I N T E G R AT EDREPOR T2 0 23Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku,
Tokyo 150-8554, Japan
Phone : +81-3-6447-8000
https://www.subaru.co.jp/en/ir/

INTRODUCTION

Pursuing Our Goal of
Delivering Happiness to All

My drive for adventure
while also remembering
to slow down to enjoy thesimple things. This is exactly
what my Subaru allows me
to do.

I love my Subaru Forester! Hername is Betty Too. We just
took her on a 3500 mile roadtrip. Looking forward to many
more adventures!

The SUBARU Group, by no means a large automaker, concentrates its limited management resources in pursuit ofThanks for making the perfectspring break road trip
adventure vehicle!

the value it provides to its customers, which is “Enjoyment and Peace of Mind.” The customers who support us value
SUBARU vehicles like lifestyle partners. Together, we are marching ahead to make society better, inspiring our customers
to say that SUBARU is “different.” Our vision of becoming a company “delivering happiness to all” was inspired by thevery happiness we perceived in our customers' behavior and feedback, which we cherish in the deep relationships wehave with them. We will put these customers who have nurtured the SUBARU brand first, and continue to pursue our goalof delivering happiness to people, society, and even the Earth.
We have collected feedback from SUBARU owners submitted via our SUBARU Group websites. It is our hope to continue
satisfying the expectations of SUBARU owners who have chosen and cherished our vehicles.

Why, SUBARU? (in Japanese only)

Dear Subaru,

https://www.subaru.jp/whysubaru/

https://www.subaru.com/owners/dear-subaru.html(Left page)(Right page)

I can’t even begin to express
how much I LOVE this vehicle!
Not only has this been a funtrip, but knowing we are safe inthis vehicle makes it even better.

Our local quilt guild, madeover 100 quilts for a summer
camp for kids going thru cancer.

Some messages have been translated from Japanese to English.

Even though we’ve only had it
for a year, our SUBARU is suchan essential companion for mywife and I, taking us to all kindsof places. A little time free, andboom! We’re off. We’d love forour kids to experience this kindof enjoyment too one day.

“What color do you think looks
good for a Forester? Any
options you like?” Since Mom
called me that day giddy withexcitement, the Forester has
been part of our family,
protecting my parents.

Our SUBARU has made every
day so special, and holds a lot ofmemories for us. We’ve just hit
100,000 kilometers, and I’m looking
forward to taking good care of
my SUBARU and exploring
together in the kilometers
beyond!

Vacations are so much more
now with our XV. Our old car
didn’t have as much storage
space, and we couldn’t campout of the car like we do now,or take our bicycles on the roadwhile traveling.

I used to be more of an indoor
type, but now I’m out every
weekend doing what I love
most—being in nature with mycar. It’s been the best thing formaking my life more enriched.

For our wedding anniversary,
I took my wife out for a breakfrom everyday life. We got in
our SUBARU and drove toward
the ocean, out on the horizon,
eating locally-caught seafoodand enjoying a long walk on thebeach. I’m already planning ournext special trip together.

Seamus and Bettie know
safety, comfort and style when
they see it!

My Legacy started on the first
try not missing a beat!! I lovefeeling safe in my Subaru withwhatever Wyoming weather
throws at me!! Thanks Subaru!

The outback is great in thesnow and off road. Our 2
rescues love the car too!

Integrated Report 2023 01

On Publication

Contents

The automotive industry is confronting a once-in-a-century transformation, and the business environment surrounding
our operations has experienced substantial and non-linearly changes in recent times. The SUBARU Group, with a global
market share of approximately 1%, is not considered a large-scale company within the automotive industry. Nevertheless,rooted in its origins as an aircraft manufacturer and driven by a dedication to the human-oriented approach to Monozukuri(Manufacturing), the SUBARU Group aims to capitalize on its agility and flexible approach as a nimble team of craftsmen
made possible by its corporate size. Our objective is to achieve sustainable growth by lead the company's efforts in“Monozukuri Innovation" and “Value Creation.”
Regardless of the business environment, the
SUBARU Group’s enduring vision is “Delivering
happiness to all” and provide value in the form of“Enjoyment and Peace of Mind.” To enrich people’s
lives and minds, we aim to evolve what it means
to provide “Enjoyment and Peace of Mind” in all
our business activities, not only in our products,
and seek empathy from our customers, retailers,
local communities and all other stakeholders. By
doing so, we strive for the sustainable growthof the SUBARU Group and the realization of aenjoyable and sustainable society. In order for abroad set of stakeholders, including shareholders
and investors, to better understand the SUBARUGroup’s approach, strengths, and business models
that underlie these initiatives, we endeavor to provide
the integrated disclosure of financial and non-financial
information in compiling our Integrated Report.

Guidelines Referenced

58 Respect for Human Rights

12 New Management Structure Policies

59 Corporate Governance61	Message from the Chairman of
the Board of Directors
62	Directors, Auditors, andExecutive Officers
68 Message from Outside Directors
76 Compliance28	Initiatives to Achieve Our Goal of Zero Fatal
Traffic Accidents in 2030
32	SUBARU’s Idea for a Digital
Transformation Strategy
36 Quality Enhancement

86 Consolidated Ten-year Financial Summary

40 Cultivating Human Resources

88 Five-year Unit Sales

46 Six Priority Areas for CSR

90 Corporate Data

Reporting System
The SUBARU Group discloses various information to engage in communication with all stakeholders. In addition to thisreport, information can be obtained from the introductory content on our website, which provides an overview of the
SUBARU Group’s values and value creation, as well as from the Sustainability & CSR section of our website, where ESGrelated information is comprehensively disclosed in accordance with international evaluation standards.

Scope of Our Value Creation Story
Philosophy of Value Creation
Strategy and Approach to Value Creation
Specific Initiatives for Value Creation
SUBARU’s Vision
Awarenessand interest

3. E
 ach department then collaborates with the secretariat to compile thereport based on the approved strategy.

Communication Aims

Disclaimer Regarding Forward-Looking Statements

78 Business Overview
84 Previous Mid-term Management Vision

2. C onsidering the feedback and evaluation, the secretariat develops theeditorial policy for the upcoming fiscal year and seeks approval from theSustainability Committee, which is composed of all executive officers.

4. A fter compilation, the report is presented to the Sustainability
Committee and the content is verified by the executive officers ofeach department before publication.

Corporate Data

34 Message from the CFO

1. A
 fter issuing our Integrated Report, we actively seek candid feedback
from both internal and external stakeholders, with a particular focus on
institutional investors. We also submit our report for evaluation by anoutside organization.

Statements herein regarding plans, strategies, and other information that are not historical facts are assumptions, judgments and forecasts based on
information available at the time of creation, and are subject to various risks and uncertainties. Actual results may differ materially from these statements
due to changes in economic conditions surrounding the Company and its Group companies, fluctuations in demand and exchange rates, and otherfactors. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility in light of the above factors.
Please note that the parties providing the information in this report regarding the Company and its Group shall not be liable for any loss or damage
incurred as a result of investment based on the information contained in this report.

02 Integrated Report 2023

06 Message from the CEO

Commentary on Strategy

Production Process

Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues
for Collaborative Value Creation, Ministry of Economy, Trade and Industry
International Integrated Reporting Council (IIRC)’s International Integrated
Reporting Framework

Foundations Supporting Value Creation

22 The SUBARU Group’s Unique Business Model

We began issuing our Integrated Report in FYE March 2022, and areconsistently striving for improvements in the annual publication.

* Some information provided may be from outside the reporting period.
* The departments, titles, etc. of the people introduced in this report are as of the time of writing.

04 At a Glance

20 Value Creation Process

SUBARU CORPORATION

April 1, 2022–March 31, 2023

Value Creation Story

18 SUBARU’s History of Value Creation

Scope of Reporting

Reporting Period

50 Environment ~Climate change~
56 Risk Management

Vision, Value statement, Corporate statement

In this Integrated Report 2023, we begin by featuring our policies under the new management structure announced inAugust 2023 with an explanation of key initiatives and a message from the CEO. We have also enhanced the disclosure of
our value creation story by highlighting the past strategies of the SUBARU Group and the progress of specific actions in
the Six Priority Areas for CSR, while introducing employees working on the frontline. We will continue to utilize this report
as one of our tools for communicating with stakeholders, further enhancing our information disclosure going forward.

* In this report, the “SUBARU Group” and “the Group” refer to the SUBARU Group; “SUBARU”
or “the Company” refers to SUBARU Corporation; “affiliated companies (affiliates)” refers to
SUBARU’s subsidiaries in Japan and overseas, including dealerships in the Automotive Business;and “group companies” refers to SUBARU’s subsidiaries in Japan, excluding dealerships in the
Automotive Business.

03 Contents/Reporting System

This provides the key points of SUBARU’svalues and value creation.
https://www.subaru.co.jp/en/introduction/

Integrated Report
Understanding
and empathy

This aim to convey a broad overview of the value creation process in a clear
and accessible manner to a wide array of stakeholders, including shareholders and investors,
with a particular focus on the sustainability of our business model and strategy.
https://www.subaru.co.jp/en/ir/library/annual-reports.html

Dialogueand evaluation

Website: Sustainability & CSR
This disclose ESG-related information in line with international evaluation standards.
https://www.subaru.co.jp/en/csr/

Integrated Report 2023 03

Commentary on Strategy

Value Creation Story

Foundations Supporting Value Creation

Corporate Data

At a Glance

Composition of Sales

Our Path to Today

FoundedBusiness Segments

Chikuhei Nakajima establishes
Aircraft Research Laboratory

2

1917

1953

Automotive

Aerospace22

Gunma (Japan), Indiana (U.S.)

Tochigi, Aichi (Japan)

operating locations operating locations

Aerospace

97.8%​

2.1%​

Industry Share*4
Global ShareApprox.

U.S. Market Share1%

Approx.

4.0%​

Affiliated Companies*1

Company Name Change
Birth of Subaru Corporation

Ratio by Region*3

95

2017

Automobile Sales Network*2

Produced in Japan

575 thousand units

Number of Employees (consolidated)*1

37,521locations in Japan

Plus locations in approximately

Performance andFinancial Soundness

Other
0.1%

Automobiles

Production Sites

Establishment of Fuji Heavy Industries Ltd.

90

Segments(Automotive and Aerospace)

Established

439

Businesses

countries
and regions

Consolidated Performance

Revenue*3

Operating profit

3,774.5 billion yen 267.5 billion yen

Units Produced(consolidated)874

thousand units
Produced in the U.S.

299 thousand units
Other:

41 thousand units

China:

10 thousand units

Europe: 23 thousand units

U.S.:

592 thousand units

Canada: 43 thousand units
Australia: 44 thousand units

Units Sold(consolidated)

852

Operating Margin*3

Capital Stock

7.1%

thousand units*3

153.8 billion yen

Japan: 100 thousand units

Automobile Category
Equity Ratio

53.3%

*3

*1 As of March 31, 2023
*2 As of April 1, 2023
*3 Figures for FYE March 2023

04 Integrated Report 2023

SUV sales
Issuer RatingA-

Approx.

81%*3

AWD vehicles

98%

*5

​

Re tail sale sRating and Investment Information, Inc.
As of October 13, 2022

*4 For 2022 (calendar year)*5 Based on sales data from 2018 to 2022 (calendar years). Excludes OEM vehicles from other companies.

Integrated Report 2023

05

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Message from the CEO

In the age of the electrification, we will
pursue the SUBARU-ness through“Monozukuri Innovation” and “Value
Creation,” with the power of our humanresources as the foundations of our Group.
Atsushi Osaki
Representative Director,
President and CEO

Profile1988 Joined SUBARU
Worked in engine and transmission design
1998	Full-time labor union officer (leave of absence)	Served in SUBARU’s Product & Portfolio Planning Division, Engineering Division, Quality Assurance Division,and other posts
2016 Vice President and Senior General Manager, Quality Assurance Division2018 Senior Vice President, CQO (Chief Quality Officer) and Chief General Manager, Quality Assurance Division
2019	Executive Vice President, CQO (Chief Quality Officer) and Chief General Manager, Quality Assurance Division2020	Executive Vice President, CQO (Chief Quality Officer), Chief General Manager, Quality Assurance Division andGeneral Manager, Quality Assurance Management Office2021 Director, Executive Vice President andChief General Manager, Manufacturing Division
Representative Director, President and CEO since June 2023

My Resolve as New CEO

I will stand at the forefront of our transformation as we build thefoundation of a SUBARU Group for the new era.
In June 2023, I was appointed the new Representative Director, President and CEO of SUBARU. My career has
been mainly in engineering, from the design of automotive engines and transmissions, to manufacturing, product &portfolio planning quality assurance, and customer service. Looking back on my career so far, I am proud to say that
I have consistently been involved in Monozukuri*1 and building relationships with customers. However, I also took
leave of absence for about eight years to serve as a full-time SUBARU labor union officer, an experience that firmly
impressed upon me that human resources are the driving force behind Monozukuri and innovation. This was also thetime when I developed my creed: “Human resources are the foundation of everything.”

SUBARU finds itself in a business environment changing at an unprecedented speed, especially with the rapid
shift to EVs*2 in the U.S. market and the rise of emerging manufacturers, including those from other industries. Thisis truly a period of once-in-a-century profound transformation for the automotive industry. My mission as President
and as a man with experience primarily in manufacturing and product planning at a time when car manufacturing isundergoing a profound shift from internal combustion engines to battery electric vehicles (BEVs), is to stand at theforefront of this great transformation, close to the field and the people who work in it, and build the foundation ofa SUBARU Group for the new era as we march forward. In order to achieve this, I will strongly advance “Monozukuri
Innovation” and “Value Creation,” aiming to become a world-leading company. We will focus our management
resources on BEVs so that the SUBARU Group can secure high profit margins over the long term, even after 2030,
when the BEV era is expected to begin in earnest. We will also continue to bring about major innovations in carmaking so that we can compete with other manufacturers even in the BEV era, for which the future can be very
uncertain.

*1 Manufacturing*2 Electric vehicle

06 Integrated Report 2023

Integrated Report 2023

07

Value Creation Story

Review of the Mid-term Management Vision “STEP”

We will move our efforts up to the next stage in order to reap
the fruits of the reforms promoted in “STEP.”

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

only that, but our community engagement activities through the Subaru Love Promise initiative at SOA*5 were alsoranked No. 1 in the automotive category among Forbes' list of the best American brands that have a social impact. I
feel that the greatest progress we have made in our “STEP” initiatives has been in improving the strengths of our
products, company, and brand, as evidenced by the recognition we have received. The strong evaluations of our
products, company, and brand not only from our customers but also from the general public at large is an important
asset for us. We hope to continue to strengthen this relationship in the future.
*3 Zero fatal road accidents among occupants of SUBARU vehicles and people involved in collisions with SUBARU vehicles, including pedestrians and cyclists.
*4 IIHS: Insurance Institute for Highway Safety*5 SOA: Subaru of America, Inc., our headquarters for dealerships in the United States

Before discussing the Monozukuri transformation that is about to begin in earnest, I would like to first review ourefforts in the “STEP” mid-term management vision, our management focus since 2018. Under “STEP,” we haveengaged in priority initiatives toward corporate culture reforms, quality enhancement, and evolution of the SUBARU
Difference.
With respect to corporate culture reforms, we have acted based on the slogan of “Change mindset, change
behavior, change the company,” working to foster a mindset of reform by providing various opportunities for
dialogue, with the aim of becoming a company open to new ideas. This has resulted in positive change, manifestingin spontaneously vibrant communication across departments. Since FYE March 2022, as the next step, we havefocused on the growth of the individual, and have been advancing the priority initiatives to increase engagement sothat each and every employee can experience growth and job satisfaction, as well as make sure that the growth of
the individual drives the growth of the organization. As for quality enhancement, I have been at the forefront ofreforms in my capacity as CQO (Chief Quality Officer). In my work toward this end, I have been encouraging
thorough awareness and reinforced systems for each and every employee as a first priority from a trifecta ofapproaches: thorough implementation of a quality-first mindset and reinforcement of organizational efforts andstructure, execution quality enhancement, and innate quality enhancement. Through these efforts, we have steadily
reduced the number of recalls (including the number of vehicles affected) and total costs related to quality. Quality is
the foundation of the SUBARU brand and is a duty that absolutely must not be shirked. Going forward, we willcontinue to step up our reforms as part of our unyielding efforts to deliver happiness to our customers throughproduct development and Monozukuri with solid quality even in the age of the electric vehicle. With respect toevolution of the SUBARU Difference, we have worked toward “Monozukuri Innovation,” such as adjustingdevelopment and prototyping processes and promoting data linkage for traceability from production to after-sales
service, in the interest of updating how we build SUBARU toward delivering enjoyment and peace of mind. In 2020,
we announced at a technology meeting that we would aim for zero fatal traffic accidents by 2030*3 and contributetoward achieving a carbon-free society with SUBARU strengths and technological innovation. Toward this end, we
have been strengthening technologies that support the values we provide, namely enjoyment and peace of mind.
We will continue to advance the corporate culture reforms and quality enhancement that we have been working
on in “STEP” as the foundation of ourreforms. Regarding evolution of the
SUBARU Difference, we will evolve these
efforts into the two pillars of “Monozukuri
Innovation” and “Value Creation” in order
to effect a major pivot to BEVs going
forward.
These initiatives in “STEP” have resulted
in strong evaluations by third parties, notonly for our products but also for ourcompany and brand. For example, ourproducts have received high ratings fromthe American Customer Satisfaction Index(ACSI) and as an IIHS*4 Top Safety Pick+. Not

The SUBARU Group Vision for 2030

We will strive toward total global sales of 1.2 million-plus vehicles
in 2030, and 50% of those from BEVs.
Today, I hold in my mind a clear image of what I want to make the SUBARU Group by around 2030. The appealof SUBARU is that it is unique compared to other automakers, showing a solid orientation for the SUBARU brand.
With this appeal, we are committed to always being a corporate group capable of creating value to bring genuine
happiness to people, not just the customers buying our products, but all stakeholders. As the world shifts toward
carbon neutrality, so too are our customers’ preferences shifting toward environmental friendliness. Knowing this, weannounced an update in August 2023 to our electrification plan targeting the year 2030.
In our updated plan, we will target 1.2 million-plus units sold worldwide in 2030, of which 600,000 will be BEVs,
making up the entirety of the 50% share we aim to allocate to electric vehicles. This is up from the previous targetof 40% for hybrid vehicles and BEVs combined. As for ensuring we have a production system to support our sales,
we have already announced in May 2023 that we will increase the production capacity of our plants in Japan from
200,000 to 400,000 units. Furthermore, we have announced that we will begin production of next-generation HEVs
equipped with the Toyota Hybrid System and BEVs in the U.S. By the end of 2028, four BEVs will be added to ourfour already-announced SUV models, for a total of eight BEV models in the lineup, and we will aim to sell 400,000
BEVs, sold, more than half of the total vehicles sold in the U.S.
To give some background on our decision to produce in the U.S. at this time, our initial plan for the production
system was to start up a production line at our plants in Japan and expand this to the U.S. after cultivating a
range of expertise in quality, cost, procurement, and other areas. The change of plan was not only due to thecoincidental timing that we were coming to realize the direction of our reorganization plan within Japan, but also
to the determination that we needed to overlap Japanese and U.S. production with an emphasis on speed, given
the pace of the transition to BEVs in the U.S. and the need to address the U.S. IRA Act*6. Though we are targeting2027 and 2028, we will explore these and a wide range of potential timings for launching production in the U.S. incomprehensive consideration of the supply chain situation, battery supply, and other factors.
Our target for 2030 is to reach 1.2 million units of global production capacity across our U.S. and Japanese plants.
However, during the transitional period to electrification, we will closely monitor regulatory and market trends, andas the launch of a dedicated BEV plant in Japan progresses, we will also make preparations for the launch of BEV
production in the U.S. so that we can start up production at the appropriate time.
We will take on challenges based on the principles of flexibility and expandability, and once we can discern themarket’s full-fledged shift toward electrification, we will attack the market in one fell swoop.
In order to realize this series of production and development, we will make growth investments to the tune ofapproximately 1.5 trillion yen*7 by around 2030 so as to prevail in the age of electrification.
*6 IRA Act: Inflation Reduction Act*7 Including the 250 billion yen investment quota for domestic production system reorganization announced in May 2021 (subject to change depending on battery
investment method)

08 Integrated Report 2023

Integrated Report 2023

09

Value Creation Story

We will aim to become a world-leading company by increasing
our corporate competitiveness through steering the company
toward EVs and “Monozukuri Innovation” and “Value Creation.”
Even if the world reaches carbon neutrality, we will remain unchanged in continuing to provide products and services
that satisfy our customers and brings them happiness. Going forward, we will continue to engage in initiatives basedon the two pillars of “Monozukuri Innovation” and “Value Creation,” and by overwhelmingly enhancing our corporate
competitiveness as a manufacturing company, we aim to become a world-leading carmaker in the BEV era.
Allow me to continue with a detailed explanation of the two pillars of “Monozukuri Innovation” and “Value
Creation.” The former is where we will carry out initiatives that integrate production, development, and the supply
chain, including engagement from our suppliers. In the past, we referred to ourselves as “a group of craftsmen witha nimble, flexible approach,” which gave us strengths from close cooperation between and unity among our various
departments. These strengths enabled us to introduce a variety of technologies such as all-wheel drive (AWD)
and the EyeSight driver assistance system. However, as times have changed, customer preferences have changed,cars have become more complex. The need to respond to these changes led to rapid progress in the division offunctions, especially in the areas of product development, production, and the supply chain.
My desire is to use “Monozukuri Innovation” to go back to basics and help build “one SUBARU” with the entire
supply chain working together toward high-density manufacturing. Until now, our manufacturing has not necessarily
been the most efficient method with respect to sales and development, with a growing number of parts toaccommodate a rich model lineup. Looking ahead, we must alter the premise of our manufacturing to focus on how
to make products simple and easy to produce, while keeping the customer's point of view in mind. This includes
how to streamline production and how many parts and what specifications are necessary to achieve efficiency.
Specifically, we will halve the development lead time, halve the number of parts, and halve production processes,
resulting in half the time required for manufacturing through an agile approach to each traditional operation domain,
where conception, design, and production were once divided up and carried out in waterfall-style management.
This is a major reform of manufacturing on a scale and level never seen before in the history of SUBARU, and it isan initiative that will fundamentally rebuild our automotive business. In making such a profound transformation thatdeviates so greatly from past practices, we may face tough barriers and resistance to change. However, SUBARUGroup enjoys the benefit of having just the right size to carry out such a disruptive manufacturing innovation all at
once. SUBARU has the strength to exert tremendous impetus when employees are oriented in a given direction, andbecause this is who we are, I am confident that we can speedily proceed with reforms in the situation we are in.
Not only that, but we have a great opportunity to build a new BEV plant in Oizumi from an unrestrictedvacant lot, which we will harness to launch a new plant embodying our hopes and dreams as we reinforce our
production system.
In the latter pillar of “Value Creation,” we will use SUBARU products as the core of an ever-expanding circle ofvalue we provide to society and the future through efforts to build strong bonds between SUBARU, its customers,
its retailers and its communities. This, we will achieve even in the age of the electric vehicle. “Value Creation”
is intended to focus on the products at the core of these efforts, for which the most important thing is greater
evolution of enjoyment and peace of mind, a major value we provide. Though some say that the era of the EV may
lead to the loss of the SUBARU-ness, our horizontally-opposed engine design and symmetrical AWD are merely
technological icons that express the SUBARU-ness, rather than the difference itself. In this new era, we are setting
our discerning sights on elevating active and passive safety performance and rough-road capability to the next level.
Looking ahead, we will build in new technologies toward electrification to further evolve the enjoyment and peace ofmind we offer. Beyond this, we will pursue strong versatility to benefit our customers, such as a seamless and stress-freeuser experience. We will also provide further benefits through our “Retaining Value” and “Continuing to Deliver NewCar Feel” initiatives, which are based on our desire for customers to have long relationships with their SUBARUs while
maintaining the value of their vehicles. The “Retaining Value” approach was born from the fact that many customers,
mainly in the U.S., drive their cars for long periods of time due to an emotional attachment for their cars. Our approachis to create value even after a car’s purchase, for example by enhancing product performance through software updates.

10 Integrated Report 2023

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Though the SUBARU Group’s future will be built on the “Monozukuri Innovation” and “Value Creation” I havediscussed up to this point, this future is only possible through the power of human resources. In my career, I haveseen many situations in which employees, both technical and administrative, are constantly pursuing the essence ofMonozukuri through active discussions and repeated testing, and I have been a party to many of these situations
myself. The driving force behind the successful and sustained creation of unique advanced technologies, such as the
EyeSight driver assistance system, is human resources with unique ideas. That is why I can say with great convictionthat “human resources are the foundation of everything.” In order to further enhance our competitiveness in
Monozukuri, it is necessary to accelerate our efforts focused on "individual growth"a priority of the "STEP", and todevelop innovation leaders. It is my mission to lead the creation of a climate that empowers human resources with awealth of ideas who will lead the new era.

Toward Delivering Happiness to All

Under our new management structure, we will work with
employees to create a SUBARU Group for the new era.
The SUBARU Group has been strengthening corporate governance in the interest of greater corporate value overthe medium to long term. The new management structure started in June 2023 will have two representative directors
working in sync to steer management: myself, with experience mainly in manufacturing, and Deputy President
Fumiaki Hayata, with experience in the North American and Japanese sales and management planning divisions.
In addition, we have increased the share of independent outside directors to strengthen the board’s supervisory
function. We are aware that in order to support sustainable growth from the aspect of corporate governance, it is aprerequisite that we provide a stronger external perspective and put in place a corporate governance structure that
leads to improved business soundness and transparency.
As we take on the challenge of drastically transforming our manufacturing, it is our desire to be a SUBARUGroup that can maintain sustainable growth and delivering happiness to not only our customers, but to all of our
stakeholders.
It is a self-evident fact that the common denominator in both car and aircraft manufacturing is that if any criticalelement is missing, our product will not reach the customer. These critical elements are suppliers who supply tensof thousands of parts, colleagues involved in various development and manufacturing processes, and staff engaged
in sales, after-sales service, and other administrative tasks who support the aforementioned processes. Naturally,
defects or inappropriate behavior would also render a product non-viable. In 2017, I was serving as Chief Quality
Officer. In response to the improprieties relating to final vehicle inspections that were uncovered at that time, I
asked employees at each workplace if they could confidently say the work they were doing had earned the trust of
our customers. I asked them because breaking this unspoken mutual understanding will never lead to the happinessof our customers. This is why it is so important for us to always be thinking about our customers’ happiness and to
do our jobs in a way that earns their trust. Employees working in our factories and engineering departments areroutinely told to act in a highly transparent manner toward local communities. We will continue to build relationships
with local communities through our various corporate activities so that they will feel a sense of pride and peace ofmind about SUBARU.
Under the new management structure, we will work alongside employees to create a SUBARU Group for the new
era so that we can bring happiness to our customers and other stakeholders, while maintaining the broad directionof the SUBARU brand.
As we take these steps forward, I humbly ask for the ongoing support and understanding of all of our
stakeholders.

Integrated Report 2023

11

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

New Management Structure Policies

Our Vision for 2030

Steady STEPs for Steady Results

On August 2, 2023, SUBARU presented its policies under
the new management structure. In the report, weannounced our target for 2030 of 1.2 million-plus units
sold worldwide, of which BEVs will account for 50% ofsales. We also announced our resolution to see ourchallenges through in the coming five years to 2028 withan eye to 2030.
The automotive industry finds itself in a once-in-acentury time of great upheaval, experiencing moredisruptive and rapid changes than ever before. In thissection, we will present SUBARU’s actions toward achieving
its vision for 2030 within this turbulent environment.

We are committed to providing SUBARU’s unwavering value of “Enjoyment and Peace of Mind,” pursuing the SUBARU
Difference with not only functional values but also emotional values. Here, we have defined our vision for SUBARU as acompany “Delivering Happiness to All.” In 2018, we formulated our Mid-term Management Vision “STEP,” which consistsof the following three directives: become a brand that is “different” from others by enhancing distinctiveness; engage inbusiness activities that resonate with customers by putting them center-stage, and; fulfill corporate social responsibilities
by contributing to diversifying social needs. The directions set forth in STEP remain unchanged in our policies under the
new management structure.
Our priority efforts as part of STEP—corporate culture reforms, quality enhancement, and evolution of the SUBARU
Difference—have begun to yield steady results, evidenced by the recent high praise* earned by SUBARU not only for its
products, but also for its company and brand. We believe that this recognition of SUBARU as a company and brand,which comes not only from SUBARU owners and evaluating organizations, but also from a broad range of generalcustomers is proof that our initiatives within STEP are moving in the right direction. Simultaneously, we consider thisrecognition we have received as a great asset for SUBARU.
* Please refer to page 31 of this report for some of our product evaluations and page 27 for brand evaluations.

Management Approach Messaging

Further Enhancing SUBARU’s CompetitivenessIn presenting our policies under the new management structure, we announced our vision for 2030 and our determinationfor 2028. Previously, our medium-term management approach has been formulated as the Mid-Term Management Vision,
which would cover a period of three to five years, which has been periodically revised and published.
However, our business environment is experiencing disruptive and non-linear changes, including the rapid shift to
BEVs in the U.S. market, major changes in the automotive industry, and the emergence of new manufacturers, including
those from other industries. Our belief is that we must adapt to this rapid change in a more timely manner, mindful of
flexibility and expandability. Based on this belief, we have altered our approach to the formulation and messaging of ourapproach to management. Now, we will be newly unbound from conventional methodologies, instead dynamicallyconsidering various measures while keeping a close eye on changes in the environment, and reporting on progress as
appropriate. This is the substance of our new management structure policies, as announced.

Our efforts in the priority areas to date of corporate culture reforms and quality enhancement will remain unrelenting as
we go forward. These are the foundations underlying SUBARU’s sustainable growth, and we will continue our actions
toward these as the basis for enhancing our competitiveness in our policies under the new management structure.
Furthermore, in order to continue to pursue our unwavering value statement of “Enjoyment and Peace of Mind” in the
BEV era, we will step up our efforts under “Evolution of the SUBARU Difference,” moving these up to the next stage in theform of two new initiatives: “Monozukuri Innovation” and “Value Creation.” Both “Monozukuri Innovation” and “Value
Creation” are Key Initiatives for our success and survival in the BEV era, and we will vigorously advance efforts in these areas tobecome a world-leading company.

Key Initiatives
Move up to
the next stage
3

CarbonNeutrality

BEVs

Once-in-a-century transformation

Non-Linear Transformation
Unprecedented Speed
Growth of emerging
manufacturers

12 Integrated Report 2023

2

Evolution of the
SUBARU Difference

Quality Enhancement
Initiatives as a foundation

1

Corporate Culture
Reforms

Previous Mid-term Management
Vision “STEP”

Monozukuri
Innovation

Value
Creation

Corporate Culture Reforms
Quality Enhancement
Going forward

Integrated Report 2023

13

Commentary on Strategy

Value Creation Story

Foundations Supporting Value Creation

Corporate Data

Substantial Revision to 2030 Target for BEVs Share of Sales

Our Determination for 2028: Launch of “Monozukuri Innovation” and “Value Creation”

SUBARU aims to reduce its well-to-wheel CO2 emissions by 90% or more from 2010 levels by 2050 in working to bringabout a decarbonized society. To this end, we will apply electrification technology to all SUBARU vehicles sold worldwide
by the early 2030s. Our milestone for 2030 had previously been to shift to electric vehicles comprising 40% or more of all
vehicles sold worldwide, with BEVs and hybrid cars making up this 40%. However, within our policies under the new
management structure, we have significantly raised this target to make 50% of SUBARU's total global sales be BEVs alone.

