Procurement Risks from Dependence on Specific Raw Materials and Suppliers

「In recent years, uncertainty surrounding the supply chain has increased further owing to heightened geopolitical risks, including the situation in the Middle East, changes in trade policies and regulations in various countries, fluctuations in resource and energy prices, supply constraints for critical components, logistics constraints caused by labour shortages, and the increase in cyberattacks.」

「Because US tariff policy has increased the procurement costs of components imported from certain countries for vehicles produced at the company's US production facilities, the company will monitor the impact on raw material and component procurement and continue working to improve costs by pursuing optimal procurement together with its suppliers.」

「In fiscal 2023, the impact of production constraints caused by the semiconductor shortage remained through the first part of the first half, but supply recovered thereafter.」

「Although the impact of production constraints caused by the semiconductor shortage and other factors remains」

「At present, production volume is recovering as a result of company-wide initiatives, including strengthening the supply chain management structure, promoting the switch to alternative products, reviewing product specifications, and reallocating components among vehicle models and plants.」

「Although risks from production constraints due to semiconductor supply shortages and other factors remain, we worked to minimize their impact by flexibly adjusting production plans and other measures. As a result, production during the cumulative third quarter ended increased by 122,000 units, or 22.2%, year on year.」

「Although the risk of production constraints due to the semiconductor shortage and other factors remains, production volume in the cumulative second quarter increased by 84,000 units, or 24.5%, year on year, partly because the company flexibly adjusted its production plans.」

「In fiscal 2021, in addition to the global semiconductor shortage that had continued from the previous year, the spread of COVID-19 in Southeast Asia and other factors disrupted the supply of some components procured from suppliers. Accordingly, the company adjusted production, including by suspending operations at some plants for several days in January, April, September and December 2021 and January and February 2022.」

「Due to supply disruptions involving semiconductors supplied by suppliers against the backdrop of global semiconductor supply issues, and component supply disruptions caused by the spread of COVID-19 infections among suppliers, operations at Gunma Plant, comprising the Main Plant, Yajima Plant and Oizumi Plant, were suspended on 28 January, from 31 January to 2 February, and from 7 to 8 February 2022.」

「The global semiconductor shortage and spread of COVID-19 in Southeast Asia constrained the supply of parts procured by the Company from its suppliers, resulting in production adjustments and temporary suspensions of operations at production sites in the United States and Japan. As a result, combined overseas and domestic production in the automotive segment for the six months ended Q2 was 342,000 vehicles, down 3.4% year on year.」

「Although production is constrained by global semiconductor shortages and other factors」

「In fiscal 2020, global semiconductor shortages also caused supply disruptions in some components procured from suppliers. As a result, production adjustments were made, including 2-day operating shutdowns at some plants in January 2021 and the suspension of operations from 10 April onward.」

「Supply disruptions occurred in some components using semiconductors procured from suppliers, so operations at Gunma Plant were suspended on 15 and 16 January 2021. Semiconductor shortages are expected to continue, and reduced production at domestic and overseas production bases is expected to result in lower vehicle sales and other effects. The amount of the impact is currently being assessed.」

「In the event of an emergency, we take measures to minimize the impact of supply chain disruptions by using the component-level Supply Chain Information Database maintained in ordinary times for first- and second-tier suppliers to quickly identify suppliers and components that may be affected, confirm the inventory required to continue production, consider producing substitute components, and support the restoration of production facilities.」

「Automobile production volumes fell below the previous fiscal year due to the continued use since autumn 2018 of operating conditions revised at Gunma Plant to prioritize quality in production and inspections, as well as an operating shutdown caused by defective components in electric power steering systems in January 2019.」

「On 16 January 2019, defective components were found in the electric power steering systems used in some vehicle models. With safety given the highest priority from the standpoint of putting quality first, all vehicle production and shipments at Gunma Plant, comprising the Main Plant and Yajima Plant, were suspended from that day, and new registrations of the affected models were temporarily suspended.」

「The group may depend on specific raw materials and suppliers. If it becomes unable to procure materials at stable costs, delivery times and quality due to tight supply and demand or other factors, its operating results and financial position could be materially affected.」

「The group may depend on specific raw materials and suppliers. If it becomes unable to procure materials at stable costs, delivery times and quality due to tight supply and demand or other factors, its operating results and financial position could be materially affected.」