Honda Motor Company, Ltd.

today. We now like to begin HONDA FY 2024 Third Quarter Financial Results Press Conference. First, an introduction of the executives on stage.

Executive

Officer, CFO, Eiji Fujimura.

Thank you. I am Fujimura.

Operating Executive, Head of Accounting and Finance, Masao Kawaguchi. Thank you.

I'm Kawaguchi.

First, Fujimura will present the FY 2024 Third Quarter Financial Results

and FY 24 Financial Forecast, followed by Kawaguchi's explanation on the details of both.

With

no further ado, Mr. Fujimura,

please. To start with, first of

all,

I

would like to extend my deepest sympathy to the victims of the And I reach for a quick recovery and reconstruction, restoration of the affected areas.

I will explain the financial results of

the Third Quarter and a forecast of the full year of the error, FY 2024.

Starting with

the summary of the results,

with regard to the cumulative unit sales until the Third Quarter

FY 2024, the unit sales of the motorcycle businesses increased mainly in Brazil and Europe, achieving the highest ever operating profits and operating margins.

In the automobile

businesses, despite the impact of the warranty expenses, the volume went up mainly in North America, significantly raising the operating profits year on year.

As

a result, operating profits of the whole company marked 1 trillion and 76.3 billion yen, with the operating profit margin being 7.2%. Regarding the forecast of FY 2024, although some challenging market environment exists in Asia,

reflecting

additional strength of the earning structures and the favorable currency impacts,

we will revise

the previous forecast.

For the

shareholder returns, in order to improve the capital efficiency, we made a decision of a share buybacks in the board of directors meeting today for the amount of 50 billion.

Together

with the already acquired 200 billion this term, it will add up to 250 billion in total. Further to the share buybacks, we resolved the cancellation of the territory stocks as many as 154 million shares.

Honda will accelerate

our efforts to improve capital efficiencies in order to enhance corporate values. Let me explain the current situation of the automobile businesses in the main markets.

Due to the solid demands in

the United States and the production recovery in Japan, leading to the incremental unit sales, the entire unit sales increased year on year. In terms of the sales forecast of the FY 2024, we are expecting the sales drop in Thailand and Indonesia. However, we expect the sales unit increase in China. There's no change of the previous forecast. Speaking of our initiatives for electrification, in the CES, the World Large Digital Tech Exhibition in Las Vegas the other day in the U.S.,

in that

show we made our world premiere presentation of the new global EV concept model of our Honda Zero Series,

the concept model named

Saloon and Space Hub. At the Fuel Cell System Manufacturing LLC, the joint venture company with General Motors,

we have started the

production of the air fuel cell systems. Next, moving on to the motorcycle businesses,

in terms of

the cumulative results until third quarter, despite the unit sales fell in Vietnam because of the economic slowdown, we had a stable demand both in Indonesia and Brazil. Thus, the entire results ended up at the equivalent level last year.

In the third quarter alone,

we had increased the unit sales in Brazil and India. Due to the reduction of units in Vietnam, the entire result was lower year on year. Speaking of the results forecast of FY 2024, we expect a unit sales reduction in Vietnam and in Japan. However, sales in India and Thailand would grow. Therefore, the previous forecast was still stands unchanged. In November 2023, Honda organized a briefing session on electric motorcycle businesses.

We

updated our sales target of electric motorcycle in 2030 from the previous announcement of 3.5 million to 4 million units. We announced how many models to be launched and we announced electrification strategies, such as production and the procurement structures. Honda will accelerate electrification of our motorcycles at its business as well, toward the realization of the carbon neutral. Next, regarding the outline of the cumulative financial results up until the third quarter, we had increased the sales of the products in the FY 2024. In spite of the negative impact of our warranty expenses, we had incremental unit sales of multiple bills and the pricing scheme that reflects the commercial value of the products and so on,

due

to which the operating profit increased by 342.4 billion yen year on year to reach 1.0763 trillion yen. The profit for the period attributable to owners of the parent is 869.6 billion yen, up by 206.4 billion. Moving on to the consolidated of a nicer forecast of the FY 2024, in spite of the challenging market environment in Asia and the higher warranty expenses,

with

the reflection of additional fortification for profit improvements, the current impact

we have

revised operating profit expectations to 1.25 trillion yen, up by 50 billion yen.

