Expansion of Overseas Operations, Primarily in China and ASEAN

「Through this acquisition of shares in ACT, we will bring into the Group the operating and customer bases for vehicle transportation, seed inspection, PDI and other services in Thailand, and promote further overseas expansion by creating synergies that leverage our expertise, including in vehicle transportation.」

「In the used-vehicle export business, although the company implemented price revisions and established a system to secure sufficient vessel capacity for car carriers, shipments were pushed into the second half because of the timing of import-permit issuance in Malaysia, resulting in lower revenue. In China's vehicle transportation business, transportation volumes increased as new models launched by major customers sold well, resulting in higher revenue.」

「In the used-vehicle export business, export volumes had to be temporarily restricted in the first half because of the timing of used-vehicle import permits issued in Malaysia. In the second half, import permits were issued and the company established a system that secured sufficient vessel capacity for car carriers. This enabled it to ship vehicles that had been held in Japan, resulting in higher revenue.」

「Meanwhile, the vehicle transportation business in China generated higher revenue after securing new contracts with domestic Chinese automakers while Japanese automakers were struggling.」

「The used-vehicle export business generated slightly lower revenue because the strong export market for new vehicles from Japan, against the backdrop of the weaker yen, limited vessel capacity for car carriers, making it necessary to restrict used-vehicle exports to Malaysia. The CKD business generated higher revenue as packaging volumes increased, and the vehicle transportation business in China generated higher revenue following the acquisition of new customers. Segment profit increased in the used-vehicle export business as the company pursued cost reductions and passed costs on to customers. Profit also increased in the CKD business in line with higher revenue, while the vehicle transportation business in China benefited from the successful acquisition of new customers. As a result, revenue from overseas-related businesses totaled ¥37,984 million, up 100.9% year on year, and segment profit was ¥676 million, up 199.0%.」

「As a result, revenue from overseas-related businesses totaled ¥21,215 million, or 92.7% of the same quarter of the previous year, while segment profit was ¥371 million, or 173.9%.」

「As a result, revenue from overseas-related businesses totaled ¥10,607 million, or 80.7% of the same quarter of the previous year, while segment profit was ¥168 million, or 128.3%.」

「As a result, revenue from all overseas-related businesses totaled ¥47,641 million, up 159.8% year on year, and segment profit was ¥492 million, up 267.0%.」

「As a result, revenue from overseas-related businesses totaled ¥37,661 million, up 199.9% year on year, and segment profit was ¥340 million, up 259.1%.」

「The used-vehicle export business generated a substantial increase in revenue in Malaysia, its main export market. Customer-satisfaction initiatives had already been increasing market share, and local demand rose, partly because of the weaker yen, leading to higher export volumes. The CKD business generated lower revenue because packaging volumes declined during a model transition period. The vehicle transportation business in China generated higher revenue as the Chinese automotive market recovered. As a result, revenue from overseas-related businesses totaled ¥22,891 million, up 253.8% year on year, and segment profit was ¥213 million, up 525.0%.」

「As a result, revenue from overseas-related businesses totaled ¥13,142 million, or 409.5% of the same quarter of the previous year, and segment profit was ¥131 million, compared with a segment loss of ¥29 million in the same quarter of the previous year.」

「The used-vehicle export business generated a substantial increase in revenue as demand surged following the lifting of the lockdown in Malaysia, its main export market, and initiatives to improve customer satisfaction increased market share. The CKD business generated higher revenue as the automobile manufacturing plants of its Thai customers resumed operations. In China's vehicle transportation business, revenue from 陸友物流（北京）有限公司 became incremental following its consolidation as a subsidiary; it had been accounted for under the equity method in the previous consolidated fiscal year. As a result, revenue from overseas-related businesses totaled ¥18,841 million, up 201.1% year on year, and segment profit was ¥131 million, compared with a segment loss of ¥46 million in the same quarter of the previous year.」

「The used-vehicle export business generated higher revenue as demand surged following the lifting of the lockdown in Malaysia, its main export market. The CKD business also generated higher revenue as the automobile manufacturing plants of its Thai customers resumed operations. In China's vehicle transportation business, revenue from 陸友物流（北京）有限公司 became incremental following its consolidation as a subsidiary; it had been accounted for under the equity method in the previous consolidated fiscal year.」

「China has become the world's largest automotive market, and changes are expected, including the evolution of CASE and MaaS and the shift toward carbon neutrality. To respond promptly to these changes, the purpose of making the company a consolidated subsidiary is to accelerate decision-making and pursue further business expansion. Specifically, as the used-vehicle market in China is expected to become more established, we will consider entering the used-vehicle transportation business in earnest. We will also consider building an integrated domestic and international transportation system for the Zero Group, assuming that electric vehicles produced in China will eventually be imported into Japan. This system would cover finished-vehicle transportation in China, export customs clearance, ocean transportation, import customs clearance, and finished-vehicle transportation, PDI, body fitting, registration and delivery in Japan.」

「On 1 July 2021, we acquired an additional equity interest and made the company a consolidated subsidiary. Going forward, we will consider entering the used-vehicle transportation business in China and developing an integrated multimodal logistics system for electric vehicles imported from China to Japan.」

「③ Expanding overseas operations in anticipation of economic growth in ASEAN and elsewhere」

「Our group formulated a three-year medium-term plan covering July 2018 to June 2021 and is pursuing five initiatives: ① developing new businesses in anticipation of the contraction of Japan's domestic automobile market and the emergence of a next-generation mobility society; ② expanding the human resources business in response to tight labor supply and demand and the decline in the working-age population; ③ expanding overseas operations in anticipation of economic growth in ASEAN and elsewhere; ④ maximizing the benefits of regional block formation through transport reforms in the vehicle transport business; and ⑤ creating group synergies and improving efficiency, including among subsidiaries and partner companies.」

「③ Expanding overseas operations in anticipation of economic growth in ASEAN and elsewhere」

「Our group is promoting strategic and agile sales activities and business operations in each segment in response to changes in market conditions, while working to develop new businesses in anticipation of next-generation mobility, growth in inbound visitors to Japan and economic growth overseas, in preparation for the contraction of Japan's domestic automobile market.」

「We will expand the scale of our business by strengthening cooperation with business partners in our overseas operations and developing new customers.」

「The Group is deploying overseas the service technologies and expertise it has developed over many years in automotive-related businesses, focusing on growing markets. In China, it has steadily expanded its business and generated earnings since its founding in 2004, but new Chinese government regulations covering freight vehicles have taken effect, and their impact requires monitoring. In the ASEAN countries, the Group is developing its business through mutual cooperation with Tan Chong International Limited.」