We have decided to significantly update our electrification sales target and production structure to support those sales toward2030. In our pursuit of these visions, we are positioning the next five years up to 2028 as a very important period for us, andunder the new management structure, we will work with strong determination on two key areas: “Monozukuri Innovation” and“Value Creation.” In this transition period when internal combustion engine (ICE) vehicles are being replaced by battery
electric vehicles (BEVs), we will strongly promote these key initiatives while updating our development process and productplanning concurrently with our decision to update our production system by reorganizing our plants in Japan and overseas.
Under the new management, SUBARU will pursue “Monozukuri Innovation" and “Value Creation" while restructuring all the way from the production structure to the development process and product planning.

CO2 reduction roadmap
Aim for 50% of global sales to be BEVs.

In 2030

By the 1st halfof the 2030s
By 2050

New Management Initiatives

UpdatedDevelopment
開発

Apply electrification technologies*1 to all SUBARU vehicles*2 sold worldwide.
Reduce average well-to-wheel CO2, emissions from new vehicles sold worldwide
by at least 90% compared to 2010 levels.

*1 Refers to the technology used to foster the use of electricity for EVs, HEVs, and others.
*2 Excluding models supplied by OEMs.

Monozukuri Innovation
Value Creation

Product

Production

SUBARU’s electrification sales target for 2030 (Ratio, Volume)
Previous

New

HEVs + BEVs

40%

BEVs

600,000% units

50

HEVs

2030
Total Global Sales

1.2

million-plus
units

Updated Production System Reorganization Plan
In conjunction with the aforementioned revisions, we have also updated the reorganization plan for our production
system, which has been announced in stages since May 2022. Specifically, in addition to the announced reorganization of
our domestic production system, we have decided to extend our production plans for next-generation HEVs equippedwith the Toyota Hybrid System and BEVs. These vehicles, originally slated for production in Japan, will now also be
manufactured in the U.S. As a result, our global factory production capacity will reach a level of 1.2 million units.
In this transition period of the shift to electrification, while keeping a close eye on regulations and market trends, we will
be flexible by taking advantage of the reorganization of our production in Japan and the U.S., and expand at once when
the direction of the shift becomes clear. With this concept of flexibility and expandability at the core, we intend tonavigate through these challenging times.
2023

2025

2026

2028

HEV

Production capacity
for transitional period

BEV

Starting in-house BEV production
BEV

Adding dedicated BEV production line

Capacity:
200,000 units/yr
Capacity:
200,000 units/yr

Next-gen. HEV
BEV

Aim to achieve this goal at an early stage
by shifting our focus and resources to BEVs.

BEV Sales in the U.S.
Aim for U.S. sales of 400,000 BEVs in 2028.

By the end of 2028: 4 more models

A total of

8 models in
BEV lineup
by the endof 2028

1.2 million-plus
units per year
(Japan + U.S.)

8 BEV models

ICE

Productionin the U.S.

To become the world’s leading company
in “Monozukuri” and “Value Creation”

Introduce four additional BEV models
by the end of 2028.
*

Next-gen. HEV

Value
Creation

Monozukuri
Innovation

Expansion of BEV Lineup
By the end of 2026: 4 SUVs

ICE

Productionin Japan

Rather than simply advancing these initiatives, our goal is tobecome a world leading company in “Monozukuri” and “Value
Creation,” so that we do not fall behind in this era of profoundtransformation. We aim to achieve our “Monozukuri Innovation”
and “Value Creation” at an early stage by shifting our focus andresources to battery electric vehicles. Our determination under
the new management structure is to take on these challenges andsee them through in the five years to 2028.
In addition to the four BEV SUVs already announced for launchby the end of 2026, we plan to launch four more models by theend of 2028. As a result, SUBARU will have a total of eight models
in its BEV lineup by the end of 2028. With this BEV lineup, we aim
to sell 400,000 BEVs in the U.S. in 2028. This will account for morethan half of our total U.S. sales.

Flexibility
andExpandability

Images are for illustration purposes only.

Starting BEV production

400,000
BEVs
2021

2022

2023

2024

2025

2026

2027

2028

* Incl. Solterra

14 Integrated Report 2023

Integrated Report 2023

15

Value Creation Story

Monozukuri Innovation

Past

Present

Going forward

Group of craftsmen
with a flexible, nimble approach

Organization segmented by function

Becoming“One SUBARU”

SUBARU's monozukuri, which has always been centered on the lives of its customers, has long created memories in theirhearts. This has evolved into the Subaru Love Promise, to which SUBARU, together with our retailers, is deeply committed.
The Subaru Love Promise initiatives strongly connect SUBARU, its customers, its retailers and its communities, with SUBARU's uniquemonozukuri/ products at the core. SUBARU will protect and expand this as a source of value creation for society and the future.

Higher density
Monozukuri
only achievablewith the size of SUBARU.

SupplyChain
Development

SupplyChainaStrong people-to-people ties between
SUBARU, customers, retailers, and communities.

Production

Communities in
SUBARU ma
rke
ver
ll o

Customers

SUBARU

Development

Achieve world-leading Monozukuri and Value Creation by cutting the product development process and lead time in half,
the configuration and number of parts in half, and the production process and lead time in half.

Retailers

Products

SupplyChain

Based on this approach, we will strive to achieve world-leading monozukuri by cutting the development process and lead timein half, the number of configurations and parts in half, and the production process and lead time in half. In our current
operations, each segmented function, such as product planning, design, and production, waits for the previous process tocomplete its work, and then passes the work on to the next process like a relay. Through our Monozukuri Innovation initiatives,
we will make the process agile, which will lead to a 50% reduction in Monozukuri time. At the same time, by continuously
advancing these initiatives, we will reduce the process and lead time for product development and production in existingdomains and strengthen our ability to respond to domains experiencing non-linear transformation in this age of uncertainty.

ts

Production

An important factor in creating value in the BEV era is to further enhance “Enjoyment and Peace of Mind,“ the unwaveringvalue that SUBARU offers to customers. We are sometimes asked whether SUBARU can maintain its strengths and the
SUBARU Difference in the BEV era. As one of our answers, we believe that our long-cultivated AWD capability will be further
enhanced by the precise control enabled by BEV technology, leading to further enhancement of our strengths; safety andpeace of mind. In addition, we are pursuing new benefits for our customers, such as a seamless & stress-free user experiencein the age of the BEV. We will also provide further benefits through our “Retaining Value” and “Continuing to Deliver NewCar Feel” initiatives, which are based on our desire for customers to have long relationships with their SUBARUs while
maintaining the value of their vehicles. We intend to realize these visions with our technologies. Through our products andtechnologies, we believe that our customers can enjoy the unfading emotional value that comes from spending time with
their SUBARU, such as “peace of mind,” “stimulated desire for self-challenge,” and their vehicles being “always up-to-date.”
As the shift to electrification progresses, SUBARU aims to become even closer to our customers' lives through these efforts.
Further evolve “Enjoyment and Peace of Mind” in the BEV era.
Enhance “seamless & stress-free” user experience with the latest technology in the BEV era.

Present

Going forward

Functionally segmented organizations achieve their own
goals and work is passed from one process to the next.

Becoming “One SUBARU”

Pursue the SUBARU-unique initiatives of "Retaining Value” and “Continuing to Deliver New-Car Feel”.

Production

The value SUBARU delivers through technology

50%
Reduction

The unfading emotional value that comesfrom spending time with SUBARU vehicles“Retain value” “Continue to deliver new-car feel”

Longevity

SUBARU-unique OTA
Value proposition in joint efforts with retailers

From“Reliable”“Long-lasting”
to “Always up-to-date” “Memories”

Versatility

Seamless & Stress-free

DesignProduction

Planning

DesignPlanning

Corporate Data

At SUBARU, making cars has always been about being close to our customers' lives. SUBARU cars have created memories fortheir owners, and our customers feel “love” for their cars and for SUBARU. In the U.S., “love” has evolved into the Subaru
Love Promise, the philosophy and initiatives to which our sales subsidiary Subaru of America (SOA) and its retailers are deeplycommitted. With SUBARU products at its core, the Subaru Love Promise creates a strong bond between Subaru, itscustomers, its retailers and its communities. We believe this is a source of our value creation for society and the future, andwe intend to protect and expand it. This commitment will remain unchanged in the period of profound change or in the eraof the electric car. We will further enhance the value of our products that are at the heart of this strong relationship between
SUBARU, customers, retailers, and communities.

Subaru Love Promise

Production-Development process and lead time
-Configuration and number of parts-Production process and lead timeFoundations Supporting Value Creation

Value Creation

In the past, SUBARU has referred to itself as a group of craftsmen with a nimble, flexible, a group that introduced theworld to technologies such as AWD and EyeSight. As the times have changed, so too have customer preferenceschanged and vehicles become more complex. This has resulted in a wide range of areas needing action, andsubsequently a rapid division of work into the product development, production and supply chain areas, including
specialization in individual areas and outsourcing of work to suppliers.
However, in this once-in-a-century period of profound transformation, , we are facing a situation in which we mustfight and outperform not only competitors within our own industry, but also competitors with completely new values fromother industries. Through Monozukuri Innovation, we will promote high-density manufacturing by integrating our supply
chain, including product development to production and the supply chain to create “one SUBARU,” something that can
only be achieved through nimbleness granted by our scale.

Development

Commentary on Strategy

Non-linearlytransforming
domains

Adventure
Enjoyment and Peace of Mind

Existing
domains

From“Practical”
to “Capable of anything”

On board / off board user experienceNo wait time

SUBARU strengths enhancedwith electrification technology.

SafetyFrom“Desire to go further”
to “Excited” “Desire for self-challenge”

From“Safe”
to “Peace of mind”

SUBARU will become even closer to our customers’ lives.

16 Integrated Report 2023

Integrated Report 2023

17

Commentary on Strategy

Value Creation Story

Foundations Supporting Value Creation

Corporate Data

SUBARU’s History of Value Creation
We have always been ahead of the curve in using products exemplifying the SUBARU difference torespond to customer needs based in the context of the times. This has created strong relationships withour customers. In particular, we believe that the driver’s universal value of safety is an unshakable
strength felt by our customers in our continuous refinement of all kinds of technologies.

PeriodTo 1950

Customer needs
based in historicalcontext
SUBARU’s value

1950s

1960s and 1970s

1980s

Since 2000

• Postwar
reconstruction• National Car
Concept• Rapid economic growth• Motorization• Leisure (skiing)
boom• Motorsports boom

• The 2008 ‘Lehman shock’ economic downturn• Increasing safety awareness• Increasing environmental awareness• Desiring mobility• Desiring anaffordable car• Desiring a car ride withoutworrying about the weather• Desiring family fun with apersonal vehicle• Desiring leisuretime with friends• Desiring to bond with cars
• Desiring to manifest uniquepersonality• Desiring car safety at all times• Desiring to do more for society and theenvironment

and 1990s

Mobility

provided throughSafety performancecar manufacturing

Family mobility for all
The SUBARU community
An unpretentious, self-actualized style
Technology

Visibility design Primary Safety

embodying our1965 Began crash tests Passive Safety

safety concept

1966 Horizontally-opposed engine

Active Safety

1972 4WD/AWD Active Safety
1989
Began stereo camera development
Preventive Safety

1999
ADA

(Active Driving Assist)

2008
EyeSight
2016 
SUBARU Global Platform
Active Safety

Passive Safety

2020
SUBARU STARLINK
Connected Safety

Products

1966
SUBARU 1000
Pre-Subaru
Aircraft

1958
SUBARU 360

1992
Impreza2012
SUBARU XV

1995
Grand Wagon
1972
Leone 4WD
Estate Van

Note: The information above is mainly about the Japanese market.

18 Integrated Report 2023

1989
Legacy1988
Established
SUBARU Tecnica
International Inc.

1997
Forester
1997
Three-time World
Rally Championship(WRC) winner

2022
Solterra

2012
SUBARU BRZ
2014
LevorgFrom 2021
Participated in

the Super
Taikyu Series

From 2008
Participated in the
Nürburgring
24-hour race
Integrated Report 2023

19

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Value Creation Process
At SUBARU, we hope to enrich the lives and minds of all people connected to our Group, with a vision of becoming a company “Delivering Happiness to All.”
With its DNA as an aircraft manufacturer and based on our human-oriented approach to Monozukuri, we provide product value that embodies the SUBARU Difference,and by continuing to meet the various expectations of our customers who share these values, we will enhancing relationship with our customers. In order to achieve this,
we are encouraging the growth of the individual and harnessing and aggregating the power of all employees, including innovation leaders and those who will support
them to achieve the organization growth. In addition, we will aim to achieve both the sustainable growth of the SUBARU Group and the realization of an enjoyable andsustainable society.

ab

rcu

larity

Sus

ta

in

le

Ci

Customer
expectations

Financial
capitalSusta

Enjoyment andPeace of Mindinab

Manufacturing
capital

le

Ci

rcu

larityIndividual growthIntellectual
capitalOrganizational growth

Cultivate self-motivated,
self-directed individuals

Continue developing
supportive culture

Empowerment
Engagement

Human
capitalSix Priority
Areas for CSR

Key Initiatives

Socialcapital

New management
structure policies

People-oriented Car Culture
Monozukuri
Innovation

Value
Creation

Resonance and Coexistence

NaturalcapitalPeace of Mind
Diversity
Environment

Quality Enhancement
Corporate Culture Reforms

Compliance e aim to be a compelling company with a strong market
Corporate Statement W
presence built upon our customer-first principle.

Sustainable Growth of
the SUBARU Group

Cultivating humanresources

Innovation LeadersAchieving an Enjoyable
and Sustainable Society

Enhancing relationships with customers

Delivering Happiness to All

Management
Resources

Enriching People’s Minds and LivesThe SUBARU Group’s Unique Business Model

Selection and concentration
Work stylechanges
20 Integrated Report 2023

Advancement of innovationin the auto industry+ Differentiation + Added value
ClimatechangeSocial Issues
Resource
Traffic
recycling
accidents

Respect forhuman rights
Integrated Report 2023

21

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

The SUBARU Group’s Unique Business Model
SUBARU is building a unique business model to achieve its vision of being a company “Delivering happiness to all.”Instead of simply expanding our priorities in our business, products, markets, and development, we aim to achievesustainable growth by selecting and concentrating our business resources in areas where we can best utilize thetechnologies and know-how that we have built up over the years as part of the human-oriented approach to Monozukuri
which SUBARU has maintained throughout its history.
In our automotive business, for example, we select and focus on specific areas to provide enhanced functional value in theform of vehicle safety, durability, and superior handling. This allows us to offer value to our customers in the form of
Enjoyment and Peace of Mind. As a result of these efforts, our customers see SUBARU vehicles as more than just a meansof transport—they are an essential part of our customers’ lifestyles.
We will continue to meet our customers’ expectations and make efforts to enrich people’s lives. This will allow us todeepen our relationships with our customers and enhance the value of the SUBARU brand.

SUBARU’s Selected Focus Areas

ActiveSafetyPreventive
SafetyConnected

Passive
SafetyAerospace BusinessFYE March 2018
Discontinued

Industrial Products Business
Sanitation Truck andWind Power Business
Railcar and
Bus BusinessPrimary
SafetySafetyEver since the SUBARU 360 popularized personal car ownership in Japan,
the philosophy at SUBARU has been to give top priority to safety
because people entrust their cars with their lives. The safety technologies
that we continue to refine based on this philosophy are integrated into the concept of delivering All-Around Safety tocustomers whenever they ride in our vehicles, from when they put on their seat belts to unexpected situations. SUBARU’senhanced safety performance constantly receives the highest safety performance ratings from various third parties in andoutside of Japan.

Automotive Business

Our priority is not simply expanding
our business. Instead, we concentrate
our business resources by narrowing
down our focus to automobiles andaerospace, where we can best utilize
the technologies and know-how wehave built up over the years.

FYE March 2013
Transferred
FYE March 2004
Transferred

Product Focus

SUVs

664

thousand units

Development and production of minicars ended in 2012.We
shifted our focus to the SUV category due to their versatility forboth daily use and more active lifestyles, making them very
well-suited to how SUBARU owners use their vehicles.

69%

Development based on our customers’ car use in the real world

thousand units

At SUBARU, we place importance on being practical for our customers, which is
why we build cars that match their lifestyles and changing needs. Examples
include a touring wagon that combines a spacious luggage compartment withsporty driving performance, and a crossover SUV that combines off-road
capability with everyday usability. Meticulous attention to materials, structure,and layout are factors that enhance the safety of the vehicle. This attention todetail enables us to make the frame thin and strong, which results in a highlevel of both driving visibility and passive safety performance.
Our vehicles are tested on our company’s test track by taking into accountvarious patterns of use by our customers. We also conduct numerous other tests
in harsh environments around the world, including uphill driving, rough roadhandling, and towing. This allows us to collect a diverse array of performancedata which we use to boost the reliability of our vehicles in the real world.

Note: Retail sales
for FYE March 2023

We aim for our cars to be easy to freely control for anyone in any environment

Market Focus

Note: Retail sales
for FYE March 2023

SUVs

592

Growth by focusing on the U.S. market, which matches
SUBARU’s car-making and the lifestyles of our customers,
and by gaining further affinity toward SUBARU’s initiatives.

Development Focus
Competitiveness

Collaboration

We focus on Enjoyment andPeace of Mind.

We effectively utilize partnerships tojointly develop vehicles instead ofdeveloping everything in-house.

22 Integrated Report 2023

SUBARU, which has roots as an aircraft manufacturer, has constantly maintained a human-oriented approach to
Monozukuri. Even in the midst of changing times, this approach has always been the core of our manufacturing
philosophy, allowing us to create various unique and advanced technologies by continually taking on challenges
that enrich the lives of our customers and society. Based on this human-oriented approach to Monozukuri,
SUBARU will continue to enhance the basic functions of our vehicles—expanding our customers’ freedom of
movement—to provide customers with Enjoyment and Peace of Mind.
Ensuring driving safety from every perspective, from putting on
your seat belt to unexpected situations

Business Focus Areas

81%

Enhancing the Most Basic Functions of Our Vehicles to Provide“Enjoyment and Peace of Mind”

Unless the driver can control the car freely, they will not be able to drive with
Enjoyment and Peace of Mind. The car must respond to the driver’s control ofthe steering wheel without delay, move smoothly without any awkwardness,
and never require steering adjustments when driving straight. This is the kind of
car that SUBARU strives for when refining basic performance—a car that anyone
can operate freely with peace of mind.
SUBARU does not have dedicated test drivers—that job is carried out by
our engineers. Our engineers strive to achieve better basic performance byunderstanding the level of skills possessed by professional test drivers. This
sharpens their ability to feel the difference between the ideal and reality, andtheorize the mechanism behind that difference, which they can then reflect in
the best possible design drawings.
If our engineers cannot acquire the equipment they need to identify thesource of any differences felt between the ideal and reality, they will create
their own equipment to solve the problem. By constantly making cars informed
not just by hard data, but also by sensory aspects, we are able to exceed the
expectations of our customers while accumulating unique theoreticalknowledge and know-how.
Integrated Report 2023

23

Commentary on Strategy

Value Creation Story

People and Technologies for Pursuing Enjoyment and Peace of Mind
As aforementioned, SUBARU does not employ dedicated test drivers because our engineers assess all of our cars in
the development stage. Our engineers want to deliver products that make our customers satisfied, so they drive ourcars while assessing sensory qualities that are difficult to express numerically, such as Enjoyment and Peace of Mind.
They then reflect their observations in the design drawings after studying their observations theoretically.
SUBARU’s strength comes from having the same engineer handle the entire process of driving, feeling, considering,and quantifying instead of dividing it among multiple staff. The SUBARU Driving Academy (SDA) exists to further refine
these skills to allow the creation of even better cars.

Drive

Feel

ConsiderCorporate Data

Enhancing Relationships with Customers —Creating the SUBARU Difference for our customers—
We at SUBARU have worked to enhance the functionality of our vehicles, including safety and longevity, as part of ourefforts to provide value in the form of “Enjoyment and Peace of Mind.” Our customers tell us about their lifestyles,
experiences, and affinity using words that describe their SUBARU vehicle as a part of their lives. Safety is one area where
SUBARU has worked to elevate functional value into emotional value in our customers’ minds, and our customers express
this value as caring for beloved family and friends.
Enjoyment and Peace of Mind

Functional values

SUBARU development: Our engineers’ dedication to one project is our strength

Foundations Supporting Value Creation

SafetyLongevity

Capability

Elevated

Elevated

Elevated

Strengths of SUBARU vehicles have come to be expressed more intimately in terms of the customer’s life.

Quantify
Emotional values

Caring for beloved
family and friends...

Building precious
memories...

Enriching life and addingcolor to leisure time...

Activities at SDA

Driving skill

Measuring skill

Logical thinking

Assessment skill

At SUBARU, we believe that we cannot build a car that is better than the driver's ability to evaluate it. However, clear
sensory differences felt by the driver do not often show up in figures acquired using conventional measurement
methods. Therefore, at the SDA, we produce engineers who have trained to elevate their driving skills and sharpen
their senses. With these engineers deeply probing the mechanisms that give rise to these differences, we will broaden
the domains where we can quantify the factors creating “Enjoyment and Peace of Mind” while driving, not only inhardware but in control software as well. By incorporating these elements into the development process, we create
vehicles with the SUBARU Difference regardless of their particular model or power unit.

On the inception of the SDA, I became a member of its inaugural class. Prior to that, SUBARU

We will further enhance this“deep relationship between SUBARU and our customers that makes us different from other brands.”

In the priority market of the U.S., we see many social media posts featuring images and videos of SUBARU vehicles withfamily members, friends, and pets in front of gorgeous backdrops. This shows us that our customers recognize ourvehicles as more than just a means of transportation - they are an integral part of our customers’ lifestyles and aspirations.
Many of our customers tell us that they feel attached to our vehicles, and they feel that SUBARU is appealing because it isdifferent to its competitors. This “difference” is truly an asset to the SUBARU brand.
The deep relationship between SUBARU and our customers creates emotional value that makes us different from otherbrands, and we feel strongly that we must continue to enhance it. We hope the “Enjoyment and Peace of Mind” that the
SUBARU Group provides allows our customers to experience greater joy, fulfillment and attachment to our vehicles. This
includes driving experiences that offer “Enjoyment and Peace of Mind,” active lifestyles, memorable experiences withloved ones, and a deeper relationship between retailer staff and customers. We will also respond to new expectations
from our customers to build a virtuous cycle that further develops our relationships and enhances the SUBARU brand.

had already offered training to obtain a license for test course driving, but I felt there was aneed for systematic training to improve driving skills and evaluation abilities. So, when I heardthat the SDA would be created, I was first in line to join the program.
Today, I serve as an instructor, engaged in human resource development and the planningand operation of training programs. Since each person will sense different parts of how a car
handles, the instructor rides with the driver during training to gain a thorough understanding of
how the driver perceives the car and to provide explanations tailored to each individual. If weare able to identify the slightest differences in vehicle handling and performance, like why acertain car’s comfort is better than another’s when going over a bump, despite having
equivalent measured values, then we can avoid being trapped by legacy measurement methods

Kazuhiro Itoand deeply probe the mechanisms giving rise to these differences, identifying the true cause.

Vehicle dynamics performancedevelopment Department

have been helping to spread activities learned at the SDA all over the SUBARU Group.

Graduates organize their own training sessions and workshops in their own departments andIn addition, SDA instructors play a central role in the development of race vehicles used in

the Super Taikyu* series of races that SUBARU competes in, with many young employees also involved in this development. The entire
process of making a car to enter in a race is carried out at an unimaginable speed when viewed from the usual mass production perspective.
At this breakneck speed, vehicle development must have an even greater clarity about the strengths and weaknesses of a vehicle’s

Subaru of America, Inc. (hereinafter, “SOA”), which is the local sales management company for the U.S., and its
participating retailers work together to make the world a better place all year round with our motto “Do the right things.”
Customers who share our values and actively support these activities will not be content with ensuring their own
happiness. Instead, they are deeply concerned about society and global resources, and they are making the effort to act
in an altruistic way, including helping those in need and want to improve society and the environment. In many cases, ourcustomers become our teachers through the various activities we implement to improve society. These ongoing initiatives
allow us to build stronger and deeper relationships with them.
We at SUBARU will continue to work with our retailers to be a trusted part of our customers’ lives. Together with ourcustomers, we will work to achieve an enjoyable and sustainable society.

performance, including in the areas of driving, turning, and stopping. When I see colleagues tackling issues by bringing together insightsfrom the respective specialized domains and actively exchanging opinions toward issue resolution, rather than taking on an issue alone, it
gives me the distinct sense that this is precisely what we need in the future of vehicle development. Building a single car under the harshconditions of racing and across departmental boundaries has led to the growth of each of our racing team members as engineers, and I
believe this has also led to further improvements in the performance and quality of our mass-produced vehicles.
* An endurance race where race cars are built to specific regulations and divided into classes for competition. Vehicles include production vehicles modified for racing.

24 Integrated Report 2023

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Value Creation Story

Our goal of being More Than a Car Company®: SOA‘s Love Promise® Initiatives
SOA Launches Programs with Love as the Keyword
In the United States, a key SUBARU Group market, SOA has been conducting its Love Campaign since 2008. Every day,SOA receives messages from customers saying things like, “I love my SUBARU.” What really stands out is that so many
people use the word ‘love’ to express their feelings about their SUBARU. Launched with love as the keyword, the Love
Campaign involves a variety of initiatives that are closely attuned to customer feelings and values. That approach isespecially represented during the year-end holiday season by the Share the Love® campaign. Large discounts are thenorm during the season, but the Share the Love® campaign gives customers who buy a SUBARU vehicle during thisperiod the chance to have SUBARU donate on their behalf to a charity of their choice. This program is closely attuned tothe sensibilities of customers who are committed to community engagement, and has been running for the 15 years from2008 to 2023.

SUBARU and its participating retailers donatedmore than $256 million to over 2,100 hometown charities.

Evolution from Love Campaign to Love Promise – An Initiative That Makes Us More Than a Car Company
The Love Campaign began as a sales promotion initiative, and over the past 15 years has grown into a more significant
activity that makes use of community networks built through collaboration with more than 630 retailers across the U.S.
SOA and retailers are participating in the Love Promise Community Commitment based on a core belief in helping
those in need through charitable efforts, and the concept that everyone connected with SUBARU should feel loved
and respected. Focusing on initiatives in five areas of interest, we are making the world a better place through activities
for the communities and regions that each retailer calls home. Specifically, in addition to the four organizations*1 that
SOA partnerships with, retailers independently support community and regional organizations.
Love will guide SOA’s aspirations to transcend what it means to be an automaker with programs to link customers,
SUBARU vehicles, and life and lifestyles.
*1 SOA has partnerships with these four national charity partner beneficiaries: the ASPCA, Make-A-Wish, Meals on Wheels, and the National Park Foundation

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

The Subaru Love Promise® Retailer of the Year Awards
The Subaru Love Promise® Retailer of the Year Awards are presented annually
by SOA to retailers across the United States that are making a positive impact
on their customers and communities.
In 2022, Adventure Subaru, a dealership in the city of Fayetteville innorthwest Arkansas, was named Retailer of the Year, which is the mostprestigious of the awards.

Initiatives by Adventure Subaru, the 2022 Subaru Love Promise® Retailer of the YearFor the past 50 years, Adventure Subaru owner Don Nelms has
built a reputation in Northwest Arkansas for treating customers
with the utmost respect and service while also making an impact
on the lives of the community through the many charities andorganizations Adventure Subaru supports.
In the past 10 years alone, Adventure Subaru and Mr. Nelms
have donated more than $3.2 million dollars to more than 70
charities and initiatives in Northwest Arkansas. This includes Don‘s personal donation of 350 acres of land on
the Buffalo National River to The Nature Conservancy of Arkansas. They have also helped many educationfocused organizations in the area such as Apple Seeds, Single Parent Scholarship Fund of Northwest Arkansas,
Ozark Literacy Council, and Champions for Kids. Their contributions have helped increase literacy rates,
improve career opportunities, and give kids new pathways to succeed in school.
When Managing Partner Brent Baker took over operations in March 2020, at the beginning of the pandemic,
Adventure Subaru and the world faced many challenges. During this difficult time, they remembered to put
their customers first and implemented changes to better serve their customers and keep them safe by creating
an at-home delivery service and providing test drives, as well as service department sanitation practices that
continue to this day.
Subaru of America has awarded Adventure Subaru the 2022 Subaru Love Promise® Retailer of the Year for
their commitment and dedication to their customers and outstanding contributions to making a difference intheir community.

Love Promise® Initiatives in Five Areas
Subaru Loves the Earth®

Subaru Loves to Care®

Subaru Loves to Help®

Subaru Loves Learning®

Subaru Loves Pets®

2022 Love Promise Retailer of The Year | Adventure Subaru
https://www.adventuresubaru.com/2022-love-promise-retailer-of-the-year.htm

Activities to protect
the Earth

Support for people
battling illness

Support for those in needof housing and foodSupport for
education• In response to the devastating
wildfires that ravaged the North
Pacific National Forest, worked
in partnership with the National
Forest Foundation to replant a totalof 1,000,000 trees in California,
Idaho, Oregon, and Washington•D onated more than 230,000
blankets•G ifted 31,000 arts and crafts kits•T
 housands of messages of hopewritten by SUBARU retailers andcustomers•D onated 80 preproduction
vehicles, worth 3 million U.S.
dollars, to fire departments
across the U.S. to be used forlifesaving extraction training•S UBARU and its retailers
supported the educations ofmore than 300,000 students
nationwide through a variety ofpartnerships, donations, andvolunteer efforts	

Animal welfare• Donated over 51 million U.S.
dollars, supporting the welfareof 420,000 animals

Subaru Loves the Earth® 
https://ourimpact.subaru.com/our-community/subaru-loves-the-earth/

Subaru Loves Learning® 
https://ourimpact.subaru.com/our-community/subaru-loves-learning/

Subaru Loves to Care® 
https://ourimpact.subaru.com/our-community/subaru-loves-to-care/

Subaru Loves Pets® 
https://ourimpact.subaru.com/our-community/subaru-loves-pets/

Subaru Loves to Help® 
https://ourimpact.subaru.com/our-community/subaru-loves-to-help/

26 Integrated Report 2023

U.S. Accolades for the SUBARU Brand
SOA programs, including Love Promise® initiatives withretailers and customers, rank highly in U.S. consumer
brand evaluations for all industries and in U.S. customer
satisfaction surveys. This has helped to enhance theForbes BEST BRANDSACSI®

SUBARU brand.

SUBARU was named one of the top brands on
Forbes’*2 Best Brands for Social Impact 2023 list.
SUBARU ranked No. 1 in the automotive category
and No. 2 among the top 300 brands.

SUBARU has received top rating in numerous categories
in the American Customer Satisfaction Index (ACSI)
survey for the automobile industry.

Accolades and Awards
https://www.subaru.com/vehicles/accolades.html*2 A leading global economic magazine based in
the United States• Safety: Ranked 1st (3 years in a row)*3• Driving performance: Ranked 1st*3• Service quality: Ranked 1st*3• Endurance: Ranked 1st (2 years in a row)*4• Production quality: Ranked 1st (2 years in a row)*4• Satisfaction 1st*3*3 Compared to all other measured mass-market automotive companies in the 2022 American Customer Satisfaction Index (ACSI) surveys of customers rating their own automobile. ACSI® isa registered trademark of ACSI, LLC.
*4 Compared to all other measured mass-market automotive companies in the 2022 American Customer Satisfaction Index (ACSI) surveys of customers rating their own automobile. The #1
rating is shared with one other automotive company.

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Value Creation Story

Initiatives to Achieve Our Goal of Zero
Fatal Traffic Accidents in 2030
Further advance our technologies to deliver “Enjoyment and Peace of Mind.”
Maintainthe SUBARU Difference even in the age of vehicle electrification.

