JATCO Business Report FY2006

Business Highlights

-The Company will launch production of belt type CVTs (continuously variable transmissions) in Guangzhou city, China in mid 2009. CVTs for middle-class cars currently exported from Japan via Nissan Motor to Dongfeng Nissan will be produced locally. Annual production will be 140,000 units and a total investment will amount to six billion yen. The Company will consider expansion of production capacity depending on the amount of new orders. The Company plans to increase global sales of automatic transmissions (AT) to 4,700,000 units in 2009, which is an increase of 700,000 units from an estimate for 2007. By leveraging new production capability in China with a high potential for growth, the Company intends to expand its business globally. The new site in China, "Jatco China Limited" (tentative name) will be established in May 2007. It will be a 100% subsidiary of the Company and capitalized at 4.6 billion yen. (From an article in the Nikkan Jidosha Shimbun on Mar. 2, 2007)

Expansion of Procurement
-The Company will expand procurement of auto components from Leading Competitive Countries (LCCs). The Company now procures casting parts from some LCCs. From the next fiscal year, the Company will also purchase gears made in Korea for the new automatic transmission unit it plans to release in the second half of the same year, aiming to achieve a 30 percent reduction in cost. The gears the Company will procure from LCC initially are only simple ones that do not require complex manufacturing processes, but the procurement of the key transmission item will allow the company to optimize cost. The Company believes this move will also increase its business efficiencies and competitive edge in the global market. The Company will consider further expanding items it purchases from LCCs, targeting Korean and Chinese manufacturers, which have largely developed technological capabilities to support the growing local automotive markets. (From an article in the Nikkan Jidosha Shimbun on Feb. 15, 2007)

Dissolution of Joint Venture
-Fuji Heavy Industries Ltd. (FHI) announced dissolution of Fuji AT Ltd., a joint CVT (continuously variable transmission) venture with the Company established in 2003. FHI aims to streamline its administration by this dissolution, while marketing efforts for larger CVT sales will be enhanced by the Company as a key player. (From an article in the Nikkan Jidosha Shimbun on Oct. 3, 2006)


Reinforcement of Development Operations
-The Company plans to reinforce its development operations, especially in electronics technologies. Its electronic control development function of the control system development department will be consolidated into the electronics technology development office as of April 1, 2007, with which the Company aims to accelerate establishing the foundation for hybrid system technologies and accumulating know-how to improve development efficiency. The department to develop material-related production technologies will be transferred from the development division to the product engineering division, which is expected to better reflect the next-generation elemental technologies on product development. As its largest shareholder, Nissan Motor Co., Ltd., announced its new mid-term environmental action plan or Nissan Green Program, better fuel efficiency and cleaner exhaust emission have become more significant in new car development. The Company will enhance its electronics development capabilities to make better proposals to automakers and to meet new needs. (From an article in the Nikkan Jidosha Shimbun on Mar. 30, 2007)

New Products Development
-The Company announced development of a new 6-speed automatic transmission (AT) for medium and large front-wheel-drive (FWD) vehicles. Compared to conventional 5-speed AT, it supports powerful starting and acceleration performance while realizing both better fuel efficiency and quieter running operation in the high speed range by expanding the total gear ratio of both low and high gears. Downsizing the overall length and weight was fully pursued to achieve 10% reduction each. Car models to mount this new AT are the "Qashqai," Nissan's SUV for the European market; the "Scenic" and the "Grand Scenic" of Renault; and the Mitsubishi "Outlander." (From an article in the Nikkan Jidosha Shimbun on Oct. 24, 2006)

-The Company announced that it is supplying a newly developed belt CVT (continuously variable transmission) to Fuji Heavy Industries Ltd. for the new mini vehicle "Stella" released by the automaker on the same day. The new CVT was jointly developed by the Company, Fuji Heavy Industries, and their joint venture company, Fuji AT Ltd. The new system offers reduced friction, reduced lock-up start speed, wide gear ratio and hydraulic pressure optimization when starting. Also, it is tuned to variable speed characteristics appropriate for the vehicle in which it is mounted and features improved acceleration and fuel economy. "The world's most advanced CVT," according to the company, is produced at Fuji Heavy Industries' Gunma Oizumi Plant. The new addition has completed the Company's full lineup of CVTs covering entire segments from mini, small and mid-sized vehicles to large 3.5L-class vehicles. (From a story in the Nikkan Jidosha Shimbun on Jun. 15, 2006)

Investment Activities

-The Company has opened "Gino Juku", a new training school, in the No. 1 block of the Fuji Plant manufacturing continuously variable transmissions (CVTs). The Company's staff can receive at the Gino Juku systemized hands-on training which covers all necessary manufacturing know-how, including usage, maintenance, and inspection of production machinery. The Company, which has invested 10 million yen in this project, aims to achieve the world's top-level product quality by enhancing the skills of every production worker, from new and experienced. (From an article in the Nikkan Jidosha Shimbun on Mar. 5, 2007)