The profit for the period

attributable to owners of the parent is expected to be 960 billion yen, up by 30 billion.

Forex

assumption is 144 yen per dollar in the second half, and is 142 yen for the full year projection. Unit sales and PL shown in the slide. Regarding dividends, expected annual dividends for FY 2024 will be 174 yen per share based on the condition before splitting the shares. Therefore, no change from the previous announcement.

At today's

board meeting, we passed a resolution regarding acquisition and cancellation of our own shares.

As for the acquisition, we have set an upper limit of 34 million shares, or

50 billion yen.

Regarding the cancellation, approximately 154

million shares will be cancelled.

Next, Mr. Kawaguchi will explain the details of

the financial results and forecast.

Let me begin. First, the Honda Group FY 2024 April to December 9-month

unit sales, up by Business Area, is as follows. Motorcycles declined to ,000,000 units compared to the same period last year, mainly due to decrease in Asia. Automobiles at ,000,000 units, led by an increase in North America. Power products business total sales amounted to ,548,000 units, led by a decrease in North America. Next, a change in profit before income tax for nine months, then compared to the same period last fiscal year. Firstly, operating profit increased by 342.4 billion yen. The change factors are as follows.

Sales impact. This saw a positive impact on profit

of 282.4 billion yen, mainly due to increase of automobile sales. Price and cost impacts, a pricing that reflects increased product value, a decrease in precious metal prices, and other raw material costs, had a positive impact of 359.8 billion yen. Next, expenses, increase in warranty expenses plus other factors, had a negative impact on profit of 366.6 billion yen. R&D expenses had a negative impact of 28.5 billion yen. Currency effects, a positive impact of 95.4 billion yen. Profit before income taxes, despite a decrease in equity method profits, mainly from China, and due to an increase in operating profit, interest in income and others, profit was increased by 405.1 billion yen.

Next,

sales revenue and operating profit by business segment. Operating profit marked a record high of 411.5 billion yen in motorcycle business. Operating profit for automobile was 460.5 billion yen. Financial services, 204.8 billion yen. Power products, businesses, and others, was a negative 400 million yen. Next, I would like to explain the cash flow situation. The FY2024 nine-month free cash flow of operating companies, excluding financial, was 926.5 billion yen. Net cash balance at the third quarter end was ,183.3 billion yen.

Next, the forecast for fiscal

2024.

Although reviewing Honda Group unit sales for

each business operation by region, the total volume is unchanged from a previous forecast. Next, the forecasted change factors behind profit before income taxes -on-year. First operating profit we expected increased by 469.2 billion yen. The breakdown is as follows. Sales impacts are positive. Sales impacts is positive of 360.6 billion yen, mainly due to an increase in automobile unit sales price and cost impacts. Although there is an increase in labor costs, positive effects of pricing plus a decline in raw materials, such as precious metals, will lead to an increase of 434 billion yen. Expenses negative, 353.4 billion due to an increase in warranty expenses and others. R&T expenses, a negative impact of 51 billion yen on profits. Currency effects, a positive impact of 79 billion yen. Although profit before income taxes expected increased by 565.4 billion yen, despite a decrease in equity method profit mainly from China, offset by increase in interest income and others.

Next, changes from the previous forecast. Operating profit and

profit before tax forecast is increased by 50 billion yen. The breakdown is as follows. Sales impacts, a negative 11 billion yen, mainly due to decrease in consolidated unit sales. A price and cost impact. Although there is labor cost increase, pricing relating to the increased product value plus a decrease in raw materials, such as precious metals, will result in a 40 billion yen increase in profit. Expenses minus 32 billion yen is forecast, mainly due to an increase in warranty expenses. Currency effects, an increase of 53 billion yen. Lastly, the forecast for capital expenditures, depreciation and amortization and R&T expenditures for FY 2024 as shown. There are no changes from the previous forecast. This concludes my explanation. Thank you for your attention.

Thank you very much

for your attention.

So,

we would like to now continue on with the questions and answers. As we have announced before, we are going to take questions on the Zoom. And because of the interest of time, please limit the questions to two questions per person. Thank you very much for your cooperation. So, please push the raise your hand button on the system, please, if you have questions.