SUBARU’s All-Around Safety
Attaching particular importance to protecting lives, SUBARU is working to achieve our target of zero fatal traffic
accidents*1 in 2030.
SUBARU will enhance the safety performance of its cars from every perspective as we aim to achieve zero fatal
traffic accidents in 2030. We will do this by making the four existing areas of Primary Safety, Active Safety, Preventive
Safety, and Passive Safety even better, while also adding Connected Safety.
*1 Zero fatal road accidents among occupants of Subaru vehicles and people involved in collisions with Subaru vehicles, including pedestrians and cyclists

Basic design features for avoiding accidents
Primary
SafetySafe situation

Increasing driving safety through basic design
features such as car shape and controls
Designing for visibility

Hazardous
situation

Preemptive
accident
avoidance

Driving position

Interfaces

The ultimate in driving performance for greater safety
ActiveSafetyFacilitating hazard avoidance by improving the performance ofbasic car functions: driving, turning, and stopping
Horizontally-opposed engine

Symmetrical AWD

SUBARU Global Platform

Advanced technology that supports safe driving
Accident

Preventive
SafetySupporting safe driving by helping avoid collisions
and reduce damage

SUBARU believes that to attain zero fatal traffic accidents in 2030, it is crucial to offer exceptional performance at a
price that is affordable for a wide range of customers. SUBARU’s EyeSight driver assist system, which was introduced inJapan in 2008 and achieved cumulative global sales of 5 million units in June 2022, has continued to evolve over thecourse of 15 years.
The stereo cameras equipped in EyeSight enable the system to recognize
objects with two cameras, similar to human eyes, detecting items on the road at ahigher level than radar-based systems. The development of EyeSight began
approximately 30 years ago. During the early stages, there were frequent issues withthe system’s ability to detect objects properly, particularly when it was raining or thewindows were foggy. However, these challenges were overcome through extensive
The stereo cameras of EyeSight version 3
testing in various real-world scenarios and subsequent improvements.
The EyeSight system was launched in 2008, achieving a world first in using solely
stereo camera technology to enable pre-crash braking and adaptive cruise control.
EyeSight version 2 was announced in 2010 with an enhanced pre-crash braking
system that provides support until the vehicle comes to a full stop. During thisperiod, EyeSight became a standard feature in numerous models for the Japanesemarket, and its affordability contributed to a significant increase in its recognition
Image depicting EyeSight’s recognition capability
and widespread adoption among customers. In addition, it began to be developedin certain models overseas as well.
In 2014, with the release of version 3, advancements in color recognition and an
expanded field of view using stereo cameras significantly enhanced the advanced
safety features. In the 2020 release of the Levorg, SUBARU introduced EyeSight X,
combining a new stereo camera with four radars in the front and rear, and a highprecision map locator.
Illustration of EyeSight X capability
In 2022, we newly adopted a wide-angle single lens camera for enhancing
EyeSight’s recognition capability in the mainstay Outback for the North American market. Through its evolution into a“three-eyed” system with stereo cameras and an ultra-wide-angle single lens camera, EyeSight can now recognize asignificantly wider range. This enhancement enables collision damage reduction through pre-crash braking forsituations where pedestrians and cyclists, often at higher risk of accidents at intersections, might emerge from adriver’s blind spots.
While there were other options available to achieve accident reduction in these scenarios with pre-crash braking,
SUBARU chose to utilize the wide-angle single lens camera to provide the highest level of safety at an affordable pricefor customers. EyeSight is currently integrated into the Crosstrek and Impreza for the Japanese market, with plans for a
gradual rollout to other models in the future.
<When the vehicle is turning left or right>

Damagereduction
during an
accident
Spread ofdamageRealized throughadoption of awide-angle
monocular camera

Protecting both passengers and pedestrians
Engine layout

SUBARU Global Platform

Pedestrian protection airbag

To save even more lives
Connected
Safety<When the vehicle is moving straight ahead>

Realized throughadoption of awide-angle
monocular camera

An extra level of safety, just in case
Passive
SafetyCorporate Data

Evolution of EyeSight Driver Assist System

EyeSight

Collision

Foundations Supporting Value Creation

Commentary on Strategy

24-hour/365-day access to rapid emergency assistance

The wide-angle single lens camera

Click on the links or scan the QR codes to view the videos explaining SUBARU’s efforts to reduce accidents.
Preventive Safety (1)Active Safety

https://www.subaru.co.jp/topic-en/2022_11_15_203208/

https://www.subaru.co.jp/topic-en/2023_05_22_081936/

Passive Safety

Preventive Safety (2)https://www.subaru.co.jp/topic-en/2023_01_31_144916/

https://www.subaru.co.jp/topic-en/2023_09_26_165037/

Advanced Automatic Collision Notification (AACN) system

28 Integrated Report 2023

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Value Creation Story

Foundations Supporting Value Creation

Commentary on Strategy

Corporate Data

EyeSight and AI combine to Enhance Preventive Safety

Plan to Achieve Zero-Fatality Road Safety

SUBARU is committed to enhancing its preventive safety technologies and is actively exploring new technologies as it
strives to achieve zero fatal traffic accidents. Our current focus is on integrating AI technology with EyeSight.
The fundamental principle of spatial recognition using stereo cameras is to
An image captured by EyeSight
precisely calculate the distance to objects from each pixel by triangulating thedisplacement of images captured by the two cameras, one on the right and one on
the left. The strength of EyeSight lies in its ability to accurately convert everything
captured by the cameras into a three-dimensional representation, allowing it toperceive the shape and distance of various objects. However, when it comes to
Calculates the distance to objects pixel by pixel(Near Red < Orange < Yellow < Green < Blue Far)
capturing small objects or subtle irregularities, determining whether to pass overAn image recognized by AI
them or consider them obstacles solely based on EyeSight‘s image recognition can
be challenging. In contrast, AI excels at precisely categorizing objects captured incamera, pixel by pixel, based on extensive previously learned data. Since EyeSight
can fuse the distances to recognized objects with the classifications made by AI inthe same image, EyeSight and AI are considered an excellent match. If this can be
Can focus solely on the road surface even in
put into practical use, it is expected to lead to an enhanced level of vehicle safety incomplex road environments
various situations by allowing for more detailed and accurate recognition of the(Color-codes the recognized road surface on a
pixel-by-pixel basis)
driving environment’s information than ever before.
This initiative is being pursued at SUBARU Lab, a newly established independent
office, designed to create an environment for generating fresh ideas from a different perspective. This new base inTokyo’s Shibuya, an area increasingly seen as an IT hub following recent redevelopment efforts, has enabled us tostreamline and effectively recruit the talent essential for AI development. While our current focus is on AI technology, we
aim to continue advancing our development by actively incorporating not only AI but also new technologies in the future.

To achieve zero fatal traffic accidents, SUBARU conducted a comprehensive investigation of all fatal traffic accidents
that occurred in the United States from 2017 to 2019*2, analyzing the causes of the accidents and the reasons forfatalities. Based on this analysis, we identified functionalities that can effectively eliminate these causes. Following this,we decided on specific measures to implement thesePresentfunctionalities and are actively engaged in their
ADAS enhancement
Causeddevelopment to bring them to fruition.
Advancedby other
Driver-Assistancevehicles%Systems
In concrete terms, we will improve Advanced Driver
reduction
Down
to
zero
Assistance Systems (ADAS) to further avoid and mitigate
fatal traffic
accidents
accidents, and reduce at-fault traffic accidents. For no-fault
AACN utilizationin 2030
Advanced Automatic
accidents, we aim to achieve zero fatal traffic accidents in
Collision Notification%
Caused2030 by strengthening our existing four safety performance
reductionbyownareas, beginning with Passive Safety, and adopting
vehicleCausedConnected Safety in the form of our Advanced Automaticby otherContinual
improvement ofvehiclespassive safety
Collision Notification (AACN) system.

Continuous Enhancement of Passive Safety
SUBARU focuses on developing cars with the utmost priority of safeguarding everyone in
the event of a collision, not just the vehicle occupants but also pedestrians and cyclists.
Strengthening the vehicle body and enhancing restraint systems are two criticalelements to occupant protection. In strengthening the vehicle body, we combined acabin structure that can withstand severe collisions by using high-strength materials
with the Subaru Global Platform, which helped realize a body structure that efficiently
absorbs collision energy. This design ensures protection in collisions from any direction.
In enhancing restraint systems, we reduce the load on the upper body by firmly restraining the lower body withknee airbags and seat cushion airbags. We also adjust the seatbelt tension based on the occupant’s physique toprevent excessive pressure. This ensures the protection of all occupants, regardless of age or body size. Nevertheless,even with the evolution of restraint systems, they will not be fully effective unless seat belts are properly fastened. The
rate of rear seat belt usage in Japan is only around 40%. SUBARU has taken steps to address this situation byintroducing advanced seat belt reminders and expanding the number of models equipped with them.
Pedestrians and cyclists sustain injuries at a rate 2.5 times higher than that of vehicle occupants. To reduce thedamage to pedestrians and cyclists in the event of an accident, SUBARU not only uses
soft structures for bumpers, bonnets, and other areas that can absorb impacts but also
equips its vehicles with pedestrian airbags.
In the pursuit of zero fatal traffic accidents, it is necessary to anticipate morediverse and severe accidents than ever before, however. For example, in collisions
involving bicycles, it has been recognized that under certain limited conditions, thecurrent pedestrian airbags may not cover all cases, given the various factors such as the cyclist’s physique and theorientation and speed of both the bicycle and the vehicle at the time of impact. As a result, we are utilizing computer
simulations to identify worst-case scenarios from the countless collision patterns that can be imagined and to develop
specific countermeasures.

30 Integrated Report 2023

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35

*2 All fatal traffic accidents involving vehicles from the most recent five model years

Caused byown
vehicleCar Assessments
SUBARU undergoes safety performance testing and assessment of public organizations in and out of Japan
including JNCAP in Japan, IIHS*1 in the U.S., and Euro NCAP*2 in Europe, and has gained the highest rank ofassessment in most of them.
In FYE March 2023, the Solterra won the JNCAP Five Star Vehicle Safety Performance 2022 Award, the highest
rating in the JNCAP. At the IIHS, as of May 2023, three of SUBARU’s 2023MY (model year) vehicles had won theorganization’s 2023 TOP SAFETY PICK+ (TSP+) Award, and two vehicles had won its 2023 TSP Award. In addition,
the Legacy, Outback, Ascent, Forester, WRX, BRZ, and Solterra received the highest rating of “Good” in the IIHS
Seat Belt Reminder evaluation test, a program launched in March 2022. Euro NCAP gave the Solterra a five-starrating in its 2022 assessment.
*1 IIHS: Insurance Institute for Highway Safety*2 Euro NCAP: European New Car Assessment Programme, a safety information disclosure program for automobiles in Europe.

FYE March 2023 Commendations
Assessed Automobiles

Assessment Organization

Assessment

Solterra

JNCAP, Japan

Vehicle Safety Performance
JNCAP Five Star Award 2022

2023 models of the Outback, Ascent, Solterra(built after October 2022)(U.S.-specification
models only)
IIHS, U.S.

2023 TSP+ Award*

2023 models of the Legacy and Forester(U.S.-specification
models only)
IIHS, U.S.

2023 TSP Award*

Solterra

Euro NCAP, Europe

2022 Five-star rating* In the IIHS’ s publication of vehicle safety information, the TOP SAFETY PICK (TSP) Award is given to vehicles that earned the rating of “Good” in theoriginal moderate front overlap test and small overlap tests (driver- and passenger-side), and the rating of “Acceptable” or higher in the updated sidecrash test and headlight evaluation (standard equipment), as well as the rating of “Advanced” or higher in the daytime vehicle-to-pedestrian crashprevention test. In addition to these ratings, vehicles that earned the rating of “Good” in the updated side crash test and “Advanced” or higher in thenighttime vehicle-to-pedestrian crash prevention test are awarded the TOP SAFETY PICK+ (TSP+) Award.

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Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

SUBARU’s Idea for a Digital Transformation Strategy

SUBARU’s Unique Digital Transformation (DX) Strategy with a Firm Foundation to
Respond to Environmental Changes
The automotive industry is undergoing a once-in-a-century upheaval that adds further complexity to car-making. Until
now, automakers were tasked with the product planning, development, and manufacture of cars which were thendistributed to dealerships. More recently, however, it has become possible to secure touchpoints with customers
through the use of data and digital technologies.
It is generally said that consumer needs are shifting from goods to experiences. SUBARU provides products thathave functional value backed by sound car-making and considers it important to strengthen relationships withcustomers through their experiences driving our cars. SUBARU’s DX strategy utilizes data and digital technology tostrengthen Monozukuri (car-making) while simultaneously facilitating the creation of experiences.

Primary Initiatives
In order to strengthen ties with our customers, we continuously carry out an array of measures, which are making
steady progress.
Strengthening Monozukuri

Creating Experience-making• We will streamline development and production by using a
digital twin that combines partial model-based developmentusing data and digital technology in conjunction with real-world
development.

• We are deploying connected services, which started in the U.S.,in Japan as well. We are working toward enhancing functionality
and expanding the market in the future.

• We will establish data handling tools and skills to process alarge number of control items and expand their use on-site.

• We established the SUBARU Digital Innovation Lab to make useof digital technology and data in areas such as sales andmarketing.

• We will build a data integration platform that links data acrossdepartments to address a siloed, functional organization.

• We are expanding the domains of services provided by the
SUBAROAD driving app.

*F or more details on our initiatives, please see pages 40 to 43 of our Integrated Report 2022.
https://www.subaru.co.jp/en/ir/library/annual-reports.html

Strengthening Ties between SUBARU and our Customers

Fostering DX Human Resources

For a smaller car manufacturer like SUBARU to respond to the current upheaval in the automotive industry, we need to
select and establish focuses in regard to the use of data and digital technology. As a result of these major changes, thevertical division of units by function (such as development, procurement, manufacturing, sales, and after-sales service)that worked well for car-making in the past is becoming obsolete. In response, we are changing the way business isconducted across the entire Company by establishing data systems and enabling everyone to share that data tofacilitate changes to organizational culture in the future.
SUBARU has many customers around the world wishing to enrich their lives by leading a lifestyle that includes a car.
In response to these customers, we are working to establish data and digital-based “experience-making” for ourcustomers as our new challenge. We are also working to enhance the value SUBARU provides to customers in the formof Enjoyment and Peace of Mind by strengthening our Monozukuri through similar data and digital-based methods.
The common goal between Monozukuri and experience-making is to increase the number of customers who feel anaffinity with our value statement, and deepen our relationships with these customers. In other words, the ultimate goalof all our initiatives is to deliver happiness to our customers.

Currently, SUBARU is proactively hiring mid-career DX human resources, but as a basic principle, we believe it is criticalto foster human resources internally in this area as a company engaged in Monozukuri. As an example of this, we havelaunched the Software Human Resource Development Project for engineers as a way to adapt to electrification (seepage 42 of this report). In addition, we have been focusing on on-site education in cooperation between a specialized
IT department and the respective operating department. Furthermore, we are working to build a system to raiseawareness and skill levels on the manufacturing floor, utilizing data and digital technologies. To do this, we have takena standard training program for data scientists, one of the six kinds of DX human resources defined by the IPA*, andadapted it to suit the SUBARU ideals. This course is used to train experts who can use data as a tool for improving workon the manufacturing floor. To ensure the establishment of individual skill development as part of our corporate
culture, we are conducting a continuing chain of grassroots activities in which the first generation of students mentors
the second generation, and the second generation then mentors the third generation.

Setting common goals and implementing parallel initiatives
Changes to products, services,and business models

Areas forchallenge

Attempts to create
new value

Creation of new values(Experience-making)

Strengthening ties between the SUBARU brand andcustomers by utilizing data and digital technology

Changes in our business,organization, processes, andcorporate and organizational culture
Strengthening Monozukuri

32 Integrated Report 2023

Reforms

From improvements tobusiness process reform

Improvements

Improvement as the core element

Foundation

Development of infrastructureand human resources capableof utilizing data

* Information-technology Promotion Agency (IPA), JapanMy role is to support the production of molds for car body parts from the IT
technology side. The molds I work with are used with presses to shape sheet
materials such as steel and aluminum into panel parts such as bonnets and doors,which are important to a car’s external appearance. This is why I work to develop
systems to ensure that the machine tools used to make the molds operate withintolerances measured in units of a hundredth of a millimeter. We have always had
quite a bit of data in our engagements with mold and panel manufacturing floors,and I thought that being able to make better use of this data would streamline
operations and enable the provision of higher quality molds. And, since this would
consequently improve mass-produced panel quality and deliver happiness toour customers, I joined the data scientist training program.
Tatsuya Ichikawa
Participants in this training program came from many different departments. In
addition
to general classroom lectures and practical training, there was also a lot
Vehicle Body Manufacturing
Engineering Departmentof time for discussion and sharing the data utilization issues we had been facingin our respective departments. Hearing opinions from colleagues in otherdepartments where I normally have no work connection was refreshing. It offered me new insights and hints forformulating improvement plans in my own department. I was also able to turn the lessons I learned in this training
program into action, developing and proposing a plan to use data for improving press line quality.
After completing the program, I also became an instructor to help train the next class of trainees. Part of this is mystrong feeling that it is more effective when employees who have a real sense of SUBARU’s situation today provide
guidance to their internal colleagues. It is my desire to motivate colleagues who are aware of issues but have not beenable to take action, and I would like to expand the circle of my support to help make SUBARU as a whole even better.

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Value Creation Story

Foundations Supporting Value Creation

Commentary on Strategy

Corporate Data

Message from the CFO

To thrive amid competition in theage of electrification, we will makegrowth investments while maintaining
financial soundness and stability.
Katsuyuki Mizuma
Director of the Board, Executive Vice President
Chief Financial Officer (CFO) and
Chief Risk Management Officer (CRMO)

Profile1984 Joined The Industrial Bank of Japan Ltd
2014 Became Managing Executive Officer of Mizuho Bank, Ltd.
2016 Joined SUBARU as Senior Vice President and Senior General Manager
of Subaru Overseas Sales & Marketing Division 22018 E xecutive Vice President, Chief General Manager of Overseas Sales &Marketing Division 1, Chief General Manager of Overseas Sales &Marketing Division 2
Executive Vice President, CFO and CRMO since June 2021

Financial and Capital Strategies Contributing to Sustainable Growth and Greater
Competitive Advantage
As the SUBARU Group does not possess a large scale among automakers, we have developed a highly profitable businessmodel through selection and concentration, in which we allocate limited management resources to areas where we candemonstrate our strengths. In order to achieve success in the coming era of full-scale vehicle electrification, we are striving
forward in adherence to this principle.
In an increasingly uncertain business environment, it will become even more important to have financial and capital strategies
that will enhance business growth and competitive advantage while reducing business risks. To ensure that SUBARU will thrive amid
competition in the age of electrification, we will make solid growth investments while maintaining financial soundness and stability.
We also believe that achieving sustainable growth will necessitate management practices that are mindful of cost of capitaland stock price. Our current cost of capital, as measured by weighted average cost of capital (WACC), is mid 6%. Return on
equity (ROE), which expresses the profitability and efficiency of our business, has been an important indicator for us, including
as a KPI for executive performance-linked compensation. We recognize that a level of 10% or higher is where we should
aim currently, and we are working. We will continue our efforts to steadily fulfill our duty toward shareholder returns with
unprecedented attention toward improving capital efficiency, to gain stakeholders’ understanding of these approaches andstrategies, and to meet their growth expectations as indicated by the price earnings ratio (PER).

Review of FYE March 2023 and Outlook for FYE March 2024
In FYE March 2023, needs for SUBARU vehicles remained extremely high, especially in the U.S. market, though there was acontinuing supply shortage of semiconductors and other components, which had been significantly affecting automobile
production since around 2021. In this environment, we have sustained efficient sales through maximum control of production
constraints through Group-wide activities such as strengthening supply chain management, switching to alternative
parts, and flexibly adjusting production plans. In addition, despite significant impact from higher raw material prices,
we successfully offset a great deal of impact through pricing policies and improved sales mix, which was augmented bysignificant tailwinds from the yen’s depreciation on our operating results. As a result, operating profit increased 196% to267.5 billion yen, the first increase in both sales and profit in three fiscal years. ROE increased 6.2 points from the end of theprevious fiscal year, achieving the 10% level we established in our capital policy as an evaluation indicator.
For FYE March 2024, we are targeting revenue of 4,200 billion yen and operating profit of 300 billion yen, the latter 32.5
billion yen higher than the previous fiscal year. In the automotive segment, gradual recovery is expected despite lingering
semiconductor supply risks. Many markets are still showing strong demand for SUBARU vehicles, and given this, we plan
to return production and consolidated sales volume to their respective pre-pandemic levels of 1.01 million vehicles each.
Although market prices for precious metals and other raw materials have calmed somewhat, the burden on our suppliers
is growing due to factors such as soaring energy prices, and we believe it is an important issue to thoroughly engage

34 Integrated Report 2023

them in discussions and take actions to mitigate these. We will minimize the negative impact of cost increases throughincreasing sales volume and utilizing pricing policies. In addition, the quality enhancement measures set forth in the midterm management vision “STEP” have been generating results, with total quality-related costs now steadily decreasing. We
will continue to focus on achieving our performance targets by optimizing the overall cost of our business processes while
maximizing our efforts to deliver as many vehicles as possible, as quickly and courteously as possible, to our customers
waiting for SUBARU vehicles around the world.
In the aerospace segment, the business environment has been severe since the COVID-19 pandemic, and the segment
has sustained net losses for multiple years. However, we expect the segment to return to profitability in FYE March 2024. We
will continue the structural reforms we have carried out to date and grow our three business pillars of defense, commercial,and helicopter.

Steady Investments in Electrification toward Reaching Industry-leading Profitability
In August 2023, President Osaki presented our policies under the new management structure. This presentation also
included an update to our electrification plan, which we had announced in stages beginning in 2022. This update described
how we will concentrate our resources on BEVs and aim to achieve world-leading Monozukuri innovation and value creation
without being lost in the current upheaval of the automotive industry. To achieve this goal, we will aggressively invest in
growth in order to thrive amid competition in the age of electrification while maintaining financial soundness and stability.
Specifically, we expect to invest approximately 1.5 trillion yen in electrification by around 2030. While this does of course
include estimates due to its nature as a long-term outlook, we will bring about this significant investment while maintaining
both an equity ratio of 50% or more and an appropriate level of net cash based on the situations SUBARU finds itself
in along the way. Currently, we retain net cash of around 700 billion yen. In the interest of ensuring a balance between
Japanese yen and U.S. dollar holdings and striking an optimal capital structure, if it is deemed appropriate to raise funds,
we will explore the potential of doing so in through yen-denominated debt with an eye to sustainable finance and otherfinancing options, where appropriate. As President Osaki has emphasized, human resources are the driving force behindinnovation toward electrification, and fostering human resources is the source of SUBARU’s competitiveness. This is why wewill also invest in human capital to ensure that the people who will lead our transformation are fully primed for success. To
ensure competitiveness even in the age of electrification, we will aggressively invest and maintain a rigorous selectivity ofwhere we invest while carefully monitoring global economic trends and the business environment.
In the update to our electrification plan, we announced the 2030 target that we aim to sell 1.2 million vehicles
worldwide, of which 600,000 will be BEVs. Toward this, we will improve profitability through value creation, as well as reduce
costs through greater density and efficiency in our manufacturing through Monozukuri innovation. In addition, we will takeunprecedented steps to improve capital efficiency for the investments that are expected to increase. By completing these
initiatives competently, we will achieve industry-leading profitability.
There has been no major change in our approach to shareholder return, but our aim is to return profits with a greaterawareness of improving capital efficiency going forward. With the aim of maintaining a total return ratio between 30% and50%, we will pay stable and consistent dividends and flexibly repurchase shares after comprehensive consideration of ourbusiness performance, investment plans, and the business environment. Even as we increasingly make investments, we willemphasize shareholder returns and flexibly implement a capital policy that is optimal and balanced for both ourshareholders and the Company, based on the business conditions and valuations at the time.
Though we are already actively engaged in investor dialogue both in Japan and overseas, we will further improve thequality of our engagement here so that they can gain a firm understanding of SUBARU’s electrification strategy and gaina strong sense of expectation for our growth. Despite a challenging outlook, especially in the automotive industry, we willcontinue to make steady efforts to achieve sustainable growth for the SUBARU Group through management practices that are
mindful of cost of capital and stock price. We look forward to your continued support of the SUBARU Group.
Operating Profit (Billions of yen) / Operating Margin (%) / ROE (%)
300

8.5

10.0

9.0

6.3

4.4

3.8

100

181.7

210.3

0

’19/3
Operating Profit (Left)

150

100

144

8

200

5.8

Dividend Per Share (Yen) / Dividend Payout Ratio (%) / Total Return Ratio (%)
10

’20/3

3.6

3.3

102.5

90.5

’21/3

’22/3

Operating Margin (Right)

7.1
267.5

6
4

100

78.1

100

0

ROE (Right)

75

61.3
49.1

50.3

50

2

’23/3

56.1

56

56

29.1
76

0

’19/3
Dividend Per Share (Left)

’20/3

’21/3

’22/3

Dividend Payout Ratio (Right)

50
25
0

’23/3
Total Return Ratio (Right)

Financial Information
Please visit the SUBARU website for details about financial information.

https://www.subaru.co.jp/en/ir/library/index.html
Integrated Report 2023

35

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Quality Enhancement

Since launching activities in 2018 to achieve Quality Enhancement, we have been taking actions in three areas: 1)
Thorough implementation of a “Quality- First” mindset and reinforcement of organizational efforts and structure, 2)
Execution Quality enhancement, and 3) Innate Quality enhancement. Through efforts in these areas, we are steadily
reducing the number of recalls (including the number of vehicles affected) and total costs related to quality. In 2023,
we launched the new Crosstrek and Impreza, which have incorporated these three quality enhancement activities fromthe vehicles’ respective planning stages. The SUBARU Group will continue to pursue “Monozukuri Innovation” andunflaggingly evolve its quality enhancement activities. Even in this era of change, including accelerating electrification,
we will always pursue quality that delivers happiness to our customers.
1

Thorough Implementation of a “Quality-First” Mindset and Reinforcement of Organizational Efforts andStructure

We are consistently conducting regular activities to raise quality awareness for each and every SUBARU employee. These
include in-house quality education tailored to each employee's level of knowledge and experience, and the Quality Caravan,
which introduces actual cases of defects that have occurred and prevention measures. In addition, we set up the FAST* quality
improvement team in 2021 in the North America market, creating a speedy market response system. In this team, quality
assurance and development functions work in unison with service functions at dealerships to address issues.
* FAST: Fast Action & Solution Team

2

Execution Quality Enhancement

This initiative aims to prevent the occurrence of defects during the vehicle production stage, and includes activities to rapidly
resolve defects that have occurred in the market. We have increased the speed at which we improve execution, including the
expansion of QA (Quality Assurance) Lab facilities to enhance investigation capabilities and expand the scope of application ofparts traceability. As of 2022, we have also launched operations at our new final vehicle inspection building so as to carry out
more rigorous inspections. We intend to gradually roll this out to each production line going forward as well.
3This initiative aims to prevent the occurrence of defects during the vehicle development stage. We have given greater authority
to employees responsible for development and have worked to ensure quality throughout all processes, from the initial planningand conceptualization stages to development, design, production preparation, and distribution. In addition to taking rigorous
action to prevent recurrence of past defects occurring in the market and similar defects that could occur, we are also working
at the development stage to deliver defect-free vehicles to customers through focused change point management to prevent
defects in newly adopted parts and systems.

Accelerating Quality Enhancement in Three Areas, as a Top Priority

2

Innate Quality
Enhancement

Execution Quality
Enhancement

Ensure quality from the very start of development
down through component logistics and production

 onstruction of a new final vehicle inspection
C
facility (partially operational as of August 2022)

Fully check past issues in development, production, and suppliers
Identify changes in new parts and systems and prevent issues before they occur

Swift response to quality issues

 larify the quality responsibilities of the Project General
C
Managers in charge of product development and enhancetheir authority
 tricter development process where meeting criteria of eachS
quality gate (checkpoint) is given top priority

1

1. We will deliver long-lasting products that our customers can use with peace of mind.
2. We will continually improve our products and services by always listening closely to our customers’ voice.
3. W
 e will be a good corporate citizen in all markets where we do business by ensuring compliance withall internal rules, local laws, regulations and social norms.

Quality Caravan
The Quality Caravan is a two-month internal event beginning in November of each year. Since its inception in 2018, thisevent has sought to build a culture encouraging all employees to take the customer’s perspective and put quality firstthrough learning about the current state of SUBARU’s quality. Panels are displayed to explain the details of quality defects
and the comments received from customers. In FYE March 2023, its fifth year, the Quality Caravan was themed on changing
mindsets and changing behavior with regard to quality through an understanding of the customer connections that lie
beyond the work that we do. Information was gathered from dealerships and the Customer Support Department, whichhave close relationships with customers, and a dramatized video was created to show how customers were affected by theactual problems that occurred.
In a questionnaire conducted after the event, participant comments included that their actions had shifted toward agreater awareness about not only avoiding defects but also providing peace of mind to customers. We believe thatcomments like these have led to the practice of continually improving our products and services by always listening closely
to our customers’ voice, as stated in SUBARU’s Quality Policy.

The FAST Quality Improvement Team for the North American Market

Innate Quality Enhancement

3

Quality Policy At SUBARU, quality is our highest priority as we earn the trust of our customers.

Early detection of defect trends based on analysis using AI
Direct gathering of quality data via telematics systemsE arly determination of the scope of affected parts withtraceability systemsN ew QA Lab facility for enhancing our capability toinvestigate defects

In January 2021, we launched “FAST” in the U.S. to strengthen our quality assurance system in North America, a major
market for the SUBARU Group. In the North American market, which constitutes an enormous amount of both SUBARU
vehicles sold and owned, our most important task is to quickly and accurately ascertain information and improve the speedof our quality improvement actions.
FAST is a cross-national and cross-organizational team consisting of personnel from each of SUBARU’s divisions andheadquarters, as well as from Subaru of America, Inc., Subaru Canada, Inc., and North America subsidiaries (North America
Subaru, Inc., Subaru Research & Development,Inc.) Furthermore, we are strengthening cooperation between SUBARU and
our U.S. production base (Subaru of Indiana Automotive, Inc.) to improve quality through all-SUBARU initiatives. At its
inception, FAST consisted of 42, and has gradually increased in team size. As of March 31, 2023, a total of 77 people,
including 61 people assigned from SUBARU, are working on quality improvement activities as part of the FAST team.

Canadian dealerships(Subaru Canada, Inc.)

FAST

Servicefunction

U.S. dealerships(Subaru ofAmerica, Inc.)

Subaru Research &Development, Inc.

North American
Subaru, Inc.

Servicefunction

Development
units

Qualityassurance units

SUBARU
Strongercollaboration
Strongercollaboration

Qualityassurance units

Productionunits

Development
units
Subaru of Indiana Automotive, Inc.
Production
units

Thorough Implementation of a Quality-First Mindset and Reinforcementof Organizational Efforts and Structure

Redefine goalsQ uality awareness, reflection activities

In April 2019, Quality Policy revised for the
first time in 25 yearsF ull revision of the quality manualQ uality Caravan eventsC ompany-wide efforts to prevent lessons learnedin the past from fading away

36 Integrated Report 2023

 einforcement of organizationalR
structureN orth American quality team FAST

Since the launch of the FAST team, the number of defects and buybacks, which had been an issue in the North American
market, has steadily declined. Going forward, we will work to accelerate resolution of quality issues, including those of ourbusiness partners, through participation in external manufacturing quality improvement activities at Subaru of Indiana
Automotive, Inc. and by expanding our local parts survey function.

