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5. Aichi Machine Industry Co., Ltd. Business Report FY ended Mar. 2012-2015

Aichi Machine Industry Co., Ltd. Business Report FY ended Mar. 2012-2015

Recent Years

Management Plan

Increasing sales ratio outside Nissan and Renault
-In 2014, the Company will increase sales to the automakers outside Nissan and Renault of France. The Company plans to increase the ratio to 10% of total sales from current 4 to 5% in the fiscal year ending March 2017. The Company is aiming to double sales outside Nissan and Renault by expanding its customer base for manual transmissions (MTs) and engine parts. At the same time, the Company hopes to reinforce its contribution to Nissan and Renault by improving technologies and cost competitiveness. (From an article in the Nikkan Jidosha Shimbun on March 6, 2014)

Engine production in Japan to remain at around 300,000 units during the period between FY2013 and FY2016
-The Company said it is forecasting its yearly engine production in Japan to remain at around 300,000 units during the period between FY2013 and FY2016. As Nissan Motor is aiming to produce 1 million vehicles per year within Japan, Aichi Machine Industry is expecting to maintain the same production level as that of FY2012. Meanwhile, in response to Nissan's strategy to boost its production and sales in emerging countries, Aichi Machine Industry is going to increase domestic production of engine components for supply to overseas engine assembly plants to the level of 900,000 units a year. In addition, Aichi Machine Industry is carrying out initiatives to support the production launch of engines and manual transmissions at Nissan's facilities in overseas markets where the Company does not have its own production sites. (From an article in the Nikkan Jidosha Shimbun on Feb. 1, 2013)
2012-8

Nissan will make the most of capabilities and expertise of Aichi Machine Industry for expanding production of 4-cylinder engines
-In 2012, Nissan Motor Co., Ltd. will make the most of capabilities and expertise of Aichi Machine Industry Co., which has recently become its wholly-owned subsidiary, for expanding overseas production of 4-cylinder engines and enhancing local production engineering. Nissan is now mapping out a new project to localize engine production in the Asian region. Overseas projects of producing Nissan engines have been handled primarily by the Yokohama Plant. Along with reorganization of Aichi Machine into a 100% owned subsidiary, Nissan is pursuing a new approach of assigning Aichi Machine to undertake overseas engine production and to manage the plant operation. Among Nissan engines produced in Japan, about 30% are supplied from Aichi. Most of them are 4-cylinder HR15DE and HR16DE engines. During this fiscal year ending March 2013, 376,000 engines are planned to be made, a decrease of 6% from a year ago. Aichi Machine's engine production has been so far limited only to the domestic facilities. From now on, however, Aichi is expected to implement global operations in the form of dispatching its personnel to Nissan's overseas projects and transferring expertise in production. (From an article in the Nikkan Jidosha Shimbun on August 31, 2012)

Company Becomes Wholly Owned Subsidiary of Nissan

-Nissan Motor Co., Ltd. announced on December 16 that it will make Aichi Machine Industry Co., Ltd. its wholly owned subsidiary through a stock swap effective March 22, 2012. Aichi Machine, one of Nissan's consolidated subsidiaries, mainly manufactures engines and transmissions for Nissan vehicles. Acquiring a 100% stake in the company will speed up the Group's decision-making procedures and accelerate localization of powertrain production operations. Aichi Machine, which was established in 1949, signed a technical partnership agreement with Nissan in 1962. Nissan injected capital in the company in 1965, further raising the ratio of shareholding to 41.43% in 2000, adding the company to its consolidated financial statements. Aichi Machinery, which produces 1.2-, 1.5- and 1.6-liter small engines, is also the Nissan Group's sole development and domestic production center for manual transmissions. According to its plan, Aichi Machinery is producing approximately 416,000 engines and 208,000 transmissions, including dual clutch transmissions used on the Nissan "GT-R", during this fiscal year ending March 2012. Of all its sales, about 85% is generated by sales to Nissan, while some 10% is generated by sales to Renault of France. Based on this acquisition project, Nissan will review and enhance the functions of the subsidiary, intending to expand its powertrain production business from the current domestic-oriented operations to a global supply hub. The plant will assume the same role as Nissan Motor's plants in Yokohama and Iwaki, Japan. (From an article in the Nikkan Jidosha Shimbun on December 19, 2011)

R&D Activities

-The Company has started to work on the development of a production technology to increase accuracy in engine assembly in order to improve fuel efficiency of a small-car engine, whose development and production have been commissioned from Nissan. In an aim to halve the assembly tolerances, it will review the manufacturing and assembly processes of major components. It plans to support Nissan in reinforcing the fuel-efficient vehicle lineup by reflecting its new methods to improve accuracy on occasions such as partial remodeling. (From an article in the Nikkan Jidosha Shimbun on August 29, 2011)

-The Company has set a capital investment plan of JPY 13 billion for the fiscal year ending in March 2016. The volume is about threefold larger than usual. The investment will be appropriated for a new machining line to produce engine parts destined for the North American market and new facilities to manufacture powertrains for small hybrid vehicles. Production volumes of the Company's core product lines such as small engines and manual transmissions have been decreasing due to the market stagnation in Japan and emerging countries. Meanwhile, the Company plans to strengthen its production capacity in expectation of an increase in its cost competitiveness thanks to the weak yen and new orders following a planned new car release in Japan. (From an article in the Nikkan Jidosha Shimbun on March 9, 2015)

Employees

Consolidated

Non Consolidated