Okay,

first question.

From the Asahi Shimbun newspaper,

Mr. Wakai,

please. Wakai speaking

from Asahi Shimbun. Can you hear me?

Yes. I have two questions.

Question one is Daihatsu obligation problems. You have a -k-card by yourself, and what is the impact of sales because of that? And those are fraud in the amortization and development stage. What sort of actions do you take to prevent those law compliance? And the second question is that not all earthquakes, there should be some reduction of production ongoing today. What is the prospect of report as a basis? And question three, how do you address the situations, especially with the suppliers involved?

Thank you very much for your question, Mr. Wakai. Thank you for those

two questions. And let's start with Daihatsu's fraud.

It

is a story of other company matters, and

we

do not fully understand what actually has happened. Therefore, speaking of the financial status and also what we do to prevent such things, that's the thing we can explain perhaps. And in terms of the results, Daihatsu may have a less number of the sales, and then the sales of those k-cards, whether that will be added to our sales of the k-cards. In fact, we do not have any reflections as such effect of the sales in our account financial results at this time. However, there should be some impact on the sales to a certain extent. However, their cards and our k-cards are priced differently, different price range. And also, our k-cards are not really shipped to the general dealers, different sales dealer style. Therefore, the impact should be restricted, I believe. And also in terms of our actions to prevent such fraud,

at Honda,

we have those homologation testing, and we have those homologation departments who does the testing and application of those matters. Actually, this department is separately organized. We're from the development and the production. And in order for that department to conduct tests and a process for application, they already have the well-documented processes as to, for instance, how many days it should take until the acquisition of those certificates. And of course, those certification has to be given in order to make the process to go on to the next development process. We have the clear rules for that. Therefore, we do not have the air system such that we can prevent the very tight development schedule, which might induce the fraud of those kind. Starting from April 1st, new homologation departments and quality improvement departments

are

to be a part of the functional department so that they can have the improved and fortified quality governance

report.

And in the EV area coming up now, digital as well, maybe in those areas

of

electrification or digital things, we would have additional checks, including cybersecurity, I suppose. Therefore, we should make sure we would have a good hand on that. And as the head office, we have a good organization to ensure those controls. In terms of the Noto Peninsula

earthquakes, as we said

right at the beginning, we would like to wish for a quick restoration of the affected areas and people there. And our situation is that tier 1, 2, 3 suppliers, those have a very tight life-life situations and the possibility of the recovery of the production, the stock levels and so on. In fact, every day we are checking out their level of the stocks, their situation of the recovery of those suppliers, and every day the situation is progressing. In fact, our financial statements at this time do not reflect the impact by the Noto Peninsula earthquakes. However, every day the situation progresses. And as for the recent production conditions, specifically with the K-cars, minicars, so for the shaving, reduction of the production units per day is actually conducted now. And we had these operations planned on Saturdays, Sundays, holidays, to make me have to cancel those holiday operations in order to adjust production. And we have the area, about 20,000 units affected due to that reason. And in terms of the recovery and so forth, we will continue to look into the situation so that we can explain when the situation is clear. And in terms of the BCP and the supplier condition, how we control that, specifically the suppliers operating the affected areas, of course, making the greatest effort to recover. And thanks to them,

we

try to get information of what they do, stock levels, and the potential production of alternative manufacturing in other areas globally. In fact, we've had quite a good know-how since the last earthquake events. Therefore, at earlier stage, we could grasp the situation earlier. So this is the situation today.

Semi-conductor will include it

as well.

Next question, Nikkei. Okinaga,

please.

Okinaga, please. Mr. Okinaga, please. We cannot hear you. Can you

check out with your microphone?

Can you hear me? Yes? Thank you. You can go to the presentation. I have two questions.

We have seen a number of recalls in this fiscal year, and I think it's reached tens of thousands. And you say that the warranty is 353.4 billion. And does this include all the costs for recalls, or is it the case that the warranty expense will increase further from what you have already stated?