Integrated Report 2023

37

Value Creation Story

QA Lab
The QA (Quality Assurance) Lab is a new facility at the Oizumi Plant within our Gunma Plant. At this facility, we investigate
the causes of defects in parts returned from the market. The QA Lab was established to serve three purposes: 1 To
accelerate the process of determining defect causes, 2 To perform independent investigations separately from thedepartments and business partners that had been investigating defects, serving an audit function, and 3 To create ahuman resource development function to support entities requesting investigations so that they can use analysis devices
and conduct their own analyses. Full-scale lab activities began in April 2022, and we are working to install the latest
equipment to enhance its functionality.

BEFORE
Parts return

Investigation
requestResult sharing

Countermeasureformulation

Countermeasures

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

processes at undercarriage using a lowered floor to reduce theburden on inspectors, and a wide conveyor that moves across theentire floor so that inspectors can concentrate on inspection
without walking from place to place. These standard inspectionlines offer flexibility and expandability to accommodate BEV*
production, and will be passed on to the dedicated BEV line at the
Oizumi Plant, which is currently under construction.
In addition, we operate a training facility equipped with thesame facilities as the standard inspection line to enhance ourvarious training programs for inspectors (including inspector
candidates).
We are also taking actions to share digital data from final
vehicle inspections with other functions, including development,
manufacturing, and services, to help improve quality.			
* Battery electric vehicle

Markets
Quality assurance
departments

Supplier/Specialized
departments

Quality Assurance
Division

Designdepartments

Quality is at the foundation of the SUBARU brand,
and we will continue to deepen our quality
enhancement efforts.

AFTER
Parts return

Investigation
requestResult sharing

Countermeasureformulation

Markets3

Primary
investigation
QA Lab1

Root cause
analysis

2
Continued
investigation
Supplier/Specialized
departments

New Final Vehicle Inspection Building
At the Gunma Plant, we are working to strengthen and restructure
quality assurance at the plants on its premises. After thoroughly
analyzing the inspection process, which differed from one
production line to another, a unified standard inspection line wasestablished to enable ease of inspection and create anenvironment allowing inspectors to focus on the inspection
process. In August 2022, the No. 5 Final Vehicle Inspection
Building at the Yajima Plant began operations, and in August
2023, the No. 3 Final Vehicle Inspection Building began
operations, both featuring these unified standard inspection lines.
Specific features of these inspection lines include standardized
lighting facilitating easier detection of abnormalities, inspection

38 Integrated Report 2023

Auditing

Designdepartments

Countermeasures

Our efforts in quality enhancement, a top priority since 2018, havebeen showing results. These include a steady decline in the number ofOsamu Eriguchi
recalls and vehicles affected, as well as total costs related to productSenior Vice President
quality. During these efforts, we have also thoroughly instilled a
Chief Quality Officer (CQO)
Company-wide quality-first awareness, firmly imprinting quality as
part of SUBARU’s DNA. Still, today’s automobiles feature increasingly
larger and complex control systems, requiring unprecedentedly high levels of quality. In addition, weare committed to “Monozukuri Innovation,” announced in August 2023, which calls for higher density indevelopment, manufacturing, and the supply chain, and we intend to firmly root our quality enhancement
within these innovation efforts so as to continue providing reliable quality to our customers.
Furthermore, all of our functions will work together to resolve customer concerns and improvecustomer satisfaction in the area of after-sales service as well. When addressing defects, we will quickly
take measures from several angles, including supplying repair parts to the market and reducing repair
times, in addition to improving our production lines. In this way, we will take efforts as a unified SUBARU toeliminate customer concerns as quickly as possible.
In addition, every year on October 26, we conduct Company-wide efforts to prevent lessons learnedin the past from fading away. In these activities, all employees consider the cause of improper final vehicle
inspections and what actions they should take if such an incident were to occur in their own work. In
FYE March 2023, these activities included a presentation on the new final vehicle inspection buildings.
Presentations to all employees also included positive comments from inspectors looking back on the leadup to the new inspections, saying they wanted to transform the overall Company from their position at the
final vehicle inspection site. These annual efforts are part of our work to dig deep and determine the root
causes behind improper final vehicle inspection and bring about substantial corporate culture reforms.
Quality is at the very foundations of the SUBARU brand. Our goal is making SUBARU a brand that ourcustomers will choose for its quality, even in the age of electrification.

Integrated Report 2023

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Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Cultivating Human Resources

Human Capital Management to Become a Company “Delivering Happiness to All”
In the rapidly changing business environment, the SUBARU Group is committed to human capital management with theapproach that the human resources that drive our operations are the foundation of our competitiveness and sustainable growth.
We believe that creating competitiveness comes from linking the growth of the individual, in which people think and act on theirown initiative in response to various changes, to the growth of the organization. To achieve this, we have been taking a range of actions
focused on encouraging autonomy, polishing individual ability, and building empathy, under priority themes such as human resource
development and corporate culture reforms, with the goal of building human resources who will lead the future of SUBARU.
In order to be a powerful driver of the impending wave of vehicle electrification, we will use our new management structure tofurther deepen these efforts and build an environment where these innovation leaders, who will bring about Monozukuri innovationand value creation, can fully demonstrate their abilities. By linking the growth of the individual to the growth of the organization inthis way, we will continuously strive toward our vision of becoming a company “delivering happiness to all.”

Becoming a company“Delivering Happiness to All”
VisionProviding “Enjoyment
and Peace of Mind”
Monozukuri
Innovation

Value
Creation

Expected
benefits

Boosting employee engagement

Measures initiative

Empowerment of diverse
human resources

Creating a vibrantworking environment

Human resource developmentencouraging autonomy
and taking on challenges

Diversity Management

Health Management

Empowerment of female employees
Mid-career/highly-specialized humanresources
Promotion of non-Japanese employeesE mployment of people with disabilities
Empowerment of senior citizen
employees

Health checkups and guidance

Reskilling and upskilling
Career interviews
Open-call job rotation
Assessment and remuneration
Selection of young talent

SUBARU promotes various initiatives where the ideal employee is defined as someone who continues to take on new
challenges independently based on their affinity with SUBARU’s philosophy. In these initiatives, we encourage employees toautonomously develop their capabilities and take on challenges, supporting the growth of the individual.

(1) Building resonance through the SUBARU Vision
Awareness Program
In our SUBARU Vision Awareness Program conducted for all
employees, we aim to create a strong organization in which diverse
employees work as one toward a unified vision through autonomous
demonstration of their respective outstanding abilities.
The program uses videos and mutual discussion amongcolleagues in the same workplace to encourage participants toconsider SUBARU’s vision to become a company “Delivering
Happiness to All” and to understand how their daily work isconnected to the happiness of SUBARU’s customers. At the same
A SUBARU Vision Awareness Program sessiontime, the program aims to build resonance with SUBARU’s vision andto encourage each employee to act autonomously. According to theresults of a survey of participants conducted in FYE March 2023, approximately 70% of employees said that the program waseffective in creating a deeper understanding about “delivering happiness to all.” Based on these results, in FYE March 2024,
we will further encourage a sense of ownership and autonomous action among employees that will boost resonance to evenhigher levels.

(2) Supporting employees’ autonomous career development and encouraging growth of the individual

Growth of the individual
and the organization

Autonomous skill development

Human resource development polishing individual ability andencouraging autonomy and taking on challenges

Mental healthcare
Hybrid work, work style reform
Improving health literacy

We employ a multi-pronged approach to supporting our employees’ career development. In individual career planning, acareer design sheet is used to visualize future career goals based on self-understanding, including one’s own experience, skills,
and strengths. Each individual’s thoughts and ideas about their career are then shared with the workplace through careerinterviews with supervisors. Based on the shared career plan, supervisors provide tailored support to each individual, creatinga system that allows employees to develop their careers autonomously. In addition, we offer age-based career planningtraining, in which participants learn optimal career planning methods and tackle questions about their own careers from a
broad range of perspectives through interaction with employees of around the same age. Another program is career
management training, in which participants learn the essential mindset and skills required of supervisors when they conduct
career interviews.
An annual PDCA cycle is used to evolve each of these initiatives. For example, in a survey conducted after an age-based
career planning training program, many participants commented that it offered valuable time to assess their careers and that it
helped clarify how to create a career vision and determine where they need to work on going forward. These comments
informed our decision to enhance our activities here, including gradually expanding the age ranges covered by this program.

(3) Knowing the outside world to spur challenge with an accurate sense of urgency
Corporate Culture Reforms
Vision Awareness Program

Dialogue with the President

Employee attitudes survey

Improving productivity, workplace improvement activities

PolicyPolishingindividual ability

Encouraging
autonomyD ialogue with leaders at other companies

Building
empathy

In order for SUBARU to maintain its growth going forward, we believe it is essential for each individual to know the outsidecompany, take on challenges proactively with an accurate sense of urgency, and lead the organization.
As part of our efforts to help individuals know the outside world, leaders in corporate management from outside SUBARU
were invited to deliver lectures to our own leaders (managers and section leaders) in FYE March 2023 on the theme of“Leadership for Survival into the Future.” These management leaders from a total of seven companies delivered lectures
expanding participants’ horizons and helping them think independently about how to demonstrate their own leadership inthese rapidly changing and uncertain age.
In our efforts to cultivate and generate managerial talent, each selected employee participates in external courses
according to the issues they face and the skills they wish to develop, and by applying the knowledge and inspiration gained

Cultivating human resources for sustainable growth

40 Integrated Report 2023

Integrated Report 2023

41

Value Creation Storyfrom outside to their work within the Company, they develop their ability to lead SUBARU into the future. We also offer
elective external open lectures for all employees, actively providing opportunities for them to learn about the outside world sothat many employees can engage in their work with a broader perspective.

(4) Providing career choices through open-call job rotation
SUBARU introduced an open-call job rotation system in FYE March 2022 as a scheme to support employees in the career plans
they have developed for themselves. Under this system, employees voluntarily apply for open positions offered by eachdepartment, and if conditions are met for both sides, the employee is transferred. More than 100 employees have taken
advantage of this system to capture new career opportunities. As of FYE March 2023, we have launched a new initiative
offering open-call recruitment to young employees for positions that involve overseas assignment. This has helped launch
career development overseas for our motivated talent.

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Diversity Management for Long-lasting Growth
The SUBARU Group aims to continue creating the unique value provided by the SUBARU brand. To achieve this goal, SUBARU
employees with a diverse range of individual characteristics and values need to be able to fully utilize their own unique talents
and to be encouraged to create innovation. This is why SUBARU respects diversity in the form of gender, nationality, culture, andlifestyle, and strives to create a positive workplace environment for everyone. SUBARU is committed to empowered and fulfilling
careers with respect to human resource diversity, including for women, mid-career hires, people with disabilities, non-Japaneseemployees, and LGBTQ+ individuals. To this end, in January 2015, SUBARU established the Diversity Promotion Office, and has
been expanding systems, assigning the right people to the right positions, cultivating human resources, and promoting them tomanagement positions.

Promoting active roles for female employees(Comments from open-call job rotation users)
The system allowed me to utilize my cultivated skills in new areas, creating a feeling of broader career options.
 he ability to take a new job in a completely different area has allowed me to take on new challenges and grow asTa person.

Upskilling Engineers for New Value Creation
The creation of new technological value is essential for SUBARU to continuously meet customers’ expectations, which
fluctuate with the market. SUBARU is actively working to upskill its engineers, a process adding new technical skills
required in the era of the electric car to the technical skills cultivated in internal combustion engines and reinforcing
technical skills that embody the SUBARU-ness.
In particular, given that areas related to software will determine how well a company generates technological value,
we launched the Software Human Resource Development Project within our engineering department in FYE March 2023.
This project aims to cultivate human resources capable of developing software that will innovatively enhance the value of
automobiles.
Specifically within this project, we launched a training program for acquiring software skills at different levels in October
2022. This training program has two major course branches, one for new employees and one for existing employees. In eachof these branches, courses are offered at the introductory, beginner, intermediate, and advanced levels.
All of the approximately 170 new employees who joined the engineering department in FYE March 2023 havecompleted the beginner level of the training program for new employees. Approximately 10 participants have advanced
to the advanced level and are continuing their training.
In the training for existing employees, an introductory level course on software literacy was conducted for all of theapproximately 4,000 engineering department employees. Currently, approximately 200 of these employees are taking the
beginner level course.
In addition, in order to utilize the skills acquired in these training programs in practice and link them to the creation oftechnological value, we are also studying and implementing the optimal allocation of human resources.

At SUBARU, we believe the empowerment of women is important to our sustainable growth. It is based on this belief that we
support female employees in their pursuit of career development and in their efforts to balance work and childcare as two key
issues. We also provide health support to ensure that female employees can sustain their careers through various life events.
Regarding support for career development, we place special emphasis on nurturing female managers. We have set a goalof doubling the number of female managers by 2025 compared to 2021. In FYE March 2023, we implemented various initiatives
aimed at supporting female employees aspiring to become managers. These initiatives included the promotion of the
Women's Leadership Program (WLP), which provides guidance and education tailored to each employee, organizing diverse
training programs to help individuals shape their own career paths, andestablishing a training system that includes dialogue sessions withfemale executives through an executive forum aimed at further
enhancing the contributions of female managers. We have also worked
to create a culture and workplace environment that promotes the active
participation of women through initiatives such as unconscious bias
training targeting managerial staff. As a result of these initiatives, as ofApril 2023, we have 31 women among the 1,095 managerial positions,representing an increase of approximately 1.3 times from the 24 female
managers in 2021.

An executive forum session

To support balancing work and childcare, we have introduced a work-from-home system from FYE March 2022 and abolishedcore hours in the flex-time system to facilitate flexible work styles for diverse human resources so that they can balance rewarding
work and fulfilling lives. In addition, for employees in direct departments, we introduced an early-morning childcare service by
qualified nursery teachers using in-house facilities in FYE March 2020. In FYE March 2023, we have expanded this to cover nights
and late nights in our efforts to help balance work and childcare.
Another initiative is the Women’s Empowerment Working 4’s Project, launched in FYE March 2023 under the leadership ofwomen working in our manufacturing department. This project’s goal is to bring about what is needed for women to shine much
more brightly, and includes improving facilities and holding round-tablediscussions.
For our future development, we recognize that it is necessary to
make improvements in the two issue areas of work styles and corporate
culture. To this end, we will further correct long working hours andencourage male employees to take childcare leave, as well as further
raise awareness in the workplace and among managers through various
training programs, and promote active roles for female employees.
A Women’s Empowerment Working 4’s Project session

A software training class for new employees (beginner level)

42 Integrated Report 2023

Integrated Report 2023

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Value Creation Story

Foundations Supporting Value Creation

Commentary on Strategy

Corporate Data

Boosting Employee Engagement and Reforming Corporate Culture for a More Robust Foundation

Strengthening mid-career recruitment
SUBARU has been actively promoting mid-career recruitment in recent years to respond to changes in the businessenvironment and achieve sustainable growth. There were 4,161 mid-career hires working as regular employees (approximately
24% of all regular employees) as of the end of March 2023, and 175 of them were in management positions (approximately
16% of all managers).
In addition, at the SUBARU Lab AI development base established in Shibuya, Tokyo in December 2020, we are working toenable smooth and targeted hiring of human resources required for AI development. As of April 2023, 13 employees play
active roles in this area within SUBARU.

Promoting employment of people with disabilities
In accordance with the April 2023 Human Resources Department Policy on Employment of People with Disabilities, the
SUBARU Group strives to create workplace environments in which people with disabilities can truly shine. Under this policy, we
are working to improve understanding among employees to ensure that those with diverse personalities, regardless ofwhether they have disabilities, can work with peace of mind and excel in the workplace. This is achieved through training
regarding the employment of persons with disabilities provided within SUBARU and our Group companies.
In FYE March 2023, our specified subsidiary SUBARU BLOOM Co., Ltd., thelargest employer of people with disabilities in Gunma Prefecture, received
recognition for its long-standing contributions with the Gunma Prefecture Governor'sAward as an excellent company for employing people with disabilities. As of June
2023, SUBARU BLOOM has 82 employees with disabilities on its roster.
As a result of various initiatives, as of June 2023, the SUBARU Group has 326
employees with disabilities, and the percentage of employees with disabilities(including at our special subsidiary company and affiliated companies) is 2.47%.

SUBARU conducts the Employee Attitudes Survey to assess changes in employee awareness and the workplace environment using
objective data, and utilizes its results as a KPI for the evaluation of the Company’s efforts. Survey results are also used to identify
issues and formulate countermeasures at each workplace, and are utilized in personnel policies and corporate culture reform
efforts. Evaluation results become part of our PDCA cycle as we work to become a company “Delivering Happiness to All.”
Employee engagement is a rating in the Employee Attitudes Survey that reflects fulfillment from work and pride in thecompany. We are implementing various initiatives aimed at boosting this rating to 70% by 2025. This indicator has also beenused in qualitative (non-financial) evaluation for executive compensation since FYE March 2023. In the FYE March 2023 survey,
employee engagement results showed a downward trend (from 50% to 47%), due in part to instability in the global economy
and social conditions.
Various Initiatives Aimed at an Employee Engagement Rating of 70% by 2025

Employeeengagement

Results of the Employee Attitudes
Survey Percentage of those who feel both pride in the company
and fulfillment from their work
Target for 2025(%)
80

Fulfillment fromwork

Pride in thecompany

Management by supervisors andinterpersonal relations
Opportunities for improving abilities

Identifying withthe corporate philosophy
Keeping up with changes at SUBARU

70%

70
60

49

50
40

46

42

50

50

47

2020

2021

2022

30
2017

2018

2019

2025 (Year)

Implementation of Various Measures Related to both “Fulfillment from Work” and “Pride in the Company”
Initiatives to boost engagement

A supervisor checking work

Senior executive management

Management level

General employees

Promoting Non-Japanese Employees

Message from the President

Facilitation and coaching training

SUBARU Vision Awareness Program

The SUBARU Group hires human resources best suited to the policies and business activities of each location, regardless of
their nationality. SUBARU employs 88 non-Japanese employees as of the end of March 2023. There are three non-Japaneseemployees in managerial posts at IT, engineering, and manufacturing departments. In our manufacturing department, where
there are a number of non-Japanese employees employees, work instructions for our processes are translated into fivelanguages to facilitate communication and support active roles for our non-Japanese colleagues.

Executive engagement declaration (includes KPIs)
Use of employee engagement index improvementfor director compensation evaluations

 ompany-wide disclosure of Employee Attitudes
C
Survey results and employee engagement rating bydepartment/office (planned) nhance understanding of SUBARU through TeamE
Window*

Ongoing communication of future strategy

Career interviews

Activities in cooperation with labor unions

Dialogue with the President

Visualization within the talent management system

Workplace environments, etc.
Health management

Initiatives for the LGBTQ+ community
The SUBARU Group’s Human Rights Policy prohibits discrimination based on gender, gender identity, expression, and sexual
orientation. To ensure that all employees have a proper understanding of sexual diversity, we conduct employee awarenessactivities and increase the number of allies (LGBTQ supporters) throughout the year.
In FYE March 2022, we set up an external hotline employees can use to consult about LGBT-related issues. In addition, theDiversity Promotion Office regularly holds opinion exchanges with members of the LGBTQ+ community to help provide themwith a workplace offering peace of mind. At our internal LGBTQ+ seminars, participants have the opportunity to hear
unfiltered comments from people identifying as LGBTQ+, learning about the attitudes and knowledge needed to support
them. In addition, as part of activities to increase the number of people who have an understanding of LGBTQ+ issues, we arerecruiting internal allies to share information on related events and improve understanding within the Company. In FYE March
2024, as a member of the LGBT-Ally Project, we will work to support the community while interacting with other companies,
including through the Tokyo Rainbow Pride event.

Smile Up Project

Responses to new work styles

Wages

Welfare and benefits* Team Window: An initiative for building a more robust organization by conveying information and facilitating discussion among members representing all departments

Survey participation was strong, with 97% of all regular employees responding in FYE March 2023. Our analysis of the FYEMarch 2023 survey suggests that the impact of temporary factors such as poor performance due to unstable operating
conditions during the COVID-19 pandemic and uncertainty about future market conditions led to the lower overall score.
Based on these results, in FYE March 2024, we will work toward greater employee understanding by providing timely and easyto-understand information on SUBARU‘s future strategies and on its management, as well as by creating opportunities for
dialogue, as part of our efforts to eliminate uncertainty about the future.

Response rate of questionnaires

100%
95%

91%

95%

2021

2022

2019

2020

80
70

62

60

60

97%

90%

90%
85%

94%

2023

70
56

54

(FYE March)

64

50
40
30
20
10
0

Bronze certification in the PRIDE Index

44 Integrated Report 2023

External consultation service informational cards distributed to employees

Communication,
Open culture
2019

2020

2021

Work-life
balance2022

2023

Opportunities
for improving
ability

Empathy forthe corporate
philosophy

Workworthwhile

Pride inthe Company

Integrated Report 2023

45

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Six Priority Areas for CSR

We envision becoming a company “Delivering happiness to all.” To achieve this vision, we have adopted
the Six Priority Areas for CSR and will promote initiatives based on the SUBARU Global Sustainability
Policy and to fulfill our corporate social responsibilities, thereby providing “Enjoyment and Peace ofMind” to our customers and other stakeholders. The SUBARU Group aspires to be a truly global
company with sustainable growth driven by each and every one of its employees, and to contribute to
the realization of an enjoyable and sustainable society.

SUBARU Global Sustainability Policy
Until recently, the SUBARU Group promoted various initiatives in line with its CSR Policy, revised in June 2009. However, tocope with changes in the social environment and in relationships with our stakeholders, we established the “SUBARU
Global Sustainability Policy” in April 2020 as a guideline to be shared by all Group employees on a global basis.
This Policy is applied to Subaru Corporation and all its subsidiaries.

SUBARU Global Sustainability Policy

SUBARU Group’s Six Priority Areas for CSR

We, the SUBARU Group, are committed to sustainable business practices designed to promote harmony between people, society andthe environment in the following ways:

Process of Identifying the Six Priority Areas for CSR

1.	Through our business activities, we will contribute to the resolution of various social issues, including the protection of the global
environment, and to the creation of a sustainable society.

The SUBARU Group promotes CSR initiatives in the Six Priority Areas for CSR: People-oriented Car Culture, Resonance andCoexistence, Peace of Mind, Diversity, Environment, and Compliance.
To select the priority areas, the SUBARU Group first identified 41 CSR priority topics for which social needs were high andthen conducted a questionnaire among experts and investors in North America and Japan. The responses and opinions we
received were used in an assessment and exploration of these areas from two perspectives: areas in which we can engage thecommunity by leveraging our business strengths, and areas related to the demands of society. As a result, the SUBARU Group
selected People-oriented Car Culture, Resonance and Coexistence, Peace of Mind, and Diversity as the four areas where
SUBARU could engage our communities by leveraging our business strengths, and Peace of Mind, Diversity, Environment, andCompliance as the four areas where the SUBARU Group could work to meet the demands of society.
Peace of Mind and Diversity appear in both categories, because Peace of Mind is an area in which society’s needs and thestrengths of the SUBARU Group’s business coincide, while Diversity refers not only to diversity in the community, but also todiversity in a broad sense, including in the products that the SUBARU Group offers to customers.

In August 2023, SUBARU announced new management policy. Its priority areas in this policy are fundamentally
unchanged. Based on the SUBARU Global Sustainability Policy, SUBARU will pursue value creation on a Groupwide and global basis with the goal of becoming a company “delivering happiness to all.” We will also promote
initiatives in the Six Priority Areas for CSR, recognizing issues of importance to society and the SUBARU Group,with the aim of creating greater social value and economic value.
Reflecting SUBARU Group’s Six Priority Areas for CSR in Management

2.	Respecting the quality and originality of our products, we will continue to provide SUBARU’s unique value using advanced
technologies, and enrich the lives of all those involved with the SUBARU Group.
3.	As a good corporate citizen in the international community, we respect human rights, diverse values and individuality, and treat all
stakeholders with sincerity in every interaction.
4.	We strive to maintain and advance the workplace environment so that employees can work safely in peace, and with a senseof satisfaction.
5.	We respect international rules and the laws and regulations of each country and region, as well as local culture and customs,
and pursue fair and transparent corporate governance.
6.	We make use of dialogue with stakeholders to make management decisions, and disclose corporate information in a timely andproper manner.

Six Priority Areas for CSR: Visions for 2025 and Relevant SDGs
The Sustainable Development Goals (SDGs) for 2030 are development goals for achieving a sustainable future, and the
SUBARU Group recognizes the importance of responding to these goals.
By clarifying visions for 2025 regarding the Group’s Six Priority Areas for CSR, SUBARU will reinforce its efforts in eachpriority area and make positive contributions toward achieving the SDGs. Specifically, we acknowledge that the SUBARUGroup’s initiative to achieve a goal of zero fatal traffic accidents* in 2030 contributes to Target 3.6 of the SDGs: “By 2020, halve
the number of global deaths and injuries from road traffic accidents.”*Zero fatal traffic accidents among occupants of SUBARU vehicles and people involved in collisions with SUBARU vehicles, including pedestrians and cyclists.

SUBARU Group

SUBARU

Six Priority Areas for CSR
People-oriented
Car Culture

Executive Management
Board Meeting

Reflection
in management

Priorities specific
to SUBARU

Board of Directors

Resonance andCoexistence

Visions for 2025

Relevant SDGs

SUBARU believes that a car is more than just a means of transport.

make the car a partner that enriches people’s lives and minds, whilecherishing the human emotions of “Enjoyment and Peace of Mind.”

Information disclosure
Board of Directors
and dialogue

Society’s
expectations

Resonance andCoexistence

SUBARU will become a company that is trusted by, and resonatesand coexists with, both individual customers and society as a wholeby engaging seriously with their voices through greater person-toperson communication.

Become a company that is widely trusted by, resonatesand coexists with society.

Peace of Mind

SUBARU will become a company that provides all stakeholders withthe utmost peace of mind.

Become a company that provides the utmost peace ofmind to all stakeholders.

Diversity

The SUBARUu Group’s approach to promoting diversity has two key
elements: offering products that respect diverse forms of market
value, and respecting and reflecting the diverse values of all those
who work for the SUBARU Group.

Promote businesses that create diverse forms of market
values while respecting the diverse values of all people.

Stakeholders

Diversity
Areas related to thedemands of society
Priority areas selected from issues
regarded as critical by experts andinvestors in North America and Japan

Compliance

SUBARU Global Sustainability Policy

46 Integrated Report 2023

Basic Concepts

People-oriented SUBARU will foster a sustainable mobility culture by providing
Become a company that enriches people’s lives andcustomers with added value in the form of products and services which minds as a partner.
Car Culture

Priority areas selected from thebusiness strategy perspective

Peace of Mind

Environment

Six Priority Areas for CSR

Areas in which the Company can
engage communities byleveraging its business strengths

Environment

In order to pass on “The earth, the sky and nature,” SUBARU’s fields
Cherish and protect the global environment—The earth,of business, to future generations, we provide utmost care to thethe sky and nature—through Group-wide activities.
environment with our company-wide activities.

Compliance

SUBARU will become a company that operates in accordance withlaws, regulations, and societal norms, ensuring that our focus oncompliance as a priority permeates throughout and is practiced by
all those who work for the SUBARU Group.

Act in good faith and become a company that is trusted
by and resonates with society.

Integrated Report 2023

47

Value Creation Story

Foundations Supporting Value Creation

Commentary on Strategy

Corporate Data

Activities in the Six Priority Areas for CSR in Relation to SDGs
Six Priority
Areas

Relevant
Stakeholders

Vision/KPIs(FYE March 2026–FYE March 2031)

Initiatives

ThemesFYE March 2021

FYE March 2022

FYE March 2023

FYE March 2024

FYE March 2025

Enjoyment ofdriving a car

Evolution of SUBARU Global Platform and Integration with Intelligent Technology(Achieving safe and enjoyable driving with peace of mind like a skilled driver)

Providingenjoyment ofcustomization

Development of high-quality accessories matched with new models

FYE March 2026

Customers
Enhancing thebrand image

Proposing new formsof mobility
Localcommunities

Disseminating car
cultureSix Priority
Areas

Promotion of marketing activities that match the characteristics of each market
Promotion of motorsports and continuation of awareness-raising activities
Advancement of Subaru’s “Dynamic x Solid”
design identity to “bolder” expression“Designing experiences” with a focus on resonance with customers
under the vision of “Earth-tainment: Enjoying the Earth Together”

Proposing new forms of mobility andresearching technology unique to SUBARUTechnology development toward realization

Customers

Business
partners

Coexistence and mutual
prosperity with business partners

Resonance andCoexistence

Utilizing diverse
human resources

Employees

Creating a safe
workingenvironment

Creation of a safe and rewarding workplace environment, building of a brand that is loved by employees
Continuation of production operations and maintenance of employment at each site

11.2

Business
partners

Efforts in cooperation
with business partners

Customers

Providing a wide
range of products

Customers
KPI• Continue satisfaction surveys.
(Improve customer
satisfaction.)• Enhance connection withcustomers through theInternet of Things (IoT).
(MySubaru, the nextgeneration system,
telematics)

11.2

Popularizing vehicles
that reduce
environmental impact

Environment

Governments

Business to help
reduce environmental
impactBusiness
partners

Environmental activities
in cooperation withbusiness partners

Peace of
Mind

Securing andimproving quality

Placing of the highest priority on quality by implementing quality caravans and providing education for fostering
quality awareness
Collaboration with business partners
Optimization of the span of management in manufacturing departments

5.5
5.5.2

8.5

Incorporation of feedback on diverse market needs
Design parts that can be used in multiple vehicle models

Development and sale of EVs (BEVs and SHEVs)
BEV development

Launch of Solterra, global rollout and sales expansion of BEVs

Energy conservation investment and effective utilization of facilities

Efficient parts storage and transportation

Cherish and protect the global
environment—the earth, thesky and nature—throughGroup-wide activities.
KPI• Reduce CO2 emissions by
60% regarding plants andoffices (Scope 1 and 2) fromFYE March 2017 levels by FYEMarch 2036 (total volume
basis).
• In 2030, aim for 50% of
SUBARU global sales to be BEVs.
• Apply electrification
technologies to all SUBARU
vehicles produced and soldworldwide by the first half ofthe 2030s.
• Formulate a resource
circulation strategy including
secondary batteries.

13.1
13.2

12.2
12.5

Promotion of retailers’ continuous efforts for energy saving, water quality conservation, and recycling

Reinforcement of security and export control initiatives

In-house educationand dissemination

Promotion of compliance from the perspective of the SUBARU Group
Establishment, dissemination, and management ofinternal rules and manuals on laws and regulations

Act in good faith and become
a company that is trusted byand resonates with society.

Prevention of harassment

Strengthening product supply capacity (parts center capacity increase plans/parts supply system improvements)

Improvement of quality in all processes, from product planning to production, sales, and service

KPI ouble the number of female•Dmanagers by 2025 compared
to 2021.
•T he number of participants incareer development training•A chieve the legally prescribed
employment rate for persons
with disabilities.
•A chieve 100% in thereemployment rate of seniorcitizens wanting to work.

Compliance training

Governments

Establishment of a timely and efficient supply system of spare parts and accessories

Promotion of initiatives to produce vehicles of choice in terms of quality as well

Promote businesses thatcreate diverse forms of market
value while respecting thediverse values of all people.

Optimization of logistics and complete knockdown (CKD) costs

Ensuring comprehensive
export control

Implementing and sustaining EyeSight test rides (awareness-raising for advanced safety technology), etc.

