Financial Overview

(in billions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	808.0	733.9	10.1	-Sales increased year-on-year due to greater demand in the automotive industry because of growing sales in developing countries and the economic recovery in the U.S. market.
Operating income	37.0	23.7	56.1	-Financial performance improved year-on-year due to greater sales coupled with effective cost-cutting initiatives.

Contracts

-The Company announced its shipments of motors and inverters for the GM "Chevrolet Volt". The Company is supplying the two motors used by the Volt's extended-range electric vehicle, one to power the vehicle instead of the engine, and the other to run a generator for charging the batteries. The new inverter is some 40% smaller than the first-generation one, which has been using mainly in large vehicles. The Company's components have been used in a number of GM's electromotive vehicles, including the 2006 "Saturn Vue" (motors and inverters) and the 2007 "Chevrolet Tahoe" (inverters), and the lithium-ion batteries are used in the 2011 "Buick LaCrosse". (From a press release on November 22, 2011)

Recent Development Outside Japan

<Thailand>
-From 2013, Hitachi Automotive Systems Asia, Ltd. plans to increase the production volumes of electrical/electronic products for engines and drivetrains.

-From April 2012, Tokiko (Thailand) Ltd. has increased its production volume of electrical/electronic products for drivetrains.

New Company

<China>
-Hitachi Highly Automotive Systems (Shanghai) Co., Ltd. was established in April 2012 in Shanghai, China. The company will first start producing standard starters from July 2012, and then it plans to produce starters for idle-stop systems in 2014.

-The Company announced that it will set up jointly with Hitachi China Ltd. a new company "Hitachi Automotive Systems (Guangzhou) Ltd." to develop and manufacture automotive systems in Zengcheng City in Guangdong Province, China at the end of January 2012. The new subsidiary venture, which is expected to go into operation by April 2013, will be capitalized at 420 million yuan (approximately 5 billion yen, $64 million) with an investment of 90 percent by Hitachi Automotive Systems and 10 percent by Hitachi China. The Company will employ about 350 workers in 2014. Acquiring land of about 230,000 square meters in Zengcheng, the new company will be engaged in production of electronic control systems, including direct injection engine control, anti-lock braking and electronic stability control, as well as development and designing of new products. When demand increases in the local market, the Chinese facility will boost its production capacity, and also develop and design products catering to local brand vehicles. (From an article in the Nikkan Jidosha Shimbun on December 21, 2011)

<Czech Republic>
-Hitachi Automotive Systems Czech, s.r.o was established in the Czech Republic. Commercial production of suspensions is scheduled to begin in March 2013.

Outlook for FY ending Mar. 31, 2013

(in billions of JPY)

	FY ending Mar. 31, 2013 (Forecast)	FY ended Mar. 31, 2012 (Actual Results)	Rate of Change (%)
Sales	800.0	808.0	(1.0)
Operation income	37.0	37.0	0.0

-The Company predicts that sales turnover for the fiscal year ending March 2013 will be flat, even though sales in developing countries will continue to be strong.

Performance Objectives

-The Company has set the following performance objectives for the fiscal year that ends March 2014.

• Sales: 1 trillion yen
• Profit Margin: over 5%
• Percentage of sales generated outside Japan: over 60%*

*This percentage is based on the sales volumes of automotive parts sold to customers' plants that assemble finished vehicles outside Japan.

R&D Expenditure

(in billions of JPY)

	FY ended Mar. 31, 2016 (Planned)	FY ended Mar. 31, 2012 (Actual Results)
Overall	80.0	52.8
Development of electronics and electrical systems	48.0	24.0

R&D Structure

-The Company plans to establish a new technical center in China in September 2012.

-The Company plans to conduct joint R&D activities with universities located in the U.S.A. and Germany, such as with the Technical University of Munich.

-As of March 2012, the Company had 3,600 engineers working in its Global Engineering Division. This includes 500 in electronics/electric power systems development. In order to strengthen its business in the field of electronics/electric power systems development, the Company plans to double the number of engineers engaged in this field from the current 500, to 1,000, by the end of the fiscal year ending March 2013. In all, by the end of the fiscal year that ends March 2016, the Company plans to have 4,000 engineers in its Global Engineering Division.

-Outside Japan, the Company had 200 engineers working in R&D. Among that number are 130 in the U.S.A., 20 in Europe, and 50 in China/Asia. By the end of the fiscal year ending March 2016, the Company plans to increase this number 2.4 times, to 480; with 200 in the U.S.A., 40 in Europe, and 240 China/Asia.

Product Developments

Double-sided direct water cooling technology
-The Company and Hitachi, Ltd. jointly developed a double-sided direct water cooling technology, which will help downsize the power module for EV and HV inverters. For the newly developed power module, the power semiconductor, previously releasing heat from one side, has a double-sided cooling structure to reinforce the heat-releasing route and further improve the cooling capacity. To be more specific, the heat-releasing route has been formed on both sides of the power semiconductor with insulating layers in place of grease. The companies have successfully downsized the module by the design technology for the best heat releasing structure, while making full use of analysis techniques on thermo fluids, electric heat generation and stress. Hitachi has confirmed that the power module prototype by application of this technology has 35% higher heat releasing capacity and requires 50% less floor area. (From an article in the Nikkan Jidosha Shimbun on November 26, 2011)

Capital Expenditure

-The Company will invest 38.3 billion yen during the fiscal year ending March 2012, mainly to increase the production volume of automotive equipment.

-Between the fiscal years ending in March 2012 and March 2014, the Company plans to spend a total of 200 billion yen in capital investments. When compared to the 90.0 billion yen the Company invested between the fiscal years ending March 2009 and March 2011, this amount is 2.2 times greater. Among the total, the Company will invest 3.7 times more in electronics/electric-power systems. Also, when broken down between the amount that the Company will invest in Japan and outside Japan, the break down is 40% in Japan and 60% outside Japan.

Investment Outside Japan

<USA>
-At its plant in Kentucky, the Company upgraded and expanded the volume of electrical products it produces, as well as expanded and improved its production lines. Also, it launched a production line to manufacture lithium-ion battery modules, planning to start trial production from November 2012.

-The Company built a new plant in Berea, Kentucky to produce motors for hybrid cars. The plant is scheduled to launch trial production from November 2012.

<Mexico>
-The Company built a second production line at its plant in Lerma, Mexico, planning to launch commercial production of ignition coils.