Yes, thank you. And in the

third quarter, the warranty expenses have increased. I did explain that. And so there was a fuel pump impera, this incident. So this has been added on. And the fuel pipe, first of all, I'd like to express my condolences to the person who has passed away. But this, in terms of the accounting, the financial statement, is this reflected in the numbers? Well, in terms of the units, as you mentioned, it is increased to a few million units, and we will respond to this situation. And in terms of the financial statement, we believe that this is a failure coming from our supplier side. And therefore, we will have them compensate for the recall expense. And this is how we've handled it in our financial statement. In regards to this case, the warranty expense is not that large. That is our understanding. And the reason why it's large, and then February 1st, the U.S. authority, we've already filed a notification over a recall. There's a seat weight sensor. And there was a failure with the seat weight sensor. And we have added some 55 billion yen for that recall. And I think that this is a reason that can be attributed to the increase in warranty costs. Thank you. May I have another? About your buyback of shares, why did you decide to acquire your own shares? Well, yes, I think there's still room for an increase in shares given the weekend. But I think that's the impact of the interest rate hike in the U.S. and China. But is that the reason behind this decision, the resolution?

Well, about the acquisition of our own shares, we want to improve the

capital efficiency. And recently,

the issue is the PDR one-fold. And we have given this. I'd like to start

talking from there. Well, we, the management, we are aware of this PDR issue, and we take it seriously.

And

therefore, we are thinking of what we need to do. We believe that it is a responsibility for us to take further steps. It's about 1,700 yet. It's about 10.7 folds right now. And it's less than one fold, 1.0. And I think there are three reasons for this.

Well, the three are those

accumulated from the past and the current and the future. So these are the three folds. First, for the past,

the past decade, our capital has

increased from 6 to 12 trillion yen. And so it's 45 percent in terms of the ratio. And so we have to deal with this past that we have. And the current situation is that for a long time, the automobile revenue had dropped. And therefore, the share prices were not increasing because of this situation. But in regards to this, I'm looking at the financial results here. As we've been saying for the past, we are trying to reduce fixed costs and also improve the revenue of new models. And incorporating these measures and plus the shortage, we are starting to recover from the shortage of semiconductors. And therefore, the revenue of automobile business is improving. And so this is the current situation. And what's more important is the future. Well, the auto sector on the whole, the share prices are not picking up. This is because in this age of the ZEV, we really don't know who the winner will be. And therefore, there is this lack of transparency and certainty. And I think that this is having an impact on our business. But we believe that given the age of zero, zero emission, we have to come up with our own strategy and try to improve our resolutions, so to say, and try to make investment in the growth sectors and try to reap the profit from those investments. So in order to improve this so-called resolution, the other day at CES, we communicated that we have a brand strategy in place. Plus, we have technology, investment, and other strategies to reap the fruit from our efforts in place. And next fiscal year, we are going to have a press meeting.

And so the

way we communicate will be changed so that we can gain more understanding from the market. And we will also try to change our way of communicating our technology to the public. So this is something that we are thinking of right now. So amongst these three, and going back to the first one, so in regards to our capital here, we want to return to our investment. And for the beginning, we have had 200 billion yen acquisition of own shares. And this program has ended in December last year. So just like that, we are going to maintain that pace. And by the end of this fiscal year, we want to complete this process. And given this, we believe that this time the 50 billion yen decision was made, and we've just made this announcement here.

We want to be actively

investing in the future. And so while we do that, and also we have to try to continue to earn with the profitability of ICE, and we have to invest in growth and have a balanced way, and at the same time improve our capital efficiency. This is the management message that we want to communicate to you by announcing that we will acquire our own shares. That is all. Thank you.

Thank you very much. Mr. Kinaka. Next one, Yomiru Shimura newspaper. Mr. Nakamura,

please. Can you hear

me?

Nakamura from Yomiru Shimura newspaper. I have two questions. One about

semiconductor procurement in such cases now. The production situation is very well put now, but do you think that semiconductor supply situations have been recovered fully before the COVID? And the second question was you said about pre-tax profits, and you talked about the precious metal prices. And what is the current status of those prices, including Gafferwerks situation, too? You mentioned the reduction of the precious metal prices.

So in terms of the semiconductor

supply procurement,

this year

or from the February-March periods in 2023, the situation has been on the recovery. We've done a lot of measures, and those actions are getting some fruitful results. And nowadays, it is not a concern at all.