Global penetration of maintenance system with high and consistent quality

Relevant
SDGs

Enhancement of the understanding of employees, promotion of cooperation with U.S. minority organizations

Establishment and maintenance of an environmental management system

Continuous enhancement of crash safety

Promotion of accurate, high-quality inspection and maintenance

CSR surveys, awareness-raising, and stronger CSR initiatives in the supply chain with business partners

Promotion of lighter, electric, and biofuel aircraft

Contributing to local communities through stronger cooperation with nonprofit organizations (NPOs)

Developing autonomous flight control systems (collision avoidance technology, fault-tolerant system improvements)

Improving inspection
and maintenancequality

Diverse work styles: Labor management to back up work-life balance and support for hybrid work leading to
improved productivity

Continuation of conservation efforts in cooperation with governments

Contribution and relationship-building through sporting activities

Expanding enhanced safety functions since FYE March 2021

Customers

Examination and promotion of a workplace environment that pays due consideration to minorities in society

Introduction of hydroelectricity and green electricity

17.16

Adoption of Advanced Automatic Collision Notification (AACN) system and expansion of its functions

Establishing andstrengthening a
reliable product supply
systemOperation of the human resources system for senior employees

Introduction of solar power generation for self-consumption

Advancement of Advanced Driver Assistance System (ADAS)

Contributing to safe
driving

Six Priority Areas for CSR

Creating workplaces where female employees in direct departments can thrive
and play an active role

Establishing appropriate disposal schemes for EV batteries

Community support activities during disasters and pandemics

Improving safetyfunctionsFYE March 2026

Expansion of the sale of EVs (including models with e-BOXER)

Become a company that is
widely trusted by, resonatesand coexists with society.

Reinforcement of community exchange and partnership activities

Revitalizing
relationships withlocal communitiesFYE March 2025

Acquiring new knowledge through proactively recruiting external human resources

Promote diverse
work styles

Utilization of athletic teams, boosting of employee morale

Local
communitiesFYE March 2024

Compliance with the legally prescribed employment rate for persons with disabilities

Diversity

Efficient vehicle maintenance by utilizing IT and digital transformation (DX)

Reinforcement of efforts for occupational health and safety, improvement of plant environments

FYE March 2023

Promotion of active roles for non-Japanese human resources

Employees

KPI• Continue customer
satisfaction surveys.
(Improve customer
evaluation results.)

Enhancing the maintenance system for promoting EVs

Enhancing and strengthening the SUBARU Group’s telecommuting environment

Childcare support for female
employees in direct departments

Operation of the human resources
system for senior employees

9.1

Enhancement of customer loyalty

Building of relationships with business partners with CSR surveys, awareness-raising, and from CSR perspectives

FYE March 2022

Review of the human resources system for senior employees

Become a company thatenriches people’s lives andminds as a partner.

Providing products and services contributing to prosperous lifestyles

Establishing a newmaintenance system

FYE March 2021

Expanding the number of female managers

Dissemination of SUBARU’s manufacturing practice and its endeavors for “Enjoyment and Peace of Mind”

Development of a maintenance system for EVs

Vision/KPIs(FYE March 2026–FYE March 2031)

Initiatives

ThemesPromoting active roles
for female employees

Utilizing digital technologies to strengthen relationships with customers

Strengthening
relationships withcustomers

Relevant
Stakeholders

Expansion of the lineup of high-performance, value-added items
Promotion of the brand strategy (SUBARU, the Beloved Brand: More than a Car Company)

People-oriented
Car Culture

Six Priority Areas for CSR

Relevant
SDGs

Compliance
Become a company thatprovides the utmost peace ofmind to all stakeholders.
KPI• Achieve a goal of zero fatal
traffic accidents* in 2030.
*Zero fatal traffic accidents
among occupants of SUBARU
vehicles and people involvedin collisions with SUBARU
vehicles, including pedestrians
and cyclists.
• Improve impact energy
absorption ability to 1.4 times.

Employees/
Local
Communities

Protecting humanrights of workers

Maintenance and improvement of the workplace environment by promoting work style reforms and complying with
the Labor Standards Act
Implementing conflict mineral surveys
Establishment anddissemination of our
Human Rights Policy,
implementation ofdue diligence

3.6

Business
partners

Maintaining fairrelationships

Promoting initiatives to respect human rights

KPI• Promote initiatives to respecthuman rights based on the
Human Rights Policy;
Communicate the policy
throughout the entire
supply chain.
• Strengthen CSR procurement
management.
• Provide compliance and legal
trainings.

8.7
8.8

16.5
16.5.2

CSR surveys, awareness-raising, and stronger CSR initiatives in the supply chain with business partners
Promotion of fair trade on a continuous basis
Appropriate management of software license

Note: Development of products (vehicles) is based on a premise that they are equipped with the latest technologies yet affordably priced at the same time.

Continuation and reinforcement of activities of the health and safety committees

Employees

Creating a safe
workplace

Maintenance and enhancement of workplace health and safety, and promotion of a more comfortableworkplace environment
Formulation andimplementation of plans forhealth promotion initiatives

Reinforcement of health promotion efforts

Secure and create employment

Local
communities

Contributing tosafety of local
communities

Governments

Contributing to safe
lives of people

Promotion of plant
environment improvement

Promotion of a sense of trust regarding stable operations

Implementing community safety awareness activities
Reduction of environmental impact and prevention of pollution

48 Integrated Report 2023

Contribution to the creation of a society in which people’s lives and property are protected and people can enjoy
peace of mind

Integrated Report 2023

49

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Environment ~Climate change~

Declaration of Support for the TCFD Recommendations

Strategy

SUBARU recognizes that climate change is one of the most pressing global
issues, and has been working to disclose information on climate change. In
April 2023, it has declared support for the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD). For more information
on SUBARU’s disclosure of the TCFD’s recommended items, please see our
TCFD Content Index (https://www.subaru.co.jp/en/csr/tcfd/).

SUBARU recognizes that climate change action is one of the most critical issues to address. To address climate change-relatedtransition risks in policy and regulation, technology, markets, and other items, dedicated departments at SUBARU work to identify
uncertain climate change-related risks.

Main Risks Identified (Bolded items are identified as highly important risks related to the strategic reorganization of SUBARU’s production system)
Climate-related Risks

Business
Managementin GeneralIn the event that more rigorous climate change targets are set in various countries, SUBARU’s business could
be significantly affected.

Products

If SUBARU fails to meet fuel economy regulations imposed in various countries, the Company could incur
additional costs or losses related to negative incentives, such as fines or non-penal fines for legal violation,and credit purchase for unmet standards. Also, some of our products could fail to satisfy certain fuel economy
standards, resulting in restrained sales opportunities.

Production
Phase

SUBARU could incur rising costs due to fossil fuel use, not only because of geopolitical factors associated withpetroleum etc., but also carbon taxes, emission quotas, and other government policies and regulations.

Products

To promote electrification, it is crucial to ensure profitability for the entire product cycle ranging fromprocurement and use to disposal. Thus, it is essential to involve SUBARU’s upstream and downstream partners
in exerting efforts toward this end. Failure to do this could render the Company unable to meet the
profitability goal for the entire product life cycle.

Production
Phase

If use of renewable energy does not grow as expected, SUBARU could face slower progress in achieving its Scope 1
and 2 emissions reduction goals.

Marketrisk

Products

At present, it is difficult to predict technological progress and price optimization for electrification, which will
likely cause a substantial gap with the real state of market needs. In such a situation, SUBARU could incur
unnecessary and excessive R&D costs while facing a decline in customer satisfaction, resulting in unexpected
losses and reduced sales opportunities as well as hampered advancement of the Company’s electrification
efforts.
In addition, SUBARU views electrification as a steady medium- to long-term trend, and also anticipates thepossibility of its swift and sweeping penetration of the market at some stage. SUBARU could be unpreparedfor such prospect in terms of technology and timely product lineups, and thus suffer from a resultant loss of
product sales opportunities.

Reputationalrisk

Business
Managementin General

If SUBARU fails to implement adequate initiatives to achieve low-carbon/zero-carbon outcomes, its brandvalue could be harmed, which could affect the Company’s sales and recruiting ability. Capital costs could also
rise, due to increased difficulty in obtaining financing from investors.

Management System
Regulatory
risk

Transition risk

SUBARU has established the Environment Committee, which discusses measures from broad and medium- to long-term
perspectives that accommodate environmental standards required by future societies, and evaluates the progress of related
implementations and achievements. Management of climate change-related activities is included in the responsibilities of ourenvironmental management structure. Environmental risks and opportunities associated with climate change are assessed andmonitored at the Environment Committee. After discussion at the Sustainability Committee, major issues become the subject ofproposals and deliberations at the Board of Directors and the Executive Meeting, while particularly significant matters are subject
to deliberation within the Board of Directors before decisions are made.
In addition, in order to contribute to the realization of a decarbonized society through the reduction of CO₂ emissions throughout
the life cycle of our business activities, SUBARU holds monthly CN Promotion Meetings, bringing together departments
representing the five areas of “product use,” “materials and components,” “transportation,” “disposal,” and “manufacturing.” Inthese CN Promotion Meetings, members from each area worked together and shared information, formulated a master planfrom a medium- to long-term perspective, and took actions to visualize and mitigate emissions in each area in the interest ofachieving carbon neutrality by 2050. These efforts are overseen by the Environment Committee.

Main Risks Identified

Technology
risk

Governance Structure for Climate Change

気候変動関連のガバナンス体制
Board of Directors
Executive Management Board Meeting(Presided over by the chairperson: President and Representative Director)

Sustainability Committee
Physical risk

(Chaired by the President and Representative Director)

Environment Committee(Chaired by the Executive Officer in charge of the Sustainability
Division appointed by the Board of Directors)

Production & Environment
Subcommittee

Global Warming Prevention
Working GroupAcutephysical risk
Chronic
physical risk

Business
Managementin General

As an impact of climate change, extreme torrential rain will frequently cause floods in various locations, which could
pose risks of SUBARU’s operations being affected by disrupted supply of raw materials and submerged factories.
There is a possibility that SUBARU might suffer from shortages of natural resources used for tires and metal resources,
such as materials for automotive batteries used in electrification technologies.

Domestic Affiliated Companies‘
Environment SubcommitteeSubcommittee
Sales and Service Environment
Subcommittee

Main Opportunities Identified

Logistics Environment
Subcommittee
CN Promotion Meeting

Climate-related Opportunities

Product Use
Materials and Components

Market opportunity

If SUBARU advances its efforts to make products more environmentally friendly as planned and global climate change
mitigation/adaptation efforts progress adequately, the Company will be able to maintain its key markets while at the same timepotentially expanding in markets receptive to its offer of “Enjoyment and Peace of Mind.” In addition, through contributing toaddressing climate change issues, SUBARU could increase its brand value, thereby enhancing its sales and recruiting ability.
This could make it easier for the Company to obtain financing from investors, thereby lowering capital costs.

Energy source opportunity

Regarding energy use during the production phase, by transitioning to renewable energy while at the same time giving
due consideration to cost-effectiveness, SUBARU could overcome the risk of being exposed to price fluctuations involvedin energy derived from fossil fuels, thereby preventing future cost increases.

Transportation
Disposal
Manufacturing

50 Integrated Report 2023

Main Opportunities Identified

Note: T he risks and opportunities described above are based on past facts and currently available information, and may change significantly due to such factors as future
economic trends and the business environment facing SUBARU. The opportunities described represent those for SUBARU’s products to contribute to climate change
adaptation and do not anticipate climate change-related deterioration.

Integrated Report 2023

51

Value Creation Story

SUBARU explores climate change-related countermeasures in consideration of a variety of scenarios, including its own scenario
assuming carbon neutrality by 2050 (equivalent to the 1.5°C scenario), based on climate change-related policy trends in various
countries and information published by the International Energy Agency and other organizations. This exploration also incorporates
risks and opportunities recognized with respect to sustainable business activities. As an example measure, SUBARU has developed
an electrification strategy* that considers multiple scenarios, including one in which the percentage of electric vehicles sold in themarket increases significantly, as well as one in which the market penetration of electric vehicles increases modestly.
We are also advancing BCP*1 measures against flooding during torrential rainfall as a means of adapting to climate change. Thisaction is in consideration of the risk of increasingly severe natural disasters due to a lack of progress in addressing climate change.

Commentary on Strategy

In order to contribute to a decarbonized society, SUBARU has set long-term goals (long-term vision) for 2050 and mediumterm goals (milestones) regarding products (Scope 3) and plants and offices (Scope 1 and 2). These medium-term goals arereviewed as necessary according to the business environment, which is experiencing rapid, disruptive changes.

Category

Target Year

Examples of scenarios and their risks/measures
Example scenario risksof particular importance

Risk of limited sales
opportunities due to
products not meetingcertain fuel efficiency
standards
Penetration of BEVs

Increasing severity ofnatural disasters

Products

Businessmanagement

Corporate Data

Metrics and Targets*1 BCP: Business continuity plan

ScenarioFoundations Supporting Value Creation

Goal
2

Reduce average well-to-wheel* CO2 emissions from new vehicles (in operation) by 90%
or more compared to 2010 levels*3

2050
Measures

Products
Scope 3

Early 2030s
2030 uilding a production system that can dynamically adapt theBproduction ratio between BEVs, hybrids, and ICE vehicles,
keeping a close eye on environmental regulations and market
trendsRisk of market needdiverging fromelectrification technology

 stablishing an eight-model BEV lineup by the end of 2028 withE
400,000 BEVs sold in the U.S.

Risk of operations being
affected by disrupted
supply of raw materials andsubmerged factories as aresult of frequent flooding
in various locations fromextreme torrential rain

 aking measures against flooding by installing rainwaterTcollection tanks and strengthening drainage capacity*Electrification Strategy
https://www.subaru.co.jp/en/outline/about/policy/index.html

Plants and offices
Scope 1 and 2

Apply electrification technologies*4 to all SUBARU vehicles*5 produced and soldworldwide
Aim for 50% of global sales to be BEVs

FYE March 2051

Achieve carbon neutrality

FYE March 2026

Reduce CO2 emissions by 60% compared with FYE March 2017 (total volume basis)*2 Well-to-Wheel: Approach to calculating emissions including the emissions produced by the generation of electricity to be used by EVs and other vehicles.
*3 R educe total CO2 emissions calculated based on the fuel efficiency (notified value) of all SUBARU automobiles sold across the world by 90% or more compared2010 levels by 2050. Changes in the sales quantity due to changes in the market environment shall be taken into consideration, while minor changes in running
distance shall not.
*4 Refers to the technology used to foster the use of electricity for EVs, HEVs, and others.
*5 Excluding models supplied by OEMs.

SUBARU is naturally working to improve the fuel efficiency of gasoline-powered vehicles while turning its attention to
expanding its lineup of EV models, especially the development and supply of BEVs. We believe it will be especially
important to steadily promote the expansion of the above initiatives in order to reduce the amount of CO2 emitted fromautomobiles. The percentage of SUBARU’s EVs as a share of global sales in FYE March 2023 was 5.7%. However, we willgrow our earnings base in the BEV era by strengthening our supply capacity for EVs, including the start of in-house BEV
production in the mid-2020s in conjunction with the reorganization of our domestic production system, the launch of thenext-generation e-BOXER, and the addition of dedicated BEV production lines in the late 2020s. As we do this, we will work
to ensure a high level of financial soundness, taking actions in a sustainable structure toward our stated goal of aiming for
50% of SUBARU global sales to be BEVs in 2030.
Results and future plan of percentage of EVs sold (retail sales basis)

Risk Management
It is essential for the SUBARU Group to strategically conduct risk management while building a more robust managementfoundation and securing longevity of its business. We therefore believe it is important to create a SUBARU Group that has an
infrastructure that is resilient to risk to enhance our corporate value.
To address climate change-related transition risks, dedicated departments at SUBARU gather information from a wide rangeof sources and work to identify uncertain climate change-related risks from future projections. For the physical risks associatedwith climate change, the Risk Management and Compliance Office plays a pivotal role in establishing regulations in responseto these operational risks as part of the BCP*1 system. During emergencies, the office centrally collects Group-wide information,
establishing a system to manage company-wide responses.
Some items related to climate change are proposed and discussed at bodies like the Board of Directors and the Executive
Meeting, and particularly significant matters are subject to deliberation within the Board of Directors before decisions are made.

52 Integrated Report 2023(%)
50

Aim for 50% of
global sales to be BEVs

40
30

• Adding dedicated BEV production line
• Starting in-house BEV production• Equipping with next-generation e-BOXER
and other

20
10
0

2018

2019

2020

2021

2022

2030

Integrated Report 2023

53

Value Creation Story

The majority of the SUBARU Group’s CO2 emissions come from the use of the products it sells, and the SUBARU Group’s

Commentary on Strategy

Foundations Supporting Value Creation

CO2 Emissions (Scope 3)

direct CO2 emissions (Scope 1 and 2) constitute a marginal portion of total emissions when including Scope 3. However, weGreenhouse Gas Emissions (t-CO2)

believe that making proactive efforts to diminish direct emissions will encourage the entire SUBARU value chain to work as
a team and in greater earnest. Therefore, we are reducing our CO2 emissions by using renewable energy and upgrading tohighly efficient machinery and equipment with the aim of achieving carbon neutrality in 2050.
For our medium-term goal for plants and offices (Scope 1 and 2), has been raised to reducing CO2 emissions by 60% in
FYE March 2036 versus FYE March 2017.
Scope 1: Direct emissions of greenhouse gases from a company’s own facilities.
Scope 2: Indirect emissions of greenhouse gases from the use of purchased or acquired electricity, heat, and/or steam
supplied by another company.
Scope 3: All indirect emissions other than Scope 1 and 2 emissions, including those arising from the procurement of
raw materials, transport, product use, and the disposal process, as well as arising from employee commuting,business travel, etc.

CO2 Emissions (Scope 1, 2)(t-CO 2)

Corporate Data

CategoryFYE March 2019

FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

1,703,682

1,992,046

1,583,247

1,430,501

1,726,493

1

Purchased goods and services

2

Capital goods

372,211413,287

282,713

260,566

402,9153

Fuel- and energy-related activities
not included in Scope 1 or Scope2

102,022103,772

91,851

89,627

95,352

4

Transport and delivery (upstream)

658,268

737,817

601,167

506,604

426,929

5

Waste generated in operations

31,98432,09526,44624,88828,733

6

Business travel

4,446

4,554

4,689

4,798

4,878

7

Employee commuting

13,506

13,835

14,245

14,576

14,818

8

Leased assets (upstream)

N/A

N/A

N/A

N/A

N/A

9

Transportation, distribution, andsales (downstream)

13,283

6,049

3,893

4,750

5,842

10

Processing of sold products

N/A

N/A

N/A

N/A

N/A

11

Use of sold products

33,298,769

34,029,045

27,455,302

23,102,609

27,453,385

12End-of-life treatment of soldproducts

556,139

575,107484,440

413,368

480,917

13

Leased assets (downstream)

2,394

2,463

1,998

2,065

1,984

14

Franchises

N/A

N/A

N/A

N/A

N/A

15

Investments

N/A

N/A

N/A

N/A

N/A

800,000
600,000
400,000

327,706

323,834

305,698

250,569

218,512228,273

200,000
0

Scope1

268,461

265,049

277,034

242,710

241,687

264,961

2017

2019

2020

2021

2022

2023 (FYE March)

Scope2

Scope:SUBARU: SUBARU CORPORATIONGroup companies in Japan: 52 domestic consolidated subsidiaries(including 33 SUBARU domestic dealerships that are consolidated subsidiaries)
Group companies overseas: Subaru of Indiana Automotive, Inc., Subaru of America, Inc., Subaru of Canada, Inc., Subaru Research & Development, Inc.

Source: The calculation method for SUBARU Scope 3 emissions has been revised in reference to the Basic Guidelines on Accounting for Greenhouse Gas Emissions

SUBARU calculates CO2 emissions based on the Act on Promotion of Global Warming Countermeasures. However, emission factors for electricity at Groupthroughout the Supply Chain Ver. 2.3 (December 2017) by the Ministry of the Environment and the Ministry of Economy, Trade and Industry; the Emissions

companies overseas are based on the most recent country-specific CO2 emission intensities for all power sources published annually by the International

Unit Value Database Ver. 3.0 by the Ministry of the Environment Database of emissions unit values; and SUBARU’s life-cycle assessment (LCA) calculation

Energy Agency (IEA). Consolidation of data from the Group’s domestic companies into the scope of subsidiaries with 99% certainty of Scope 1 and Scope
2 emissions (percentage based on number of employees). Due to errors in the electricity consumption of some Group companies in Japan, results forprevious fiscal years have been revised.

standards.
	In Category 11 (Use of sold products), emissions were previously calculated on a tank-to-wheel basis, but starting in FYE March 2023, emissions have been
calculated on a well-to-wheel basis, and emissions during BEV use are also included in calculations. Revisions have been made to reflect this in data fromprevious fiscal years.
	In addition, for Category 3 (Fuel- and energy-related activities not included in Scope 1 or Scope 2,) due to errors in the electricity consumption of someGroup companies in Japan, results for previous fiscal years have been revised.

For other environmental data, please visit:https://www.subaru.co.jp/en/csr/environment/

54 Integrated Report 2023

Integrated Report 2023

55

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Risk Management

Our Approach

Risks Associated with Business Activities

SUBARU Group is undertaking risk management as one of its key priority management issues, not only to address emergency
situations when they arise but also to deal with various risks that have a serious impact on daily corporate activities, as well as
to minimize damage when risks emerge.
The automotive industry is ushering in a major transformation, which only occurs once in a century. The SUBARU Group,
which operates businesses globally, is aiming to enhance the resilience of its management infrastructure by ensuring thesustainability of its businesses by quickly tackling changes in world affairs. At the same time, the Group must boost its
measures to minimize its human, social and economic losses. Amid this environment, it is essential to strategically conduct risk
management throughout the group to conduct business activities. We therefore believe it is important to create a SUBARUGroup that has an infrastructure that is resilient to risk to enhance our corporate value.

At the SUBARU Group, we extract and identify key risks associated with our business activities and consider measures tocombat them. The major business risks are listed below. Please note that this is not an exhaustive list of all risks relating
to the SUBARU Group.

17 Risks Affecting Business Activities
Risks relating to fluctuationsin the economic and financial environment
Economic trends in major markets

Financial markets fluctuations

Political, regulatory and legal proceduresin various countries that impact business activities

Exchange rate fluctuations

Change in raw material costs

Impact of disasters, war, terrorism, infections, etc.

Management System

Risks relating to industry and business activities

To prevent the emergence and expansion of risks to the SUBARU Group, the CRMO (Chief Risk Management Officer) appointed
by the Board of Directors leads risk management and compliance activities, reporting their status to the Board of Directors.
As a system to promote risk management, SUBARU has appointed risk management officers (job grade of Chief
General Managers) for each department and established the Risk Management & Compliance Committee. This committee
is chaired by the CRMO, and its vice-chairperson is the Vice President in charge of the duties of the Risk Management
Group, comprised of the Risk Management & Compliance Office and the Legal Department. At this committee, members
deliberate, discuss, make decisions, and exchange/ communicate information on important matters.
The CRMO leads corporate Group-wide efforts to enhance risk management with professional support from experts incorporate departments, such as the Risk Management & Compliance Office and the Legal Department. In this leadershiprole, the CRMO works closely with the Corporate Planning Department, which performs division-encompassing functions,as well as different divisions and companies. The Audit Department audits execution of tasks by each division andsubsidiary in a planned manner.
Risk Management System

Formation
Normalsituation

President and CEO

Emergency
situation

Offices/plants supervision
Companies supervision

Risk Management& Compliance Committee

CRMO• Formulatecompany-wide policies• Supervise risk
management situations• Address company-wideissues• Formulate action
Risk
guidelines
management• Understand and report
officers
the implementation
situation
Risk
Management • Operate committee
meetings&
Compliance • Support activities at
Officeindividual departments(secretariat)

Special Emergency Response Headquarters:

Financing related

Chief Risk Management Officer

for immediate responseto the most critical situations

IT system/Cybersecurity

Risk Management &Compliance Office

President and CEO, CRMO,
Risk Management & Compliance Office,risk management officer and other officers
in the relevant department(CRMO)

Information sharing/
reporting

Determine which
response headquarters
should be set up
according to the situation

Departmental risk
management officers
General managers, company presidents,
officers in charge of common departments,
etc.

Emergency Response Headquarters:

for responseto critical situations
CRMO, Risk Management &Compliance Office, related officers

Cooperation
Departmental Response Headquarters:

for independent response toincidents by the related department
Each department
Dealerships, affiliatedcompanies, customers

Risk management officer

Responsible persons in individual departments

Board of Directors

Group companies related
Legal services
Cooperation between
offices/plants
Management decision support
Safety/health/personnel protection
Executives support
Stakeholder communication
Market related
Supply chain management
Technical conformity support
Quality assessment support
Decision as to whether or not
to suspend production lines

Normal situation

56 Integrated Report 2023

Risks arising from national regulations
and other events affecting business activities

Emergency situation

Focus on specific businesses and markets

Intellectual property infringement

Respect for human rights

Changes in the demand andcompetitive environment in the market

Cyber security

Secure and train human resources

Responsibility related to products, sales and services

Compliance

Climate change

Supply chain disruptions

Stakeholder communication

Impact on business performance or financial standing

Message fromthe CRMOWe recognize the importance of executing a business
continuity plan (BCP) as a critical priority to enhancethe effectiveness of risk mitigation activities.

The automotive industry is facing a once-in-a-century period of significant transformation, coupledwith a business environment that is changing at a dizzying pace. The SUBARU Group is also exposed
to various risks, and we consider the implementation of our BCP as a crucial management issue. In
recent years, we have faced an unprecedented and challenging business environment characterized bydisruptions in the supply chain due to risk factors such as semiconductor shortages, natural disasters,
Katsuyuki Mizuma
and the COVID-19 pandemic. In light of these circumstances, we have actively pursued various
Chief Financial Officer (CFO) and Chief
Risk Management Officer (CRMO)
initiatives to reduce our risk. For example, we have introduced systems that enhance the visibility of
information, even for the production facilities of secondary and tertiary suppliers with whom we do nothave direct transactions. This allows us to quickly comprehend the state of the supply chain in case of emergencies. We have also enhanced ourrisk management by strengthening collaboration with our business partners, which includes expanding our executive team within procurement
departments to increase opportunities for top-level coordination. In addition to reinforcing our supply chain management structure, we arewitnessing a recovery in automobile production volume due to cross-company initiatives such as transitioning to alternative semiconductors,
revising product specifications, and reallocating components between vehicle models and plants. Since some of the components we procure
from our business partners, including those affected by semiconductor shortages, still face supply risks, we recognize the ongoing need fora united effort across the organization, with a strong focus on our procurement, manufacturing, and development departments. At the sametime, we have gained practical risk management capabilities through this experience.
Moreover, the increasing global prevalence of cyberattacks has emerged as a threat to the entire supply chain, and as a result, we are
actively enhancing our cybersecurity measures. The Risk Management and Compliance Committee, consisting of vice presidents in charge ofdifferent departments, has embarked on a review of our Group-wide Risk Map. This revision, conducted from a holistic company perspective,
considers the significant shifts in the business environment in recent years and prioritizes issues according to the likelihood of occurrence andmagnitude of impact. At present, every committee member is actively fostering a thorough comprehension of the risk landscape confronting
the SUBARU Group. Each department is proactively advancing risk management, encompassing response measures for significant disasters andgeopolitical risks. For risks that cannot be resolved by a single department, the Risk Management and Compliance Office serves as a facilitator,
promoting cross-organizational activities.
Going forward, we will both encourage each department to think actively about risk management as well as undertake cross-organizational
initiatives to further enhance risk mitigation activities.
Integrated Report 2023

57

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Respect for Human Rights

Corporate Governance

Our Approach

Our Approach

The SUBARU Group puts people first and engages in people-oriented manufacturing. Based on the belief that respect for therights and characteristics of individuals is an important management issue for SUBARU, the SUBARU Group established its
Human Rights Policy in April 2020. In this policy, the Group respects the human rights stipulated in international norms such as
the Universal Declaration of Human Rights (UDHR), International Bill on Human Rights, and the ILO Declaration on
Fundamental Principles and Rights at Work. It also applies to SUBARU CORPORATION and all its subsidiaries, as well as tobusiness partners, and other stakeholders. The policy states that we do not tolerate any discrimination based on race, age,sex, gender identification or expression, sexual orientation, national origin, ethnicity, religion, creed, profession, disability,
family relations, or any other status protected by applicable law.
This policy was formulated with full consideration to stakeholders’ expectations, incorporating discussions with outside
experts and overseas subsidiaries. It was officially established after approval by the second meeting of the CSR Committee for
FYE March 2020 and reported to the Board of Directors in March 2020. This policy is run globally and appropriately, being
ready to address future environmental changes. If a company commits an act where human rights issues arise, it not only
results in loss of trust from customers but also damages brand image, significantly affecting the business foundation.
Therefore, SUBARU recognizes respecting human rights as a risk related to its industry and business operations.

SUBARU has articulated the vision “Delivering happiness to all” and works on the enhancement of corporate
governance as one of the top priorities of management, in order to gain the satisfaction and trust of all its stakeholders
by achieving sustainable growth and improving its corporate value in the medium and long term.
<Vision>Delivering happiness to all<Value statement>“Enjoyment and Peace of Mind”<Corporate statement> We aim to be a compelling company with a strong market presence built upon our customer-first principle.
SUBARU clearly separates the function of decision making and the oversight of corporate management from that of theexecution of business operations, and aims to realize effective corporate management by expediting decision making.
In addition, SUBARU seeks to ensure proper decision making and the oversight of corporate management and theexecution of business operations, as well as enhance its risk management system and compliance system through themonitoring of its management and operations and advice provided by outside officers. We also implement proper andtimely disclosure of information in order to improve the transparency of management.
For other corporate governance information, please visit:*Renamed in FYE March 2022 from the CSR Committee.

https://www.subaru.co.jp/en/csr/governance/corporate/

Management System

Board of Directors
Submission/
reportingInstruction/
approval

Instruction/

Executive Management approval
Board Meeting
Committees
Submission/

Human Rights
Task Team

Review

reporting ofimportantmatters

Sustainability Committee
Chair: President andRepresentative Director
Reporting

We have appointed the Representative Director, President and CEO
as a director who is responsible for leading the process of developing
the policy and assigning resources as needed for its implementationand continued improvement. Specifically, we formed the Human
Rights Task Team comprised of management personnel including
the General Manager from the Human Resources Department, IR
Department, Sustainability Promotion Department, Risk Management
and Compliance Office, and Global Purchasing Planning Department.
The human rights issues and initiatives discussed within the team are
regularly reported and deliberated upon in the Sustainability
Committee, chaired by the Representative Director, President andCEO. The details and outcomes are then submitted and reported to
the Board of Directors, where they are monitored for their impact on
the SUBARU Group’s business and appropriately addressed.

Corporate Governance Structure
SUBARU has chosen a structure with a board of corporate auditors. The Board of Directors and the Board of Corporate Auditors
decide, supervise, and audit the execution of important business.
This structure also enables us to achieve more sound and efficient business operations through increased effectiveness ofmanagement monitoring, by involving highly independent outside directors and outside corporate auditors. At SUBARU, in orderto enhance the practical governance structure based on our present organizational design, we have established two voluntary
meetings: the Executive Nomination Meeting and the Executive Compensation Meeting.
In regard to the business operation system, SUBARU has established the Executive Management Board Meeting as a preliminary
consultation body to conduct deliberations on company-wide management strategies and the execution of important businessbefore their presentation at the Board of Directors Meeting. In addition, SUBARU has adopted a vice president system and delegates
directors‘ business execution authority to vice presidents. By doing this, SUBARU clearly separates the function of decision making
and the oversight of corporate management from that of the execution of business operations, expediting decision making.
General Meeting of Shareholders
Electionanddismissal

Executive Nomination Meeting*Executive Compensation Meeting*Directors: 5* The Executive Nomination Meeting andExecutiveCompensation Meeting eachconsist of threeoutside directors and twointernal directors.

Outside directors: 3
Appointment,
dismissaland oversight

Reporting

Submission and reporting

Auditing
ReportingExecutive Management Board Meeting

Collaboration

Chairman: President and CEO
ReportingTransfer of authority
and oversight

Auditing
Accounting auditing
ReportingInternal audit units

Internal
auditing

Submission and reportingof important matters

Corporate operations
departments at HQ
Automotive Business Unit

Executive
Meeting

Aerospace Company

Executive
Meeting

Group Companies

Submission/
reporting ofimportantmatters

Corporate
Governance Meeting
Sustainability Committee
Social Contribution
Committee

Policy instruction
and approvalof plans, etc.

Environmental Committee

Plan proposal
andreporting, etc.

Risk Management andCompliance Committee

Business operations execution functions

58 Integrated Report 2023

Auditing

Corporate auditors: 2

Proposal and reporting

Board of Directors: 8

Vice Presidents

https://www.subaru.co.jp/en/csr/social/human_rights.html

Board of Corporate Auditors: 4

Reporting

Collaboration

Human Rights Policy

Election and dismissal

Outside corporate auditors: 2

Accounting auditors

The SUBARU Group carries out human rights due diligence in accordance with the procedures stipulated in the United Nations
Guiding Principles on Business and Human Rights. “Promoting initiatives to respect human rights based on the Human Rights
Policy and communicating the policy throughout the entire supply chain” has been set as a key performance indicator (KPI) underCompliance within the SUBARU Group’s Six Priority Areas for CSR. Together with our business partners, we are actively
undertaking efforts in this regard.
From FYE March 2021 to FYE March 2022, with cooperation from LRQA Sustainability Co., Ltd. (formerly Lloyd’s Register
Japan K.K.), we identified and conducted impact assessments for human rights risks in the domains of human resources andprocurement, identifying particularly key risks for the SUBARU Group. We have also formulated measures to address each ofthese risks. These are agreed upon by the Sustainability Committee and reported to the Board of Directors.
In FYE March 2023, we put into action measures to mitigate risks, while concurrently monitoring the progress and challenges
through the Human Rights Task Team. This procedure includes presenting reports to the Sustainability Committee and the Boardof Directors, thus establishing a plan-do-check-act (PDCA) cycle.

ReportingDecision making
and oversight functions

Collaboration

Human Rights Due Diligence

Electionanddismissal

Integrated Report 2023

59

Value Creation Story

Commentary on Strategy

Corporate Data

Foundations Supporting Value Creation

Message from the Chairman of the Board of Directors
Board of Directors and Board of Corporate Auditors
Board of Directors

Organization

Board of Corporate Auditors

Chairman

Chairman of Board of Directors

Standing Corporate Auditor

Composition

Directors: 5,
Outside directors: 3

Standing Corporate Auditors: 2,
Outside Corporate Auditors: 2

Role/
responsibility

The Board of Directors ensures fairness and transparency by
performing the oversight function for overall management and makes
the best decisions possible for the Company through appointment,
evaluation and resolution regarding the compensation of its CEO andother management team members, the assessment of material risks
faced by the Company and the development of measures to deal withsuch risks, and decisions on the execution of important business of theCompany. The Board takes these actions in the interest of effective
corporate governance, as well as sustainable growth and improvementof corporate value over the medium to long term.

The Board of Corporate Auditors, as an independent organization
entrusted by shareholders, is responsible for ensuring the soundand sustainable growth of SUBARU and establishing a high-quality
corporate governance system that can be trusted by society by
performing audits of the execution of duties by directors, passing
resolutions on the contents of proposal items regarding theappointment and dismissal, or non-reappointment, of accounting
auditors that are to be submitted to the General Meeting of
Shareholders, and performing business audits, accounting audits
and other matters prescribed by laws and regulations.

Meetings held in
FYE March 2023

13 times*

12 times*In addition to the number of times Board of Directors’ meetings were held as stated in the table above, there was one written resolution that was deemed equivalent toa Board of Directors’ meeting in accordance with Article 370 of the Companies Act and the Articles of Incorporation of the Company.

Number of Board of Directors’ Meetings Held and Attendance Rate
Category
Number of meetings held
Attendance rate

2018

2019

(FY)

2020

2021

2022

16

13

12

13

13

98.4%

100.0%

100.0%

100.0%

100.0%

Note: In addition to the number of Board of Directors’ meetings shown in the above table, there was one written resolution passed in FYE March 2019, two in FYE March 2020, andone in FYE March 2021-2023 that were deemed equivalent to a Board of Directors’ meeting, pursuant to Article 370 of the Companies Act and the Articles of Incorporation.
Attendance rates for newly appointed directors are calculated based on the number of Board of Directors’ meetings held after their appointment.

Following the resolution made during the Board of Directors’ meeting held in June 2023, I
have now assumed the position of Chairman for the Board of Directors as well as for the
Executive Nomination Meeting and Executive Compensation Meeting. Over the past five
years, as Representative Director, President, and CEO, I have been focused on key missions
to enhance the value of the SUBARU brand, namely corporate culture reforms, quality
enhancement, and evolution of the SUBARU Difference. As Chairman, I look forward toincorporating specific insights and fresh perspectives provided by our outside directors into
our management practices, further elevating our corporate governance to new heights.
Tomomi Nakamura
I consider the features of the Board of Directors’ meetings that I have attended to be the
Chairman of Board of Directors
high quality of proposals put forth by the executive team, the depth of understanding fromthose providing advice and oversight, and the seamless nature of discussions andcommunication, marked by mutual respect between both sides. This has resulted in therealization of a monitoring-focused Board that specializes in oversight. In the evaluation of the effectiveness of the Board conducted
in 2022, our outside directors also provided a favorable assessment of the current Board style, which prioritizes the monitoring
function. Nevertheless, despite social gatherings of management personnel* and plant visits to bridge the information gap between
inside and outside Board members, we acknowledge that challenges persist. To further enhance the effectiveness of the Board, we
will continue to drive initiatives aimed at resolving this issue. As outside directors deepen their understanding of the automotive
industry's latest trends and SUBARU's unique business characteristics, they will be better positioned to offer more comprehensive
insights and advice, drawing from their own experience and knowledge. Consequently, we anticipate that the Board of Directors will
become an even more effective forum for lively discussions than ever before.
In March 2023, we announced new executive personnel, including the replacement of the CEO, marking a significant change
in management structure, the first since the disclosure of the CEO succession plan in 2020. First, in July 2022, as the CEO at thattime, I proposed the fundamental principles regarding CEO transition at the Executive Nomination Meeting. Subsequently, we
held these meetings on an almost monthly basis, engaging in in-depth discussions and involving the outside directors extensively
in anticipation of the CEO transition to ensure the selection of candidates based on impartiality, objectivity and transparency.
Going forward, with our new management structure, we will continue to carefully assess the direction of global governancereform trends and progressively strengthen the effectiveness of SUBARU’s distinctive corporate governance, leveraging theinsights of our outside directors, aimed at fostering sustainable growth.
* Events for the exchange of opinions on important topics for SUBARU, held by directors and corporate auditors but not requiring resolution

Executive Nomination and Executive Compensation Meetings

Activities for Strengthening Corporate Governance

Organization

Executive Nomination Meeting

Executive Compensation Meeting

Chairman

Chairman of Board of Directors

Chairman of Board of Directors

Composition

Independent Outside Directors: 3, Directors: 2

Independent Outside Directors: 3, Directors: 2

Role/
responsibility

To ensure the fairness and transparency of decisions on
executive appointment, and based on ample deliberation by its
membership, a majority of which is independent outside
directors, this committee submits proposals to the Board of
Directors regarding policies for the composition of the Board of
Directors, the appointment or dismissal of the CEO and othertop management members, and the nomination of candidates
for directors and corporate auditors. It also determines andmakes proposals for appointment, dismissal, and nomination forthe same.

To ensure objectivity and transparency in decisions oncompensation for directors, the Executive Compensation
Meeting, as a voluntary committee and on the basis ofdelegation by the Board of Directors, determines individualcompensation amounts per director and other issues after ample
deliberation. Where matters concern the executive
compensation system in general, such as its revision, the Boardof Directors deliberates on proposals approved by the Executive
Compensation Meeting and decides on them by resolution.

7 times

4 times

The Executive Nomination Meeting discussed mattersconcerning the submission of reports on the executive structure
and appointments, the division of duties of executives, and theappointment of representatives of major subsidiaries.

The Executive Compensation Meeting submitted revised policy
drafts for determining director compensation systems and detailsof compensation for individual directors, while deciding on
performance-linked compensation for directors (except foroutside directors) and corporate vice presidents based on
evaluations and the amount of compensation claims in respect ofrestricted stock compensation for each individual recipient.

Meetings held in
FYE March 2023

Items deliberated
in FYE March
2023

Board of Directors(Independence)

Executive
Nomination Meeting

Executive
Compensation Meeting(Independence)(Independence)

2010

Independent
outside directors

Independent
outside directors

3 out of 8
37.5%

3 out of 5
60.0%

3 out of 5
60.0%

2012

2013

2014

2015

2016

2017

2018

2019

2020

Increasingtransparencyofmanagement

2022

2023

2003 Reduced length of director terms from two years to one year
2007 Abolished executive officer retirement bonus system
Established Corporate Governance Guidelines
Abolished senior advisor system
Independent outside directors: 1

Strengtheningofoversight
functions2

3
Ratio of outside directors: one third or more
Female director

Independent outside corporate auditors: 1

2

3

2

Female director
2004 Established Executive Nomination Meeting
Objective andtransparent
procedures

2004 Established Executive Compensation Meeting
Outside directors participating: 2

3
Ratio of outside directors: one half or more

(Gender Diversity)

2 out of 4
50.0%

Femaledirectors
Femaleofficers

3 out of 12
25.0%

1 out of 8
12.5%

Initiatives toenhance corporate
value overthe medium tolong term

Appropriate functionof theBoard of Directors

Added
non-financial
evaluation(employeesatisfaction,
qualitativeevaluation)

Introduced restricted stockcompensation plan
(ROE, quantitative evaluation)

Reduction of cross-shareholdings
60 issues 32 issues 30 issues 18 issues 10 issues 4 issues

60 Integrated Report 2023

2021

1999 Adopted a corporate vice president system

Board of Directors/
Board of Corporate Auditors
Femalecorporate auditors

Independent
outside directors

2011

2 issues

Start of evaluation of the effectiveness of the Board of Directors

Integrated Report 2023

61

Value Creation Story

Directors, Auditors, and Executive Officers

Foundations Supporting Value Creation

Corporate Data

(As of June 21, 2023)

Directors of the Board(As of October 1, 2023)

Executive Officers * Concurrently serve as a Director(Number of years in office as adirector/number of shares owned)

Atsushi Osaki

Fumiaki Hayata

Tomomi Nakamura

Representative Director,
President and CEO

Representative Director,
Deputy President

Director, Chairman

2 years / 23,422 shares

2 years / 10,256 shares

Katsuyuki Mizuma

Tetsuo Fujinuki

Director, Executive Vice President,
CFO and CRMO

Director, Senior Vice President, CTO

5 years / 40,733 shares

Chairman

Tomomi Nakamura*—President

Atsushi Osaki*

CEO (Chief Executive Officer)
Aerospace Company

Deputy President

Fumiaki Hayata*

Secretarial Office, Human Resources Department, Sales, Marketing

Executive Vice President

Katsuyuki Mizuma*

CFO (Chief Financial Officer), CRMO (Chief Risk Management Officer)
Finance & Accounting Department

Executive Vice President

Tetsuo Fujinuki*

CTO (Chief Technology Officer)
Engineering Division, Technical Research Center, CTO Strategy Office

Executive Vice President

Tomoaki Emori

Chief General Manager of Corporate Planning Division

Senior Vice President

Shoichiro Tozuka

Company President of Aerospace Company

Senior Vice President

Tatsuro Kobayashi

General Manager of Human Resources Department

Senior Vice President

Jinya Shoji

Chief General Manager of Overseas Sales & Marketing Division 2

Senior Vice President

Osamu Eriguchi

CQO (Chief Quality Officer)
Chief General Manager of Quality Assurance Division, General Manager of Quality Assurance Management OfficeSenior Vice President

Tamotsu Inui

Chief General Manager of Purchasing Division

Senior Vice President

Kazuhiro Abe

CIO (Chief Information Officer)
Chief General Manager of IT Strategy Division

Senior Vice President

Shinsuke Toda

Senior General Manager of Overseas Sales & Marketing Division 2
and Corporate Planning Division

Senior Vice President

Hiroshi Watahiki

Chief General Manager of Engineering Division and Technical Research Center
Senior General Manager of Purchasing Division

Senior Vice President

Tadashi Yoshida

Chief General Manager of Overseas Sales & Marketing Division 1
Chairman of SOA*1, SCI*2, NASI*3

Senior Vice President

Ryota Fukumizu

President of SIA*4

Vice President

Yasushi Nagae

General Manager of Investor Relations Department and General Administration Department,
Corporate Communications Department and Sustainability Promotion Department

Vice President

Tatsuya Okuno

Chief General Manager of Customer Service Division

Vice President

Shinichi Murata

General Manager of Risk Management & Compliance Office
Risk Management Group, External Relations Department, Intellectual Property Department

Vice President

Kazuki Uejima

Chief General Manager of Product & Portfolio Planning Division

Vice President

Ikuo Watanabe

Chief General Manager of Monozukuri Division and Gunma Plant

Vice President

Akihiro Kato

Chief General Manager of Japan Sales & Marketing Division

Vice President

Katsufumi Nakazawa

Chief General Manager of Parts & Accessories Division

Newly appointed / 11,403 shares

2 years / 15,894 shares

Yasuyuki Abe

Miwako Doi

Fuminao Hachiuma

Independent Outside Director

Independent Outside Director

4 years / 5,200 shares

3 years / 400 shares

Independent Outside Director
Newly appointed / 0 shares

Corporate Auditors(Number of years in office as anauditor/number of shares owned)

Yoichi Kato

Hiromi Tsutsumi

Yuri Furusawa

Yasumasa Masuda

Vice President

Kosuke Kawai

Standing Corporate
AuditorStanding Corporate
AuditorIndependent Outside
Corporate Auditor

2 years / 11,129 shares

3 years / 19,056 shares

1 years / 300 shares

Independent Outside
Corporate Auditor
Newly appointed / 0 shares

General Manager of Cost Innovation Promotion Office,Senior General Manager of Corporate Planning Division

Vice President

Yoshihiro Saito

Company Vice President of Aerospace Company

Vice President

Yoichi Hori

General Manager of CTO Strategy Office, Senior General Manager of Corporate Planning
Division, General Manager of Corporate Planning Department

Please visit the Subaru website for details on profiles.

https://www.subaru.co.jp/en/outline/profile.html

62 Integrated Report 2023

Commentary on Strategy*1 Subaru of America, Inc.
*2 Subaru Canada, Inc.
*3 North American Subaru, Inc.
*4 Subaru of Indiana Automotive, Inc.

Integrated Report 2023

63

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation(As of June 21, 2023)

Directors/Auditors
Reasonsforselection

Experience, insight,
and leadership required
for making important
strategic decisions

Promotion of business strategies foraccelerating responses to major transformation

Strengthening of management
infrastructure that supports the Company’ssustainable growth

Definitionofexperience

Experience of serving as
top management of alisted company

Experience and track record as an officer
in charge of each business division

Knowledge, experience, and competency as an officer
in charge of a field or employee with experience inhighly specialized operations

Promotion of business strategies

GenderTotal yearsof service

Representative Director,
President (CEO)Male

2 years

Fumiaki Hayata

Representative Director,
Deputy President

Male

2 years

Tomomi Nakamura

Director, ChairmanMale

5 years

Katsuyuki Mizuma

Director, Executive Vice
President (CFO, CRMO)

Male

2 years

Tetsuo Fujinuki

Director, Executive Vice
President (CTO)

Male

Newly
appointed

Yasuyuki Abe

Independent Outside
Directors

Male

4 years

Miwako Doi

Independent Outside
Directors

Female3 years

Fuminao Hachiuma

Independent Outside
Directors

Male

Newly
appointed

Yoichi Kato

Standing Corporate AuditorMale

2 years

Hiromi Tsutsumi

Standing Corporate Auditor

Female3 years

Yuri Furusawa

Independent Outside
Corporate Auditor

Female1 yearYasumasa Masuda

Independent Outside
Corporate Auditor

Male

Newly
appointed

Name

Title at the Company

Atsushi Osaki

Directors

Corporate
Auditors

Corporate Data

Board ofDirectors*

Board ofCorporate
Auditors*

Executive
Executive
Nomination Compensation
Meeting*
Meeting*

Business management(executive experience)

Technology/
development

Manufacturing/purchase

Sale/
marketingGlobalStrengthening of management infrastructure

IT/digital

Business
administration/
financial/accounting

Legal affairs/
compliance/risk management

Human
capital/labor

Requiredskills*andindicate attendance of the chairman and other members, respectively
Note: The list above does not cover the entire scope of knowledge held by the Directors and Corporate Auditors.

Approach to the CEO Succession Plan
SUBARU recognizes that decision making regarding top management changes (e.g., the CEO) and successor selection may have a
critical influence on corporate value. Therefore, in order to ensure a successful succession at the right timing, we invest substantial
time and resources to carefully develop and implement succession plans.
In order to hand over the business to the right person, the Board of Directors, as part of its essential duties, develops succession
plans that can convince all stakeholder groups. To ensure objectivity and transparency in the process for deciding on thereplacement and selection of the CEO, the Board of Directors appropriately supervises the preparation of proposals by the current
CEO through discussions at the Executive Nomination Meeting.
To be able to implement succession plans appropriately, the CEO begins to prepare for selection and development of theirsuccessor candidates independently upon assuming office. Key processes for this purpose include providing information on
candidates to outside directors on an ongoing basis, particularly by enabling the directors to monitor the candidates in person
continuously in day-to-day business settings, as a measure to ensure appropriate and timely evaluation and selection down the road.
The Board of Directors and Executive Nomination Meeting meet on a regular basis to review the list of essential qualities andskills required of the CEO, which may include removing and adding items, in consideration of perception of current trends, changes
in the business environment surrounding the company, and the future direction of the Group’s business strategies.
To ensure the objectivity of the successor selection process and increase the effectiveness of its supervision by the Board of

64 Integrated Report 2023

Directors and Executive Nomination Meeting, it is important to have effective selection criteria in place, particularly for use byoutside directors. To this end, SUBARU discloses two sets of criteria: “Abilities required of the SUBARU Group’s CEO” and “Five key
qualities required of the SUBARU Group’s CEO.” These criteria serve as a guide for evaluating candidates in light of quality,competency, experience, track record, specialized expertise, personality, and other factors, which have been discussed and decided
on by the Board of Directors and Executive Nomination Meeting.
Abilities required of the SUBARU Group’s CEO
The SUBARU Group’s CEO must be able to: properly understand the business environment surrounding SUBARU, its corporate
culture and philosophy, business growth stages, and medium- to long-term management strategies and challenges; facilitate
collaboration appropriately with various stakeholders; and lead all executives and employees to work together to maximize
corporate value.
Five key qualities required of the SUBARU Group’s CEO
1. Integrity
2. Broad perspective
3. Character
4. Tireless spirit or revolutionary leadership skills
5. Person of action

Integrated Report 2023

65

Value Creation Story

Executive Officer Training
Category

Nomination Criteria

 UBARU provides its directors and corporate auditors with information and knowledge regarding its business activities that is necessary forSthem to fulfill their responsibilities to oversee and audit management directors and corporate auditors on an ongoing basis with information

Directors
Refresher courses focusing on information regarding the Companies Act and other laws and regulations related to corporate governanceCorporate
auditors

 articipation in seminars and programs hosted by government agencies, Japan Federation of Economic Organizations, Japan Association ofP
Corporate Directors, Japan Audit & Supervisory Board Members Association, etc.
Policy UBARU provides its outside officers on an ongoing basis with information relating to the Company’s corporate statement, corporate culture,Sbusiness environment, and other matters, mainly through arranging appropriate opportunities, such as operations briefings from businessdivisions and factory tours, as well as creating an environment for officers to share information and exchange opinions more easily.

Outsidedirectors-O pportunities for discussions with and briefings from responsible vice presidents about the corporate statement, corporate culture, businessenvironment, and the performance, situation and issues of each business division/department

Outsidecorporate
auditors- Inspection tours at manufacturing/R&D/distribution sites

Name- Discussions with directors and corporate auditors on management issuesT he outside directors are expected to perform a monitoring function independent from the
management team and provide appropriate advice on management on the basis of a wide range of
sophisticated knowledge.
T he outside corporate auditors are expected to perform a management oversight function independent
from the management team and undertake their role of auditing from the viewpoint of legality andappropriateness on the basis of broad and advanced knowledge.
S UBARU has established criteria for independence of outside officers in addition to the criteria for
independence established by the Tokyo Stock Exchange, and appoints outside directors and outside
corporate auditors who meet those criteria.

Yasuyuki Abe

Independent
Officer
Status*Reasons for Appointing

Meeting
Attendance(FYE March 2023)○

As representative director and senior managing executive officer of Sumitomo
Corporation, Mr. Yasuyuki Abe has been involved in management in both asupervisory and executional capacity, possesses extensive experience andknowledge in business management, and has an advanced understanding of theIT field. Mr. Abe has served three years as an independent outside corporate
auditor for the Company since June 2016. During his tenure, he has supervised
the execution of duties conducted by directors, as well as understood the true
nature of the problems facing the Company and offered his frank opinions to senior
management in a timely and appropriate manner. In June 2019, Mr. Abe was also
appointed to the position of independent outside director and has been providing
beneficial advice to the Company’s management. In light of this, the Company
has appointed Mr. Abe with the expectation that he will appropriately perform theduties when he assumes office as an outside corporate director of the Company.

Attended
13 of 13
meetings

Outside Director, HOYA
Corporation○

As a researcher and supervisor in the field of information technology at Toshiba
Corporation, Ms. Miwako Doi has accumulated vast experience and made many
achievements in this field over many years. In addition, she has held successive
positions, mainly in government committees, owing to her high level of expertiseand extensive experience and knowledge. In June 2020, Ms. Doi was appointed
to the position of independent outside director and has been providing beneficial
advice to the Company’s management for the generation of new innovation. In
light of this, the Company has appointed Ms. Doi with the expectation that she willappropriately perform the duties when she assumes office as an outside corporate
director of the Company.

Attended
13 of 13
meetings

Auditor, National Institute ofInformation and Communications
Technology (NICT) (part-time)
Executive Vice President, Tohoku
University (part-time)
Executive Director, Nara Instituteof Science and Technology (parttime)
Outside Director, Isetan Mitsukoshi
Holdings Ltd.
Outside Director, NGK Spark PlugCo., Ltd.

○Mr. Fuminao Hachiuma has abundant experience and knowledge acquired throughhis involvement in management in a broad range of fields including overseas
business at Ajinomoto Co., Inc. and its group companies as well as promotion of
Newly
strengthening of corporate governance and management reform of J-OIL MILLS,
appointed
INC. as Representative Director and President. In light of this, the Company has
appointed Mr. Hachiuma with the expectation that he will appropriately perform theduties when he assumes office as an outside corporate director of the Company.

Outside Director, Seven & i Holdings
Co., Ltd.
Outside Audit & Supervisory Board
Member, YKK AP Inc.

○

Ms. Yuri Furusawa has held key positions in the Ministry of Land, Infrastructure,
Transport and Tourism, and has been involved in the promotion of work styleAttendedreform, active participation by women and diversity in the Cabinet Secretariat,
Outside Audit & Supervisory Board
10 of 10
as well as in the overseas business development in the private sector, giving her
Member, Kubota Corporation
meetings*2
a broad perspective and a high level of insight. In light of this, the Company has
appointed Ms. Furusawa with the expectation that she will appropriately perform theduties when she assumes office as an outside corporate auditor of the Company.

○

Mr. Yasumasa Masuda has experience in corporate planning and served as CFO
at Astellas Pharma Inc. and has deep insight in overall management with focus on
financial and accounting. He has also served as Independent Non-Executive at
Deloitte Tohmatsu LLC and Outside Director and Chairman of the Audit Committee
Newly
at Olympus Corporation, giving him a broad perspective and a high level of insight. appointed
In light of this, the Company has appointed Mr. Masuda with the expectation that
he will appropriately perform the duties when he assumes office as an outside
corporate auditor of the Company.

- Social gatherings with directors and corporate auditors- Participation in company-wide business events, such as improvement activity debriefing sessions
 UBARU gives vice presidents similar opportunities as those given to directors and corporate auditors, for the purpose of developing humanS
resources to lead its management in the future.

Participation in external programs aimed at fostering the mindset required for executive management and motivating self-improvement actionsL ectures by invited experts in specific topics to share and increase literacy in the related field(legal affairs, compliance, IT, the SDGs, media response, etc.)

Vice Presidents

OutsideDirectors
Miwako Doi

Strategy-building camps for all vice presidents
Recommendation and support for participation in appropriate external seminars and programs* Expenses to be incurred for offering the above training to directors and corporate auditors, including outside officers and vice presidents are borne by the company.

Fuminao
Hachiuma

Category
All executives(including
outside officers)
Outsidedirectors
Outsidecorporate
auditors

Corporate Data

Reasons for Appointing the Outside Officers and Major Activities

The following programs are provided to outside Board members at the time of appointment and subsequently to keep them updated:

PolicyFoundations Supporting Value Creation

Outside Directors/Outside Corporate Auditors
Training Policy/ Major Ongoing Programs

PolicyCommentary on Strategy

Programs Provided in FYE March 2023
Newly appointed directors and vice presidents participated in external seminar programsHeld a total of three classroom lectures by invited experts on management issues
Operations briefings offered by vice presidents and others, and related discussions
Held a total of four discussions with directors and corporate auditors on management issues
Outside directors and outside corporate auditors participated in external presentations and exhibits about future technologies and quality solutions

Yuri Furusawa

OutsideCorporate
Auditors
Yasumasa
MasudaSignificant Concurrent Positions(As of June 30, 2023)

Outside Director, Chairman of the
Audit Committee, Olympus
Corporation*1 Independent officers: Outside directors and outside corporate auditors with no risk of a conflict of interest with general shareholders as stipulated by the stock exchange.
*2 Corporate Auditor Yuri Furusawa was elected and appointed at the 91st Ordinary General Meeting of Shareholders held on June 22, 2022.

66 Integrated Report 2023

Integrated Report 2023

67

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Message from Outside Directors

In mid-June, I had the opportunity to participate in the reception of the Keidanren
Women’s Executive Network for the first time. Approximately 130 female executives frommember companies attended the event and I received positive remarks about SUBARU’sdistinctive qualities. While maintaining uniqueness can be challenging, it is importantthat SUBARU continues to pursue the SUBARU Difference through collaborative researchwith Gunma University*, especially amid moves toward electrification. I think it would be
wonderful to capitalize on SUBARU’s uniqueness in finding a balance between environmental
preservation and technological innovation, two seemingly conflicting elements.
Japanese people traditionally have taken an approach of making adequate
preparations and dealing with situations within their expectations. Nevertheless, inthe current environment where unexpected events such as the pandemic, the Ukraine
invasion, and economic security issues, have become increasingly common, relying solely
on such traditional coping methods may prove inadequate. Ensuring diversity, including
active women’s participation, is crucial for creating an organizational structure capableof responding to unexpected events. In a forum on women’s careers held in March 2023,
as well as during dialogues with female employees in Bifuka and Tochigi, we received awealth of vibrant input. This has instilled a sense of optimism about SUBARU’s future, and I
am looking forward with great expectations.

Contributions, future challenges,
and expectations as an outside director

Yasuyuki Abe
Outside Director
June 2016 A
 ppointed Outside Corporate Auditor
June 2019 R
 etired as Outside Corporate Auditor
June 2019 Appointed Outside Director

As an outside director, I believe it is crucial to properly understand what is happening within
the company in a limited timeframe, communicate various insights to the executive team, andthereby contribute to further enhancing corporate value. To achieve this goal, I consistently
contemplate and take action on what the best course of action is at any given moment.
The most critical task of the Executive Nomination Meeting for FYE March 2023 was
the selection of the CEO’s successor. After announcement of the CEO succession plan, asa member taking part in this meeting, I spent a considerable amount of time conducting
data research on various candidates, including interviews, in order to gain a thoroughunderstanding of them. Through extensive deliberations and discussions, we ultimately
arrived at the decision regarding the CEO succession. As a result, I believe we successfully
made a well-qualified choice for the successor. Furthermore, although the Executive
Nomination Meeting and Executive Compensation Meeting are currently chaired by the
Chairman, an inside officer, they ensure a high level of transparency in their operations
as outside officers have access to any necessary documents. This aspect is also one of
SUBARU’s significant strengths, and I believe it is something we must continue in the future.
As expectations for the new management structure, the three key initiatives from our
mid-term management vision, STEP—corporate culture reforms, quality enhancement, andevolution of the SUBARU Difference—have been steadily yielding results and contributing
to the improvement of our performance. With the new management structure in place,it’s imperative that SUBARU keeps pushing forward without disrupting this substantial
momentum. The significant challenge of adapting to electrification has prompted acontemplation of the SUBARU Difference, primarily within the Engineering Division, andsubsequent strategies are now being actively implemented.
In the sustainability strategy, it is particularly important to accelerate the pace ofdiversity reform, including efforts concerning the empowerment of female employees. I
aim to steadily assess the response to these reform and transformation initiatives.
As SUBARU aims to become a brand that is different from others by enhancing
distinctiveness, I look forward to the changes that lie ahead under the leadership ofPresident Osaki and Deputy President Hayata in the new SUBARU, and I will continue tofulfill my oversight responsibilities as an outside director.

Efforts through the Executive Nomination Meetingand vision for the future of SUBARU

Miwako Doi
Outside Director
June 2020 Appointed Outside Director

68 Integrated Report 2023

Although many companies with a board of corporate auditors in place often have anominating committee as an independent mechanism, in some cases, the successor
chosen by figures such as the CEO or Chairman is directly approved without further
formalities. In order to increase transparency, SUBARU’s Chairman, who does not havespecific areas of responsibility for business execution and has a clear understanding of theCompany’s overall business, has been appointed chairman of the Executive Nomination
Meeting and Executive Compensation Meeting, and has been promoting reforms suchas the creation of a CEO succession plan. The recent CEO change followed a highly
transparent process, involving a comprehensive review of materials, including 360-degree
evaluations of candidates in the CEO succession plan. After shortlisting the candidates,interviews were conducted by outside directors, and the CEO was ultimately selected
through deliberations in the Executive Nomination Meeting. I believe it is crucial to provide
support for candidates to accumulate the requisite business experience that qualifies themfor the role of CEO, in accordance with the CEO succession plan.

* SUBARU CORPORATION and Gunma University are undertaking a joint research course titled “NextGeneration Automobile Technology Research Course.”

Expectations for SUBARU as it navigatessignificant changes

Fuminao Hachiuma
Outside Director
June 2023 Appointed Outside Director

The automotive industry is facing a significant period of upheaval, often referred to as a“once-in-a-century” transformation, in response to the demands of the carbon-neutraland digital transformation (DX) era.
While we can recognize the magnitude of this wave of change, it is a stage where
the management’s decision-making ability is challenged as there is no clear answer atthis moment.
In times like these, it is crucial to operate and act organically across departments,
requiring a compact organizational structure. Additionally, we anticipate the need for thecapability to respond flexibly by considering various scenarios from diverse and objective
perspectives, without being bound by conventional wisdom.
Over the past 40 years, I have been involved in the food industry both domesticallyand internationally. Although it differs greatly in dynamics and scale from the automotive
industry, I feel a shared purpose in contributing to safety, security, enjoyment, and even
the well-being and smiles beyond that, just like what a manufacturer aims for.
From the position of someone involved in product manufacturing, I will continue to
strive to be of support to Subaru, shining even brighter as it overcomes this era of significant
change.

Integrated Report 2023

69

Value Creation Story

Effectiveness Evaluation of the Board of Directors
SUBARU’s Board of Directors (BoD) analyzes and evaluates the Board’s effectiveness in accordance with the Corporate
Governance Guidelines and considers and implements improvements to address any issues identified.
In the fiscal year ended March 31, 2023, aiming to apply the results of the evaluations toward enhancing the BoD’s functions,
the BoD confirmed efforts to address issues recognized in previous evaluations, reorganized the evaluation items on the survey
and implemented interviews with certain directors, and assessed and analyzed the reasons and underlying factors behinddifferences in the recognition of issues. The results of this process are reported below.
Methods of evaluation and analysis(1) Timing: December 2022–February 2023
(2) Methods: Self-evaluation survey created by a third-party
body; interviews(a)	Survey respondents: D irectors (9) and auditors (5) for a
total of 14 respondents(b)	Interviewees: C hair of the BoD, Representative Director
and President, and outside directors (3)for a total of 5 interviewees(3) Process(a)	Third-party body conducts anonymous self-evaluation
survey of directors and auditors(b)	Third-party body conducts interviews with the chair of
the BoD, Representative Director and President, andoutside directors(c)	Third-party body aggregates and analyzes survey
responses and interviews(d)	BoD verifies and discusses reports received fromthird-party body(4) Evaluation items on the survey(a) BoD roles and functions(b) BoD composition(c) BoD operation(d) BoD support system(e) BoD culture and communication(f) BoD risk management and internal control(g)	Executive Nomination Meeting and Executive
Compensation Meeting operation(h) Shareholder dialogue(i) Continued BoD improvements

Respondents evaluated themselves on a four-point scale in response to questions relating to the evaluation items. They
were also free to add their own thoughts on the characteristics of the BoD and points that they felt would be necessary
in enhancing the effectiveness thereof. Upon completing their responses, they then submitted their surveys directly tothe third-party body.

Commentary on Strategy

Foundations Supporting Value Creation

Future points to examine for further enhancing the effectiveness of the BoD(a) Discussing medium- to long-term management strategy (a continuing point for examination)
The BoD confirmed the need to establish common ground in approaching discussions of medium- to long-term management
strategy in the automobile industry, where constant, rapid transformation contributes to a lack of clarity and certainty, so that it can
optimally fulfill its supervisory responsibility.
(b) Further bolstering the support system for outside directors
The BoD confirmed the need to work on rolling out information via the BoD Secretariat in order to help outside directors performtheir functions more effectively than before.
(c) Further improving the effectiveness of the Executive Nomination Meeting
The BoD confirmed that it has been making solid progress through various efforts, including discussions of succession plans for the
CEO position and other posts as well as skills matrices for officers, and will strive to implement continuing initiatives and propel
further evolution.

Results of the Questionnaire
BoD roles and functions

4.0
Continued BoD improvements

BoD composition

3.0
2.0
Shareholder dialogue

BoD operation

1.0

Executive Nomination Meeting andExecutive Compensation Meeting operation

BoD risk management and internal control

BoD support system

BoD culture and communication

1=Strongly disagree; 2=Disagree; 3=Agree; 4=Strongly agree*The figure above presents this year’s results only without any comparison to the previous year’s
results, as this year’s survey used a new, reorganized set of evaluation items.

Evaluation Items
Evaluation Items

Evaluation Items

Recognition of the roles and functions of the Board of Directors

General evaluation
Based on the third-party body’s report detailing its aggregation and analysis, the BoD discussed and confirmed thefollowing points.
(a) The BoD is making solid, gradual progress on improvements by taking advantage of social gatherings of management
personnel*, enhancing discussions on the Executive Nomination Meeting, and taking other steps.
(b) Improvements have been made in efforts aimed at “enhancing the quality of discussion of medium- to long-term
management strategy” and “enhancing discussions on the establishment of a system to appropriately address newly
identified risks,” two areas for improvement that emerged in last fiscal year’s evaluation.

(a) B oD roles andfunctions(c) A united commitment to enhancing the value of the Subaru brandOutside officers share in Subaru employees’ consistent commitment to pursuing the “Evolution of the SUBARU Difference.”

70 Integrated Report 2023

Stakeholder perspectives

Reporting system
Supervision of corporate management(e) B oD culture andcommunication

Composition of the Board of Directors (diversity and expertise)

Directors and corporate auditors

Frequency, length, and time allocation of meetings

Risk management

Relevance of agenda items
Timing of proposals and discussions
Quality and quantity of documents(c) BoD operation(f) BoD risk
management and Group governanceinternal control

Timing of document distribution
Prior explanation
Content of explanations and reports

Internal control and compliance(g) E xecutive Nomination Meeting and Executive Compensation
Meeting operation
Supervision of proper disclosure of information toshareholders and investors

Discussions by the Board of Directors
Leadership by the Chair
Environment and systems for the provision of information(d) B oD support
system(h) Shareholder
dialogue

Provision of information to outside officers
Training of outside officers
Training of inside officers

Directors and business divisions
Inside and outside directors(b) BoD composition Composition of the Board of Directors (ratio of inside to outside directors)

Both inside and outside officers recognize that the roles of the BoD are to examine the execution of business and monitor the statusof various initiatives.
(b) A framework conducive to open provision of information to the BoD
Business divisions appropriately provide information to outside officers through measures such as sharing internal information,offering opportunities for visits to factories and other sites, and utilizing social gatherings of management personnel. The company
environment where outside officers can obtain access to internal materials and contact inside officers as necessary.

Diverse values

Delegation of authority to execution

Size of the Board of Directors* Events for the exchange of opinions on important topics for corporate management, held by directors and corporate auditors but not requiring resolution

Characteristics of the Subaru Corporation BoD(a) A BoD with a focus on the monitoring function

Corporate Data

Sharing the views of shareholders and investors
Enhancing dialogue with shareholders and investors(i) C ontinued BoD
improvements

Status of improvements based on the previous fiscal
year’s effectiveness evaluation

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71

Value Creation Story

Compensation for Directors

SUBARU deliberated and decided on the proposal of the Policy for Determining Details of Compensation for Individual Directors
approved by the Executive Compensation Meeting at the Board of Directors’ meeting held on March 3, 2022. To the right is thesummary of the policy.

(1) Compensation is at a level commensurate with the roles and responsibilities of directors
and is appropriate, fair, and balanced.
(2) The compensation structure is determined by giving consideration to providing
motivation for sustained improvement in corporate performance and corporate value andsecuring excellent human resources.
Specifically, for directors (excluding outside directors), compensation is composed of basic
compensation, annual performance-linked bonus, and restricted stock compensation (fornon-resident officers, phantom stock instead of restricted stock). For outside directors, theCompany pays only basic compensation in view of their roles of fulfilling monitoring andoversight functions of corporate management from an independent position. The total
amount of compensation for individual directors and the levels of each compensation item are
set for every position depending on difference in responsibility by utilizing the research datacompiled by outside specialized agencies.

2. Policy for determining the amount of monetary compensation excluding performancelinked compensation (hereinafter, the ”Fixed Monetary Compensation”), performancelinked compensation, and non-monetary compensation (including the policy for
determining the timing or conditions for granting such compensation)

director, and other factors. After an evaluation period, shares of the Company’s common stock
are granted at an amount equivalent to the number of units multiplied by a payout ratio (50% to100%) determined in accordance with achievement levels for performance indicator targets.
The maximum number of shares of the Company’s common stock to be granted as restricted
stock compensation to directors, for RS and PSUs combined, is 150,000 per year. In addition, theCompany and its directors shall enter into a restricted stock allotment agreement that includes
an overview and provisions that state (1) Company executives shall not, while they serve in theirpositions as executives and for a set period of time, transfer, create a security interest on, orotherwise dispose of the shares of the Company’s common stock that have been allotted tothem, and (2) the Company may acquire the said shares of its common stock withoutcompensation if certain events occur. If a director is a non-resident of Japan at the time sharesare granted, the Company shall grant phantom stock in place of and equivalent to the restricted
stock compensation that would have been granted, and the stock shall also be treated inaccordance with the restricted stock allotment agreement.

3. Policy for determining the proportion of the Fixed Monetary Compensation,
performance-linked compensation, and non-monetary compensation to the total
amount of compensation, etc., for individual directors

The Company has set the following as a general guideline for proportions of compensation
by type for directors (excluding outside directors) in reference to the compensation levels andcompensation mix of companies of a similar scale to the Company or industry peers obtained
through an external research company, and in consideration of factors such as the Company’s
overall salary level and social situations (performance-based compensation is a proportion of
the base amount).

(1) Policy for the Fixed Monetary Compensation
Directors receive the Fixed Monetary Compensation monthly as basic compensation. The
amount for individual directors is determined based on their positions, taking into
consideration elements such as the business environment.
(2) Policy for performance-linked compensation
For annual performance-linked bonus for directors (excluding outside directors), we have set a
compensation table based on rank and the KPI of consolidated profit before tax for the fiscal
year under review. Based on this table, cash compensation is paid at a certain time of eachyear. In addition, in order to encourage the achievement of goals in the Group’s medium- tolong-term strategy, a portion of restricted stock compensation (described in (3) below) to be
granted as non-monetary compensation will be PSUs, where the number of shares granted islinked to the degree to performance target achievement. In addition to consolidated ROE,
which is the financial indicator emphasized in our medium-term strategy, we will adopt
employee engagement as a non-financial KPI for these PSUs.
The Company will review the KPIs for annual performance-linked bonus and PSUs as needed
based on changes in the environment and reports from the Executive Compensation Meeting.
(3) Policy for non-monetary compensation
The Company grants restricted stock compensation to directors (excluding outside directors) forthe purpose of providing them an incentive for sustained improvement of the Company’s
corporate value and further value sharing with the shareholders. For restricted stockcompensation, a portion shall be provided as the fixed compensation type, with the rest as thevariable compensation type. Both of these shall be prohibited from being transferred during therecipient’s term of office, and this restriction on transfer shall be lifted upon their retirement.
For fixed compensation type restricted stock (RS) compensation, shares of the Company’scommon stock are granted at a certain time each year at an amount equivalent to a base amountdetermined in consideration of the Company’s business performance, responsibilities of eachdirector, and other factors.
For variable compensation type restricted stock compensation (PSUs), units (one unit = one
share) are granted at a certain time each year at an amount equivalent to a base amountdetermined in consideration of the Company’s business performance, responsibilities of each

Breakdown

Rate
President

Directors
otherthan thePresident

Fixed monetary compensation

45%

50%

Performance-linked compensation

45%

40%

Non-monetary compensation

25%

20%

Basic
compensation

Annualperformance-linked
compensation

The Company introduced a fixed compensation type (RS) restricted stock compensation in FYE March 2018.
With this revision, in order to encourage the achievement of the goals in the SUBARU Group’s mid-term management vision,
we have added variable compensation type (PSU) restricted stock to the compensation structure to increase the weight of stockcompensation. In addition, the KPIs for the variable compensation type (PSU) will be reviewed in conjunction with updates to the
mid-term management vision and management indicators. For this revision, consolidated ROE will be used for quantitative(financial) evaluation and employee engagement (employee satisfaction rating) will be used for qualitative (non-financial)
evaluation. Such compensation will not be paid to outside directors.

After

Policy for Determining Details of Compensation for Individual Directors
As a basic policy, compensation for directors of the Company is determined in view of thefollowing items:

Corporate Data

Foundations Supporting Value Creation

Restricted stock compensation (Medium- and long-term incentive)

Matters Concerning the Policy for Determining Details of Compensation for Individual Directors

1. Basic policy

Commentary on Strategy

Restricted stockcompensation
RS

PSU

The Company shall appropriately review the compensation level and compensation mix in
consideration of the Company’s business environment, as well as the situation of companies ofa similar scale to the Company or industry peers, and other circumstances based on reports
from the Executive Compensation Meeting.

4. Matters concerning the determination of details of compensation, etc., for individual
directors

The Executive Compensation Meeting, by a resolution of and upon delegation by the Board of
Directors, determines specific amounts of compensation, etc., of individual directors, following
sufficient deliberation by its members including outside directors. Its authorities include thedetermination of specific amounts of basic compensation, annual performance-linked bonus,
and restricted stock compensation (includes phantom stock), and their payment schedule.
With regard to revisions of the compensation system and other matters pertaining tocompensation overall, proposals approved by the Executive Compensation Meeting aredeliberated and decided on by the Board of Directors. The total amount of compensation for
individual directors and the levels of each compensation item are set depending on their
responsibilities, and whether he or she is an internal or outside director, by utilizing researchdata compiled by outside specialized agencies.
To ensure transparency and effectiveness of the executive compensation determination
process, the Executive Compensation Meeting shall, by a resolution of the Board of Directors,
be structured so that the majority of its members are outside directors, and its chairman shallbe appointed by a resolution of the Board of Directors.

Overview of Executive Compensation System
Composition of compensation
The ratio of compensation for the Representative Director, President and CEO will be set as 45% for basic compensation, 30% forannual performance-linked compensation, and 25% for restricted stock compensation (15% for variable compensation type (PSU)+ 10% for fixed compensation type (RS*)) upon achievement of the KPIs set forth in the STEP mid-term management vision.
As before, outside directors will only receive basic compensation(Reference) Compensation System for Directors (Representative Director President and CEO)
Fixed portion

Short-term incentives

Basic compensation

Annual performance-linked bonuses

45%

30%

Composition of compensation

We have set up a compensation table more closely linking compensation to annual performance the higher the rank, based on
the KPI of consolidated profit before tax for the fiscal year under review. Based on this table, cash compensation is paid at a
certain time of each year. For executive vice presidents, senior vice presidents, and vice presidents, specific amounts will be
determined after taking into consideration annual performance and level of contribution to human resource development. Suchcompensation will not be paid to outside directors.

Variable compensation type
Fixed(PSU) 15%compensation type(RS) 10%
Financial
Non-financial

Applicable performance indicator (KPI) to compensation composition

Annual performance-linked bonuses

Consolidated profit before tax

Variable compensation type (PSU) restricted stock compensation

Financial
Non-Financial

Consolidated ROE
Employee engagement indicator improvement points* In determining the specific amount of annual performance-linked bonus for executive vice presidents, senior vice presidents, and vice presidents, the Company shalltake into consideration consolidated profit before tax and level of contribution to human resource development.

Matters Concerning the Resolutions of the General Meetings of Shareholders on Compensation, etc. for
Directors and Corporate Auditors
By a resolution passed at the 85th Ordinary General Meeting of Shareholders, held in June 2016, the maximum total amount ofannual compensation, etc., for directors is 1.2 billion yen (including a maximum 200 million yen for outside directors). The
maximum total amount of monetary compensation is 200 million yen per year, within the abovementioned limitation, by aresolution passed at the 86th Ordinary General Meeting of Shareholders, held in June 2017. By a resolution passed at the 75th
Ordinary General Meeting of Shareholders, held in June 2006, the maximum total amount of annual compensation, etc., forcorporate auditors is 100 million yen.

Matters Concerning Delegation of Authority over the Details of Compensation, etc. for Individual Directors
SUBARU has voluntarily set up an Executive Compensation Meeting in order to enhance the effective governance structure
based on the existing organizational design. By resolution delegated from the Board of Directors, the Executive Compensation
Meeting, of which independent outside directors are a majority of its members, determines specific compensation amounts, etc.
of individual directors following sufficient deliberation. Its authorities include the determination of specific amounts of basic
compensation, annual performance-linked bonuses, and restricted stock compensation, as well as their payment schedule. For
restricted stock compensation, the number of shares allotted to individual directors is determined by the resolution of the Boardof Directors based on decisions of the Executive Compensation Meeting. In regard to revisions of the compensation system andother matters pertaining to compensation overall, proposals approved by the Executive Compensation Meeting are deliberated
and decided on by the Board of Directors.

Total Compensation for Directors and Corporate Auditors for FYE March 2023

* Restricted stock

Annual performance-linked bonuses (Short-term incentive)

Mid-and long-term incentives

Restricted stock compensation

Total Compensation (Millions of yen)
Category

NumberBasic Compensation (Paid in
fixed monthly installments)

Short-term Performancelinked Compensation

Restricted Stock Compensation
PSU

RS

Directors(of which, outside
directors)

9

293

147

23

58

521

(3)

(38)

( ̶)

(̶)

(̶)

(38)

Corporate auditors(of which, outside
corporate auditors)

5

85

̶

̶

̶

85

(3)

(29)

( ̶)

(̶)

(̶)

(29)

* The restricted stock compensation in the above table includes the amount of phantom stock expense recorded for grants to non-residents.

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73

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Cross-Shareholding

Auditing

Policy for Cross-Shareholding
SUBARU holds listed stocks as cross-shareholdings and engages in dialogues with the companies in question. Each year,
SUBARU’s Board of Directors quantitatively measures and compares benefits from holding, using dividend yield, and the capital
cost involved, using weighted average cost of capital (WACC), in order to verify each. The Company will maintain these holdings
only if it deems, based on the results of this verification, that the shares will contribute to its medium- to long-term management
and business strategies in a qualitative manner.

Auditing by Corporate Auditors
SUBARU has formulated internal rules to ensure the effectiveness of corporate auditors’ audits (e.g., Standards for Corporate
Auditor’s Audit) and developed a whistleblowing system. In this way, the Company established a framework where the corporate
auditors can gather information from directors and employees as needed in case of matters that may cause significant damages to
the Company, significant violation of laws/the Articles of Incorporation, or other significant compliance matters. In addition, theframework ensures smooth performance of corporate auditors’ duties by assigning employees independent from directors to
support duties of corporate auditors and making them known to all employees.

Verification Details for Cross-Shareholding
Based on the above policy, SUBARU has steadily reduced the number of listed stocks held as cross-shareholding. As a result, 60
issues held at the end of March 2015 decreased to 2 issues at the end of March 2021. We consider these two issues to be essential
to hold at this time for the following reasons, but we will continue to hold dialogue with these companies at least once a year, andthe Board of Directors will evaluate and scrutinize these issues annually to determine whether they should be held or not.
Investment Stocks Held for Purposes other than Pure Investment
IssuesThe Gunma Bank, Ltd.
Mizuho Financial Group, Inc.

Number ofsharesAmount reported on thebalance sheet (Millions of yen)

As of March 31, 2023

Purpose of holding, impact of holding, and reason for increase in number of shares

2,850,468

1,263

The Gunma Bank, a local bank of the area where the Company’s main factory resides, is supporting not only SUBARU but
also local supplier sites in Japan and abroad through its financial services. As the bank has been the Company’s importantpartner, the Company will continue to hold the bank’s shares to promote fair and smooth financial transactions.

372,097

699

The Mizuho Financial Group firms have been supporting SUBARU with financial transactions and other services. In
particular, the Mizuho Bank has long been the Company’s most important financial partner, providing support in a broad
area of management. The Company will continue to hold the group’s shares to promote fair and smooth transactions.

Criteria for Exercising Voting Rights for Cross-Shareholding
With regard to the exercise of voting rights for listed stocks held as cross-shareholding, the Board of Directors deliberates on anddetermines the criteria for exercise with evaluation items such as whether the company is consistently exhibiting poor performance,
whether a sufficient number of independent outside directors are in place and if management is supervised appropriately, andwhether there are any corporate governance issues present. Although these are our general principles, we hold dialogues at least
once a year with companies whose stock we hold to avoid making blanket decisions. Accordingly, we exercise our voting rights
appropriately in light of the performance, management policies, and medium- to long-term management plans of the companies inquestion, as well as from the perspectives of corporate value enhancement, corporate governance, and social responsibility. In
addition, we will continue to verify whether or not our criteria for exercise of voting rights warrant review.

Internal Control
Management System
With the aim of increasing the effectiveness of internal controls and risk management, the Internal Audit Department was madeindependent of the Risk Management Group (overseen by the Chief Risk Management Officer (CRMO)) to ensure a higher levelof independence of internal audit units in the organization and to enhance the effectiveness of internal controls.
Internal Control System
In accordance with the Companies Act and the Ordinance for Enforcement of the Companies Act, SUBARU’s Board of Directors
has adopted a basic policy on putting in place systems that ensure that the performance of duties by directors is in conformity
with laws and regulations and with the Articles of Incorporation, and other systems prescribed in the ordinance of the Ministry ofJustice as being necessary to ensure the appropriate operations of the Company and the corporate group consisting of theCompany and its subsidiaries. The Board of Directors maintains and operates this basic policy, reviewing it as needed.

Internal Control System Related to Financial Reporting
Regarding internal control reporting systems pursuant to the Financial Instruments and Exchange Act, the evaluation of theinternal control system related to financial reporting is dated the final day of the consolidated accounting period and isconducted in accordance with generally accepted assessment standards for internal control over financial reporting.
The President and Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) evaluated the status of the developmentof the internal control system related to financial reporting as of March 31, 2023 and affirmed that it has been established properly
and functions effectively, and issued an internal control report audited by the accounting auditors to that effect.

Securities Report and Financial Report are published in the Investor Relations section of the SUBARU website.

https://www.subaru.co.jp/ir/library/securities-reports.html (Japanese version only)
https://www.subaru.co.jp/en/ir/library/financial-reports.html

74 Integrated Report 2023

Specific matters studied in FYE March 2023
Matters for resolution
Audit policy, audit plan and division of audit duties, consent to agenda items for the General Meeting of Shareholders (appointmentof corporate auditors), evaluation and selection/dismissal of the accounting auditors, consent to the audit fee for the accounting
auditors, preparation of the audit report, etc. for the current fiscal year
Matters for reporting
Report on the results and findings of site visits to Company offices and affiliated companies
Sharing of information from standing corporate auditors to outside corporate auditors on important company matters,
including via the Executive Management Board Meeting and the Executive MeetingStatus reporting from responsible departments on risk management issues that arise internally or within the industry from a
preventive audit perspective
Individual opinions raised by the Board of Corporate Auditors are presented to relevant officers and others as appropriate togain reference opinions for forming decisions on the execution of business.
Main Initiatives
1) Confirming management monitoring and execution
In accordance with audit plans by corporate auditors, each corporate auditor attends important meetings, including those of the Board of
Directors, Executive Management Board Meeting, and Risk Management and Compliance Committee. When in attendance, they monitor
management decision-making processes, seek explanations as necessary, and actively express their opinions. Through exchanges of opinionswith directors, vice presidents, and others, as well as site visits to major business establishments and Group companies, corporate auditors also
confirmed the status of business execution including the maintenance and operation of internal controls, with a focus on priority audit items.
We also ensure the effectiveness of audits by utilizing remote methods, such as online meetings, as necessary and appropriate.
2) Meetings with departments related to internal controls
Corporate auditors receive regular monthly reports from the Legal Department and the Risk Management and Compliance Office oncompliance concerns including the operation of the whistleblowing system, and receive regular reports from human resource departments on
the status of issues such as disciplinary cases and industrial accidents.
In addition, corporate auditors receive reports from the departments in charge of managing subsidiaries on the status of governance andinternal controls for subsidiaries as appropriate.
3) Cooperation in the three-party audit system
Corporate auditors hold regular audit report meetings with internal audit units, receive reports on all internal audit results, and exchange
information and opinions on internal control issues, which are reflected in audits by corporate auditors.
Corporate auditors also receive quarterly reports from the accounting auditors on the status of accounting audits and exchange opinions withthem as necessary so as to ensure effective and efficient audits, thereby establishing close mutual cooperation in the three-party audit system.
As part of these exchanges, corporate auditors harness opportunities provided by quarterly reports to engage with the accounting auditorsfrom the beginning of the fiscal year with respect to Key Audit Matters (KAMs), including candidate matters, about concepts such as thesuitability of audit targets and the state of audit actions.
In addition, corporate auditors of the Company hold meetings to exchange opinions and share information with corporate auditors of Group
companies as appropriate, and also seek to collaborate with these corporate auditors by requesting their attendance at site visits of theirrespective Group companies.
Based on the findings confirmed through the above audit activities, we capture a range of opportunities to engage with the businessexecution side, including exchanges of opinions with all corporate auditors, the chair of the Board of Directors, and the representative
directors, and at Group company presidents’ meetings. Through these activities, we share information and provide necessary advice
and recommendations for the resolution of important management issues, including the strengthening of Group governance.
Internal Auditing
The Internal Audit Department (15 members) has been established and reports directly to the President. This organization evaluates
the state of the development and operation of internal controls with regard to business execution at SUBARU and its Group
companies in Japan and overseas from an independent and objective standpoint, providing advice and proposals for improvement.
As an initiative to ensure effective internal audits, the Internal Audit Department systematically conducts audits of businessexecution in accordance with an annual business audit plan prepared at the beginning of each fiscal year, taking into consideration
the risks and internal control status of the entire Group. Audit reports on business execution are distributed to all directors,
corporate auditors, and relevant departments at the same time as reports are directly made to the President at a monthly reporting
meeting. In parallel with this, reports are also made at semi-annual meetings of the Board of Directors and quarterly at joint
meetings consisting of all vice presidents.
SUBARU’s Internal Audit Department and corporate auditors work together to strengthen audit functions, as described in 3.3)
“Cooperation in the three-party audit system” above. In addition, we strive to strengthen audit functions by sharing information withthe accounting auditors on audit plans and audit results on a quarterly basis. Furthermore, the Internal Audit Department regularly
exchanges information with Group companies that have their own internal audit units, working toward greater cooperation.
The Internal Audit Department carries out a yearly evaluation of its own activities and periodically undergoes an evaluation by
external experts to confirm that the audit operations are being performed appropriately.
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75

Value Creation Story

Commentary on Strategy

Corporate Data

Foundations Supporting Value Creation

Compliance

Our Approach

Breakdown of Compliance Hotline Consultations and Trends Over Time
2019

2020

2021

2022

2023

At SUBARU, compliance is positioned as one of our most important management issues in our Corporate Governance
Guidelines. All officers and employees of the SUBARU Group are deeply ingrained with the commitment to adhere to
the Compliance Manual, laws, internal regulations, and social ethics and norms, making it an integral part of their
behavior at all levels. In the unlikely event of a violation of set standards, not only could the Company incur damages inaccordance with legal regulations, but such incidents could erode the trust and confidence of customers, business
partners, clients, shareholders, and broader society. By creating and operating a compliance system/organization, andcarrying out activities such as providing different kinds of training, each employee has a strong awareness that thoroughGroup-wide compliance forms the foundation of SUBARU’s management and behaves in accordance with this.

Suspected violation or violation

22

14

19

26

24

Labor-related grievances and requests

59

60

65

67

59

Interpersonal relationship grievances and requests

111

136

143

111

178

Management System
The SUBARU Group has established the Risk Management and Compliance Committee, a company-wide organization
designed to promote compliance. This committee deliberates, discusses, decides, and exchanges information on importantmatters related to risk management. We also employ a PDCA cycle, with each department creating its own complianceprogram each fiscal year to enhance compliance. This involves consistent, structured independent actions for legal compliancemanagement and to foster employee compliance awareness, as well as subsequent verification of compliance status.

Compliance System

AuditorEstablish
Internal audit
Results report

Report extremely important,highly urgent compliance issues

Board ofDirectors

CEO

Report important matters(e.g., deliberations/decisions)

7

6

9

10

9

Total

199

216

236

214

270

Training
In enforcing thorough compliance, we believe that initiatives in which the entire SUBARU Group acts in concert arenecessary. We conduct compliance training, training for legal affairs in practical business, and other programs for all
Group employees in Japan organized by our Legal Department, Risk Management and Compliance Office, and humanresource and education departments.
In particular, approximately 30,000 SUBARU and Group companies in Japan have participated in video-based online
training programs, which was introduced to adapt to work format changes due to the COVID-19 pandemic, thereby
raising compliance awareness across a wide range of individuals. In addition, to promote the understanding of key laws
and regulations, the Legal Department leads training for legal affairs in practical business for SUBARU and Group
companies in Japan. In FYE March 2023, we conducted such training within eight programs covering topics that
included security trade controls, the Act on the Protection of Personal Information, and the Subcontract Act. In addition,
to complement compliance enlightenment training, study groups are held at each department and affiliated company
based on their compliance program, covering important laws and regulations related to their work. These include
export controls, the Act on the Protection of Personal Information, the Antimonopoly Act, the Political Funds Control
Act, and harassment prevention.

Bribery Prevention

Risk Management and Compliance Committee members
Administrative work

At SUBARU and its Group companies in Japan, we consider the prevention of bribery in the connection to ourbusinesses as an important issue, and work to ensure the following approach is rigorously permeated.

Report important matters<Secretariat>
Risk Management and Compliance Office rohibition of providing, offering, or promising improper entertainment, gifts, favors, or other economic benefits toPpublic officials or persons in similar positions, whether in Japan or abroad(Risk Management and Compliance Oversight Department)
Discussion/cooperation

Discussion/reporting concerning scandals
Report compliance situation

Chief Risk Management Officer<Meeting of persons in charge of risk management>
Persons in charge of risk management
Conduct internal
audit

Others<Risk Management and Compliance Committee>
Risk Management and Compliance Committee Chair (CRMO)

Audit
Department/Internal Audit(FYE March)

Discussion/cooperation

Each division, department, and in-house company
Affiliated companies

Compliance Hotline
When regular or temporary employees of SUBARU and its Group companies in Japan detect a problem related tocompliance in the Group, they can consult with our Internal Reporting Desk by using the Compliance Hotline.
There were 270 consultations in FYE March 2023, the details of which are outlined in the table on the next page.
Through initiatives to fully embed this system, SUBARU has improved awareness of compliance and fostered an
atmosphere where employees can consult even about trivial matters. This has resulted in an increasing trend in thenumber of consultations over the previous five years. It is also contributing to the reform of corporate culture as achannel for addressing and resolving workplace issues.

 rohibition of providing or receiving an amount in excess of socially accepted norms in dealings with business partners
Pand customers who do not constitute public officials or similar persons
 rohibition of receipt of personal gain as a result of using information obtained in the course of business, establishingPboundaries between public and private life
Under the monitoring system for bribery prevention, SUBARU collects information to ascertain the presence of cases that
may constitute compliance violations through company-wide fact-finding investigations. It also strives to detect cases early via
business audits conducted by internal audit departments. Furthermore, SUBARU has established a system to report high-riskcases to the Risk Management and Compliance Committee and the Board of Directors, in an effort to strengthen oversight.
In FYE March 2023, there were no fines, penalties, or settlement payments related to violations of anti-corruption laws
and regulations within the Group, and no individuals were subject to disciplinary dismissals for such violations.

Tax Policy
The SUBARU Group is able to conduct its business operations thanks to support from society, and it strongly recognizes theimportance of returning profits to society. The SUBARU Group considers fulfilling its tax obligations to be an essential element of this.
The SUBARU Group strives to ensure compliance with the tax laws and regulations of each country and jurisdiction, pursuant
to the international rules and standards set out by international organizations, thereby fulfilling its societal obligations throughappropriate tax payments, while aiming for sustainable growth through sound business activities.
For Other Compliance Information
Please refer to our website for details about Corporate Governance Guidelines and Tax Policy

https://www.subaru.co.jp/en/csr/governance/compliance.html

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Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Business Overview

Automotive Business Unit

Automobile Sales by Region

Other regions 35,000
Australia 36,000

Japan 101,000

Europe 14,000
RetailAutomobile
Sales

China 11,000(Jan-Dec 2022)

North America 601,000

Product Lineup

Sports / Wagon

SUV (BEV)
Unit sales : 2 thousand units

Unit sales : 14 thousand units

Sales region : Japan, North America,

Sales region : Japan and other

Europe, and other(Other markets: EVOLTIS)
SUV

SUBARU’s history as an automaker began with the launch of the SUBARU 360 in 1958. Since then, we have worked
continually to provide new value in automobiles by developing new categories based on our core technologies,
such as the horizontally-opposed engine and symmetrical all-wheel drive (AWD), and by creating new technologicalvalue, including EyeSight*, the world’s first driver assist system. These actions have deepened our relationships withcustomers. In recent years, we have positioned the U.S. as an important market, with a strategy of concentrating
limited management resources in fields in which we should extend our strengths and advantages, including productlineups focused on SUVs and sports models. We provide Enjoyment and Peace of Mind through high value-added
products. In addition, we are developing core technologies in areas such as battery electric and hybrid vehicles, whileleveraging alliances to accelerate our initiatives toward achieving carbon neutrality.

Sports / Sedan

Unit sales : 68 thousand units

Unit sales : 27 thousand units

Sales region : North America, and other

Sales region : Japan, North America, Australia, and other

SUVSports / Coupe

Unit sales : 189 thousand units

Unit sales : 13 thousand units

Sales region : Japan, North America, Europe, Australia, China, and other

Sales region : Japan, North America, Europe, Australia, China, and other

SUV

Sedan

Unit sales : 186 thousand units

Unit sales : 23 thousand units

Sales region : Japan, North America, Europe, Australia, China, and other

Sales region : North America, China, and other

SUV

Wagon

*EyeSight is the first driver assist system to provide all functionality solely through the use of stereo cameras

Consolidated Revenue
Contribution Ratio

Revenue

Operating Profit(Billions of yen)(Billions of yen)

3,690.6
3,007.6

263.3

3,193.9
2,737.5 2,677.5

Unit sales : 213 thousand units

Unit sales : 46 thousand units

Sales region : Japan, North America, Europe, Australia, China, and other

Sales region : Japan, North America, Europe, Australia, and other

OEM

200.3
172.1

Automotive
Business

109.1(FYE March 2023)

92.5

97.8%
19/3

20/3

21/3
IFRS

22/3

23/3

19/3

20/3

21/3
IFRS

22/3

23/3

Unit sales : 21 thousand units
Sales region : Japan (OEM supply from Daihatsu Motor Co., Ltd.)
Notes 1: Retail unit sales in each region for the period from January 1 to December 31, 2022.
2: Regional sales results are for the aforementioned period.

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Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

SUBARU Models through the Years

SUBARU Core Technologies

Note: our production models

EyeSight Driver Assist System

1977

1995

2014

Stereo cameras for advanced object
recognition capabilities
By using two cameras positioned like human eyes (stereo cameras), the EyeSight driverassistance system is able to detect vehicles and pedestrians ahead of the vehicle and toaccurately determine the distance of each object. This technology helps avoid accidents,
minimizes damage, and reduces the burden on the driver. The next-generation EyeSight
system installed in the 2020 SUBARU Levorg enables 360-degree sensing thanks toredesigned stereo cameras that allow for expanded visibility and four radar units locatedat the front and rear of the vehicle. This system contributes to safe driving in an evenwider range of situations. The EyeSight X advanced driver assistance system combines
information from sources such as the GPS and QZSS “Michibiki” satellite systems withhigh-precision 3D map data, which enables driving support functions including lanechange assist and hands-off driving assist in traffic congestion. The Crosstrek released in
2023 adds a “third eye” in the newest evolution of this system, using an ultra wide-angle
monocular camera in addition to stereo cameras. This results in improved recognition
performance at intersections, where accidents are more common.

Brat released

1958

1983

Outback released(Japan: Grand Wagon)

1997

Levorg released

2014

Stereo cameras

SUBARU 360 released

1961

Domingo released

1984

Forester released1998

WRX released

2018

SUBARU Global Platform

Balancing a high degree of both drive quality andpassive safety performance
The SUBARU Global Platform, first implemented in 2016 with the Impreza, substantially
increases body and chassis rigidity and further lowers vehicle center of gravity, improving
Active Safety and delivering responsive handling performance and a comfortable ride.
Furthermore, beginning in 2020 with the fully redesigned Levorg, we have adopted the
new full inner frame construction technology to enhance rigidity across the entire body.
This further evolves Passive Safety performance and provides an even more
comfortable ride.

SUBARU Sambar truck released

1966

SUBARU Global Platform

SUBARU 1000 four-door sedan released

1969

Justy released

1985

Alcyone released

1989

Pleo released

2005

B9 Tribeca released

Ascent released(Exclusively for North America)

2022

Solterra released

2008

Symmetrical All-Wheel Drive (AWD)

Superior overall weight distribution
The combination of the low center of gravity provided by the horizontally-opposedengine and superior longitudinal-transverse weight balance achieved by placing
the transmission near the center of the vehicle maximizes all-wheel drive capability
and delivers superb driving performance in various conditions. SUBARU has beencommitted to Symmetrical AWD as a core technology that drivers can depend onin every situation from day-to-day town use to high-speed highway driving.

R-2 released

1971

1992

Exiga released

2012

Symmetrical All-Wheel Drive

Horizontally-Opposed Engine (Boxer engine)

Leone coupe released

Compact, low center of gravity

1972

The horizontally-opposed engine has pistons arranged symmetrically to the left andright of the crankshaft. The opposed pistons mutually cancel out engine vibrations,which reduces vibrations conveyed to the vehicle interior. The engine’s low heightand compact design contribute to a low vehicle center of gravity. The stable
attitude provides a high sense of security during driving.

Rex released
Subaru Boxer

80 Integrated Report 2023

Legacy series released

Conventional
In-Line Engine

Vivio released

1992

Impreza series released

SUBARU BRZ released

2012

Crosstrek released(Japanese name: SUBARU XV)Integrated Report 2023

81

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Business Overview

Aerospace Business Unit
Commercial Business
Since first participating in the Boeing passenger program in 1973, we have been
involved in development and production as a one of key partner of Boeing for morethan 50 years. SUBARU manufactures the center wing box, the critical aircraft section
where the right and left wings are attached to the front and rear fuselage and major
sections. Since the center wing box contains the aircraft’s fuel, Boeing requires that
we provide high mechanical strength and high fluid tightness, a need we have met
by demonstrating our advanced design and assembly technologies.
The Handa Plant, located in Aichi Prefecture and where center wing boxes
for large aircraft are manufactured, is a global-level production center providing
parts for not only the Boeing 787, which boasts over 1,000 manufactured
worldwide, but also the Boeing 777X, Boeing 777, the Ministry of Defense’s P-1
maritime patrol aircraft, and the C-2 transport aircraft. As of May 2023, theHanda Plant has manufactured and shipped a cumulative total of 3,000 center
wing boxes for large aircraft.

A center wing box (Handa Plant)

Defense Business

SUBARU’s roots trace back to 1917 and the Aircraft Research Laboratory, later to become Nakajima Aircraft. In the
SUBARU of today, our Aerospace Business carries on Nakajima Aircraft’s passion for Monozukuri, leading Japan’s
aerospace industry through the development and production of a diverse set of aircraft under three business pillars:
defense, commercial, and helicopter. Our defense business is wide-ranging, including the development and productionof aircraft systems under an all-Japan framework, as well as of training aircraft for the Japan Self-Defense Forces. In
our commercial business, we are responsible for the development and manufacturing of the center wing boxes andvarious other components of large aircraft such as the Boeing 787 through an international joint development programwith U.S.-based Boeing. In our helicopter business, we produce the UH-2 utility helicopter used by the Japan GroundSelf- Defense Force (JGSDF) and its commercial version, the SUBARU BELL 412EPX.
Consolidated Revenue
Contribution Ratio

2.1%

Revenue

Operating Profit(Billions of yen)(Billions of yen)

134.1

6.0
87.7

5.1

79.0
62.3

-2.1

(FYE March 2023)

-7.0
-9.8
’19/3

’20/3

’21/3

’22/3

’23/3

IFRS

’19/3

’20/3

’21/3

’22/3

’23/3

IFRS

Primary Products and Services
SUBARU BELL 412EPX UH-2 utility helicopter AH-64D attack helicopter T-5 and T-7 trainers
The Center Wing Section of Boeing 787 The Center Wing Section of Boeing 777 & 777X

82 Integrated Report 2023

The T-5 Japan Maritime Self-Defense Forcetraining aircraft

Helicopter Business

142.1

Aerospace
Business

For half a century, the SUBARU Group has been providing overall operational
support, including aircraft manufacturing, scheduled maintenance, refueling, andtraining, for programs such as Japan Air Self-Defense Force and Japan Maritime
Self-Defense Force training aircraft systems, as well as Japan Ground Self-Defense
Force utility helicopters. As of May 2023, affiliate Fuji Aviation Maintenance Co.,
Ltd. reached the milestone of 2,500 cumulative scheduled maintenance services
performed for T-5 aircraft. We also boast a significant track record in development
for unmanned aerial vehicles, and are actively involved in the operation support ofexisting systems and the research and development of future systems.
SUBARU also participates in the development of Japan's major defense
aircraft systems, including fighter, transport, and patrol aircraft, and we areresponsible for the development and production of major components, focusing
on areas where we have particular strengths, including main wings, tail fins, andcomposite materials. With the establishment of Japan’s three strategic documents,
our defense business is experiencing dramatic environmental changes toward
stronger defense capabilities for Japan. In this context, SUBARU will contribute to
the defense of Japan through action precisely meeting the needs of ourcustomers with rock-solid technical capabilities backed up by many years ofexperience and achievements.

Flying Forward Reconnaissance System

SUBARU has established a mass production line at our Utsunomiya Plant to provide
UH-2 utility helicopters to the Japan Ground Self-Defense Force, which is used for
air transport as well as lifesaving, evacuation, and firefighting during disasters, plus
other missions to ensure the safety and security of the people of Japan.
The SUBARU BELL 412EPX is the commercial version of the UH-2, and has
seen a steady increase in orders and sales. This aircraft boasts high reliability for
operation under harsh conditions and excellent serviceability, and is expected toenjoy broad use in Japan and around the world.
SUBARU will continue to support safe and reliable flight operations for its
customers as a company with manufacturing and maintenance bases in Japan, notonly by manufacturing and selling aircraft, but also by supplying parts andperforming scheduled maintenance.

The UH-2 Japan Ground Self-Defense Forceutility helicopter

Integrated Report 2023

83

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Previous Mid-term Management Vision
Previously, our medium-term management approach has been formulated and published as the Mid-Term Management Vision, a three to five-year
management plan. However, our business environment is experiencing disruptive and non-linear changes. Our belief is that we must adapt to this
rapid change in a more timely manner, and we have accordingly altered our approach to the formulation and messaging of our approach to
management. Now, we will be newly unbound from conventional methodologies and reporting on progress as appropriate.
The evolution of our Mid-Term Management Vision to date is as described below.

2007–2010
Customer Satisfaction:
Our Customers Are Everything

2011–20132014–20172018–2023

Motion-V

Prominence 2020

STEP

At the time of announcement: Representative Director of the Board, President and CEO Ikuo Mori

At the time of announcement: Representative Director of the Board, President and CEO Yasuyuki Yoshinaga

At the time of announcement: Representative Director of the Board, President and CEO Yasuyuki Yoshinaga

Representative Director of the Board, President and CEO Tomomi Nakamura

Management philosophy

Essential features

With the philosophy of “customers come first” at
its core, focusing on improving profitability andinvesting in growth areas with management resources

Aiming to be a compelling company with a strong market
presence built upon its customer-first principle

Major challenges

Reason for formulation

Value statement

Enjoyment and Peace of Mind

Delivering happiness to all

3 Strengthen sales force and the availability of automotive supply,“Accelerate sales expansion”

5 To grow the level of employee competence andso enhance the organization

4 Overhaul of cost structure and promote alliance with Toyota,“Solidify operational foundation”

Achievements

5 Back up concrete approaches for business,“Improvement in Management”
Achievements

XUV/SUV strategy succeeded
Boosted sales through U.S.-oriented product development
Highly rated collision safety and EyeSight
Cost reduction activities paid off
Achieved low-incentive sales
Achieved highly efficient production

IssuesLowering sensitivity to foreign currency fluctuations
Increasing sale in emerging countries including China
Developing environmental technology and products
Autonomy of three internal companies*
Flexibility to adapt to changes in business environment

IssuesVision for 2025

Corporate vision
Not big in size, but a high-quality company with
distinctive strengths

1 Become a brand that is “different” from others byenhancing distinctiveness.

Specific goals• No.1 for customer trust• Strong brand• Among the most profitable companies in the industry• Vehicle sales of 1.1 million-plus units

2 Engage in business activities that resonate with customers
by putting them center-stage
3 Fulfill corporate social responsibilities by contributing todiversifying social needs.
Major challenges

Direction for mid-term management visionCorporate culture reforms
Quality enhancement
Evolution of the SUBARU difference

Pursue added-value business
Enhancing the SUBARU brand
Increase tolerance to changes in the business environment
Building a strong business structure

Note: A progress report on “STEP” was made in May 2021, and content waspartially updated.

Achievement

Compliance with future environmental regulations
Production capacity shortages
Responding to the needs of new customers
Sensitivity to currency fluctuations

Among the most profitable companies in the industry
IssuesNote: The Motion-V mid-term management plan, originally intended to run from 2011 to2015, was completed ahead of schedule in FYE March 2014. Prominence 2020, the
new mid-term management vision, was launched in FYE March 2015.

* Aerospace Company, Industrial Products Company, Eco Technologies Company

VisionVision for 2020

4 To also grow through the business alliance with Toyota

Sharing the mindset of “customers come first”
within the Group
Globalization of products
World’s leading safety performance
Expanding sales in U.S. (the most important market)
Reform of profit structure by reducing costs

We aim to be a compelling company with a strong market
presence built upon our customer-first principle

Pursue the goal of sustainable growth anddevelopment by boosting competitiveness andbuilding a solid business platform at a new stage

2 With the basic philosophy of “customers come first,”“Provide distinctive SUBARU experience”

3 To strengthen competitiveness in quality and cost

Aiming to be a compelling company with a strong market
presence built upon its customer-first principle

1 Guiding principle for all activities “Confidence in Motion”“Provide value to customers and Enjoyment and Peace of Mind”

2 To increase sales globally (Most important market: U.S.)

Corporate statement

Five themes<Promote the brand strategy>

1 To provide a distinctive SUBARU experience for drivers
and passengers

Management philosophy

Strong brand
Vehicle sales of 1.2 million-plus units
No. 1 for customer trust

Consolidated Automobile Unit Sales and Operating Margin
Automobile sales(Thousand units)

U.S.

Overseas (Excl. the U.S.)Japan

Operating margin

Operating margin (%)

17.5

1,100
1,000
825

800
700
600

657

597

852

12.4

734

11.7

640

563

555

860

14.7
13.6

724

18

1,034

1,001

958

911

900

1,067

1,065

12

500
400
300
200

2.9

6

2.9

1.9

100

7.1

6.3

5.8

6.3

5.3

3.6
3.3

-0.4

0

0
’08/3

84 Integrated Report 2023

’09/3

’10/3

’11/3

’12/3

’13/3

’14/3

’15/3

’16/3

’17/3

’18/3

’19/3

’20/3

’21/3

’22/3

’23/3
Integrated Report 2023

85

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Consolidated Ten-year Financial Summary
Subaru Corporation and its consolidated subsidiaries
Years ended March 31IFRS

J-GAAP
’14/3

’15/3

’16/3

’17/3

’18/3

’19/3

Operating results (for the year)

’19/3

’20/3

’21/3

’22/3

’23/3

Operating results (for the year)*1

Millions of yen

2,408,129

2,877,913

3,232,258

3,325,992

3,232,695

3,160,514

Revenue

Millions of yen

3,156,150

3,344,109

2,830,210

2,744,520

3,774,468

Cost of sales

Millions of yen

1,728,271

2,017,490

2,187,136

2,386,266

2,442,706

2,561,753

Cost of sales

Millions of yen

2,558,262

2,728,605

2,337,614

2,240,595

3,037,993

Gross profit

Net sales

Millions of yen

679,858

860,423

1,045,122

939,726

789,989598,761

Gross profit

Millions of yen

597,888615,504

492,596

503,925

736,475

Selling, general and administrative expenses*1 Millions of yen

353,369

437,378479,533

528,916

410,542403,232

Selling, general and administrative expenses

Millions of yen

298,875

308,227

279,867

303,136

342,015

Operating income

Millions of yen

326,489

423,045565,589

410,810379,447

195,529

Operating profit

Millions of yen

181,724

210,319

102,468

90,452

267,483

Income before income taxes

Millions of yen

328,865

392,206

619,003394,695

297,340

195,838

Profit before tax

Millions of yen

186,026

207,656

113,954

106,972

278,366

Net income attributable to owners of parent Millions of yen

206,616

261,873436,654282,354

220,354

147,812

Profit for the period attributable to owners of parent

Millions of yen

141,418

152,587

76,51070,007200,431

Depreciation/amortization*2, *3

61,486

71,821

72,93885,653102,102102,749

Depreciation/amortization*3

Millions of yen

187,077

192,742

206,317224,055

239,806

Millions of yen*3*3

Capital expenditures

Millions of yen

98,537

135,346

168,338

196,616

193,789

169,960

Capital expenditures

Millions of yen

274,281284,669

258,229

244,436

257,950

R&D expenses

Millions of yen

60,092

83,535102,373

114,215

121,084

102,719

R&D expenditures

Millions of yen

102,719

118,735

101,626

113,752

107,780

Millions of yen

770,071

1,030,719

1,349,411

1,464,888

1,561,023

1,612,825

Total equity

Millions of yen

1,689,899

1,720,123

1,786,383

1,901,019

2,109,947

Millions of yen

765,544

1,022,417

1,343,732

1,458,664

1,552,844

1,605,291

Equity attributable to owners of parent

Millions of yen

1,682,248

1,712,881

1,777,735

1,890,789

2,100,973

Millions of yen

1,888,363

2,199,714

2,592,410

2,762,321

2,866,474

2,982,725

Total assets

Millions of yen

3,180,597

3,293,908

3,411,712

3,543,753

3,944,150

40.5

46.5

51.8

52.8

54.2

53.8

52.9

52.0

52.1

53.4

53.3

210,134

289,376

195,651

503,759

Financial position (at year-end)

Financial position (at year-end)

Net assets
Shareholders’ equity*4

Total assets

Ratio of shareholders’ equity to total assets*4%

Cash flows

Ratio of equity attributable to owners of parent to total assets%

Cash flows

Net cash provided by (used in) operating activities Millions of yen

313,024

311,543614,256

345,442366,298

174,006

Net cash provided by (used in) operating activities

Millions of yen

250,732

Net cash provided by (used in) investing activities

Millions of yen(33,903)(172,780)(255,676)(254,252)(150,711)(158,327)

Net cash provided by (used in) investing activities

Millions of yen(190,119)(25,844)(272,174)(179,723)(336,813)

Free cash flow

Millions of yen

279,121

138,763358,580

91,190215,587

15,679

Free cash flows

Millions of yen

60,613

184,290

17,202

15,928

166,946

Net cash provided by (used in) financing activities

Millions of yen(63,011)(110,546)(126,190)(189,044)(170,937)(96,617)

Net cash provided by (used in) financing activities

Millions of yen(141,551)(15,818)

13,966(98,502)(122,307)

Per share

Per share

Net income (EPS)

Yen

264.76335.57559.54365.77287.40192.78

Profit for the period attributable to owners of parent (EPS)

Yen

184.44198.99

99.77

91.28

261.33

Net assets (BPS)

Yen

980.981,310.15

1,721.90

1,902.56

2,025.31

2,093.60

Equity attributable to owners of parent (BPS)

Yen

2,193.97

2,233.76

2,318.17

2,465.41

2,739.27

Dividends

Yen

53

68

144

144

144

144

Dividends

Yen

144

100

56

56

76

Other information

Other information

Non-consolidated exchange rate

Yen to the U.S. dollar

100

108

121

108

111

111

Non-consolidated exchange rate

Yen to the U.S. dollar

Number of shares issued

Thousands of shares

782,865

782,865

782,865

769,175

769,175

111

109

106

112

135

769,175

Number of shares issued

Thousands of shares

769,175

769,175

769,175

769,175

769,175

Number of shareholders*5

Persons

51,38670,942

79,59476,471

132,570

133,879

Number of shareholders*5

Persons

Number of employees (parent only) Persons

13,034

13,883

14,234

133,879

145,289

142,890

147,507

139,908

14,70814,87915,274

Number of employees (parent only)

Persons

15,27415,806

16,478

16,961

17,228

Number of employees (consolidated) Persons

28,54529,774

31,151

32,59933,54434,200

Number of employees (consolidated)

Persons

34,20035,03436,07036,91037,521

Consolidated automobile unit sales*6

Thousand units

1,001

1,034

860

734

852

Vehicle unit production

Thousand units

989

1,031

810

727

874

Number of units

Number of units*6

Consolidated automobile unit sales

Thousand units

825

911

958

1,065

1,067

1,000

Vehicle unit production

Thousand units

813

914

951

1,056

1,050

989

DomesticThousand units

650

708

715

721

701

617

DomesticThousand units

617

664

525

455

575

Overseas*7

Thousand units

164

207

236

335

349

372

Overseas*7

Thousand units

372

367

285

272

299

Note: The Subaru Group has voluntarily applied International Financial Reporting Standards (IFRS) since the first quarter of FYE March 2020
*1 Change of accounting policy effective from FYE March 2019 (deduction of sales incentives from net sales); retroactively applied to the figures for FYE March 2018
*2 Accompanying a change in accounting policy effective from the FYE March 2019, change of depreciation method for certain tangible fixed assets of the Company
and its major domestic consolidated subsidiaries from the declining-balance method to the straight-line method*3 Total amount of property, plant and equipment and intangible assets*4 Partial Amendments to Accounting Standard for Tax Effect Accounting have been applied from FYE March 2019, and retrospectively applied to the figures for FYE March 2018.
*5 Number of shares per trading unit: 100 shares*6 Automobile unit sales of Subaru Corporation and its consolidated subsidiaries*7 U.S. production base Subaru of Indiana Automotive, Inc.

86 Integrated Report 2023

Financial Information
Please visit the SUBARU website for details about financial information.

https://www.subaru.co.jp/en/ir/library/

Integrated Report 2023

87

Value Creation Story

Commentary on Strategy

Foundations Supporting Value Creation

Corporate Data

Five-year Unit Sales
Years ended March 31

Consolidated Automobile Sales by Region(Thousand units)
’19/3

Japan
LegacyImpreza
ForesterLevorgWRX
ExigaSUBARU BRZ
Solterra
OEM
Others
Passenger cars
Minicars
Japan total

’20/3

’21/3

’22/3

(Thousand units)

’23/3

6.1
47.4
32.1
13.2
7.1
0.2
1.3
—
2.7
0.1
110.2
26.0
136.2

4.7
42.9
30.1
11.8
8.5
̶
1.2
̶
2.7
̶
101.9
23.9
125.8

2.6
30.7
22.9
20.1
2.8
̶
0.8
̶
1.9
̶
81.9
19.9
101.8

4.9
22.5
23.4
15.0
0.2
—
5.0
—
1.7
—
72.6
16.8
89.4

7.6
25.0
22.8
15.7
3.9
—
4.1
0.4
1.7
—
81.1
18.5
99.7

213.9
197.0
155.6
26.5
63.1
3.7
—
659.7

197.2
196.5
200.5
21.0
84.6
1.8
—
701.6

186.3
173.6
176.2
18.7
54.9
2.0
—
611.6

153.1
149.7
121.9
20.2
58.8
2.6
—
506.3

178.9
193.9
116.1
28.3
68.0
3.4
3.2
591.8

’19/3

U.S.
LegacyImpreza
Forester
WRX
AscentSUBARU BRZ
Solterra
U.S. total
CanadaLegacyImpreza
Forester
WRX
AscentSUBARU BRZ
Solterra
Canada total

13.3
22.1
12.5
4.1
4.1
0.7
—
56.8

13.0
25.7
14.8
2.5
4.0
0.4
—
60.4

9.7
24.0
10.4
2.6
2.7
0.3
—
49.7

11.4
24.5
7.3
2.6
2.7
0.6
—
49.1

11.6
16.5
8.0
2.6
3.4
0.5
0.6
43.1

EuropeLegacyImpreza
ForesterLevorgWRX
SUBARU BRZ
Solterra
Europe total

6.5
14.9
9.1
0.8
0.3
0.5
—
32.1

8.8
13.2
12.7
1.9
̶
0.4
—
37.0

3.2
5.9
4.3
0.1
0.0
0.2
—
13.7

6.0
5.9
3.1
0.0
—
0.0
—
15.0

6.0
8.8
5.4
0.0
—
0.3
2.7
23.3

Australia
LegacyImpreza
ForesterLevorgWRX
SUBARU BRZAustralia total* Legacy sales figures include sales of the Outback model.
* Impreza sales figures include sales of the SUBARU XV and Crosstrek models.

7.2
9.8
12.3
0.2
1.5
0.4
31.4

9.2
12.2
10.5
0.1
0.8
0.4
33.2

’23/3

2.7
1.6
15.6
0.8
20.6

4.9
2.2
17.4
0.0
24.5

3.9
1.1
8.8
0.1
13.9

1.1
0.4
4.9
3.8
10.1

Other regions
LegacyImpreza
ForesterLevorgWRX
AscentSUBARU BRZ
Solterra
Other regions total

5.7
20.6
22.2
1.1
1.4
—
0.3
—
51.4

3.4
16.0
23.5
0.9
1.2
0.0
0.3
—
45.3

2.2
9.9
14.0
0.2
0.4
0.7
0.1
—
27.5

4.5
10.6
10.9
0.0
0.3
0.5
0.3
—
27.2

4.7
14.8
17.3
0.3
1.2
0.9
1.3
0.1
40.5

Overseas total

864.6

908.0

758.4

644.6

752.7

Global total

1,000.8

1,033.9

860.2

734.1

852.4

Consolidated Automobile Sales by Model(Thousand units)

LegacyImpreza
ForesterLevorgWRX
Exiga
AscentSUBARU BRZ
Solterra
OEM
Minicars
OthersGlobal total

Consolidated Automobile Sales by Region

by country

’20/3

259.9
322.5
258.8
15.4
41.0
0.2
67.2
6.9
—
2.7
26.0
0.1
1,000.8

’21/3

237.8
312.0
314.1
15.0
34.4
—
88.6
5.4
—
2.7
23.9
—
1,033.9

’22/3

216.1
256.1
257.5
20.5
26.1
—
58.3
3.9
—
1.9
19.9
—
860.2

Vehicle type

1,200

221.4
273.1
187.9
17.0
38.7
—
72.3
14.8
7.0
1.7
18.5
—
852.4

(Thousand units)

1,200

1,034

1,001
860

852

1,034

900

860

734

852
734

600

600

300

300

0

0
2019.3

Japan

’23/3

193.0
226.5
185.9
15.2
24.1
—
62.1
8.9
—
1.7
16.8
—
734.1

Consolidated Automobile Sales by Model(Thousand units)

900

11.5
13.7
13.5
0.9
2.7
1.5
43.9

’22/3

3.8
3.8
15.2
—
22.8

1,001

8.0
16.1
16.9
0.3
1.3
0.5
43.1

’21/3

China
LegacyImpreza
Forester
SUBARU BRZ
China total

’19/3

10.6
16.7
12.2
0.3
1.5
0.4
41.7

’20/3

U.S.

2020.3

CanadaEurope2021.32022.3Australia

China

2019.32023.3
Others*Automobile sales of Subaru Corporation and its consolidated subsidiaries

LegacyWRX
Solterra

2020.3

ImprezaExigaOEM

2021.3
ForesterAscentMinicars

2022.32023.3

LevorgSUBARU BRZ
Others*Automobile sales of Subaru Corporation and its consolidated subsidiaries

Other Financial Information
The summary of consolidated financial results and presentation materials for results briefings are published in the Investor Relations section of the SUBARU website.

https://www.subaru.co.jp/en/ir/

88 Integrated Report 2023

Integrated Report 2023

89

Value Creation Story

Commentary on Strategy

Mechanisms Supporting Value Creation

Corporate Data

Corporate Data

Corporate Data (As of March 31, 2023)
Company Name SUBARU CORPORATION
Established

July 15, 1953

Paid-In Capital¥153,795 million

Fiscal Year-End March 31
Accounting
Auditors

KPMG AZSA LLC

Main
Businesses

Automotive:
The manufacture, sale, and repair of passenger cars
and their components

Head OfficeEbisu Subaru Bldg. 1-20-8,
Ebisu, Shibuya-ku, Tokyo, Japan

Number of
Affiliates

95 (87 subsidiaries, 7 affiliated companies,
and 1 other affiliated company)

Number of
Employees

17,228 (consolidated: 37,521)(excluding executive officers, advisors andtransferred employees)

Aerospace:
The manufacture, sale, and repair of airplanes,
aerospace-related machinery, and their components

WebsiteAddresses

Corporate website:
https://www.subaru.co.jp/en/
Investor information website:
https://www.subaru.co.jp/en/ir/

Stock Information (As of March 31, 2023)
Common Stock
Authorized

1,500,000,000 shares

Breakdown of Shareholders

Common Stock Issued

769,175,873 shares

Securities companies
24,253 thousand shares
3.2%

Number of Shareholders 139,908
Number of Shares
per Trading Unit

100 shares

Stock Exchange Listing

Tokyo Stock Exchange (Prime Market)

Securities Code

7270

Transfer Agent andAccount Management
Institution of Special
Accounts

Mizuho Trust & Banking Co., Ltd.
3–3, Marunouchi 1-chome, Chiyoda–ku,
Tokyo 100–8241, Japan
Tel: 0120-288-324 (toll free)

Individuals andothers
86,251 thousand shares
11.2%

Japanese corporations
and others
180,636 thousand shares
23.5%

Treasury stock
1,794 thousand shares
0.2%

Financial
institutions
228,889 thousand shares
29.8%
Foreign institutions
and others
247,350 thousand shares
32.2%

Note: Number of shares held are rounded down to the nearest thousand shares

Major Shareholders
Number of
Shares HeldName

(in thousands)

Percentage
of Total
Shares Held

Toyota Motor Corporation

1 Toyota-Cho, Toyota City, Aichi Prefecture, Japan

153,600

20.02

The Master Trust Bank of Japan, Ltd. (Trust account)

2-11-3 Hamamatsucho, Minato-ku, Tokyo, Japan

115,024

14.99

Custody Bank of Japan, Ltd. (Trust account)

1-8-12 Harumi, Chuo-ku, Tokyo, Japan

47,682

6.21

STATE STREET BANK AND TRUST COMPANY 505103

P.O. BOX 351 BOSTON MASSACHUSETTS 02101 U.S.A.

11,128

1.45

STATE STREET BANK WEST CLIENT TREATY 505234

1776 HERITAGE DRIVE, NORTH QUINCY, MA 02171, U.S.A.

10,198

1.33

MIZUHO SECURITIES ASIA
LIMITED-CLIENT A/C

12TH FLOOR, CHATER HOUSE, 8 CONNAUGHT ROAD,
CENTRAL, HONG KONG

10,1651.32

Mizuho Bank, Ltd.

1-5-5 Otemachi, Chiyoda-ku, Tokyo, Japan

10,0781.31

SSBTC CLIENT OMNIBUS ACCOUNTONE LINCOLN STREET, BOSTON MA USA 02111

9,287

1.21

Sompo Japan Insurance Inc.

1-26-1 Nishishinjuku, Shinjuku-ku, Tokyo, Japan

8,267

1.08

JP MORGAN CHASE BANK 385781

25 BANK STREET, CANARY WHARF, LONDON, E14 5JP,
UNITED KINGDOM

8,035

1.05

Note 1: Number of shares held are rounded down to the nearest thousand shares
Note 2: The percentage of total shares held is calculated based on the number of shares excluding treasury stock of 1,794,065 shares

90 Integrated Report 2023

I N T E G R AT EDREPOR T2 0 23Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku,
Tokyo 150-8554, Japan
Phone : +81-3-6447-8000
https://www.subaru.co.jp/en/ir/