Once

in a while, we might face some situation, however, recovered. Now we have a full-scale production in place after a long while, until the second quarter. So in the U.S., the places like that, there were shortage of the laborers and the supplier, and equipment a problem because the goods were not running for quite a long time. And we had some situations like that. However, those issues have been resolved. And in the North America, full-scale production continues after a long stretch of not having one, but we have a stable condition. And in terms of the precious metal conditions, actually those are utilized. They're mufflers or catalysts in the mufflers. That is to purify the air emissions.

A few years ago,

the precious metal prices were soaring, really. But in the last several years, prices have fallen because in China, they have a proposed the electrification that may be the main reason for the precious metal prices dropping down.

And

in

addition to that, in electrification efforts, not just of what builds, but when the economy is booming, precious metals, steels, copper, resin, those material prices are to fluctuate a bit. And we

have

to, of course, look at for x currency rates as well. We would like to keep watching out all those factors as we go. Thank you very much. Thank you, Mr. Nakamura.

Next question,

please.

Toyo Keizai magazine.

Mr. Yokoyama, please.

Can you hear me? This is Yokoyama from Toyo Keizai. Thank you. I

also have two questions. The first

is

about the full year forecast. Well, until the third quarter, I think that you are making good progress. About the third quarter, I think fourth quarter will be showing a slowdown in your operating profit increase. What's the upside and downside? I think the situation will be different. But can you share with us your perspective towards the full year forecast? Can I continue? The second question. About China.

Well, currently, I think the unit volume is

increasing, as you say. At the last presentation, I think there's a severe competition. There's a discount rate in China. I understand that is the situation. But how do you see the Chinese market environment? I think Mr. Fukushima talked about the need to cut production capacity. So what are your thoughts on China?

Mr. Yokoyama, thank you very much. In terms of the numbers, the fourth quarter outlook, rather than talking about that, I wasn't asked

to talk about this. I would like to give an overview of the financial results of this time. Well, this third quarter,

the October, December three-month actual, we had 380 billion operating profit.

And so the breakdown of the automobile and

motorcycle is 160

billion each. So ours is

20

.1 percent. It's the highest in terms of the quarterly results for the motorcycle business. And I think that the situation is that, well, this is a consideration of what I explained. There's a downturn in Vietnam. And also there is a greater scrutiny in terms of the quality, but in Brazil and Turkey and Europe included. The unit volume is increasing, or the profitability is increasing in Asia likewise. There are areas where we see a decrease in unit volume. I think that we have a proper pricing in place and other efforts, which is trying to show results. So for automobile, last fiscal year there was the semiconductor issue. And so this was a major challenge, but in North America it's a plus. 120,000 units. This is mostly hybrid. Second quarter there was a logistics disruption, but this has been cleared already. And thanks to this, we have a dealer inventory of 30 days. So this is the standard that we have in place now. So 30 days. So we've reached this standard now. And in Japan it's a plus. 20,000 businesses. Because of the semiconductor, the unit sales is in a positive range. Now China is plus. This leads me into the second question, but it is a positive. But the third quarter, last year in the third quarter, in that area there was a lockdown. And there was the impact of semiconductor supply. So it's a quite low number in China. Therefore, year on year it is a positive because of this. But so

there is this shift

towards this. And also the reduction in ice markets. And I think that this situation continues to be tough for us. We have to use these incentives to compete against the others. This is the situation we are putting in place. As for the automobile profits, despite these conditions, as the 160 billion, amongst this number,

we have a realignment of a supplier. It's

related to Yaqiu.

So there was the impairment of the

subsidy,

about 50 billion, or should I say 45 billion. That is Yaqiu impairment plus

the warranty cost

50 billion.

So close to 100 billion yen. Factors are included here. But we still have this 160 billion. And it's RSS, 4.6 percent, and nine months, 460 billion. So it's four times the profit from compared to last year. And despite this tough condition, the volume increase in North America, and the hybrid success and pricing, these factors are all combined together. And despite this one-time impairment and warranty cost issue, we have RSS, 6 percent level. And so I think that this is the situation that we currently have, at 600 billion. And in nine months,

operating profit, one trillion, pre-cash flow, 930

billion. So we are in a situation where we are having a record high. And in December, as an outlook,

we have 250

billion RSS, 6.2 percent. And so excluding the one-time events, if we have 135 yen currency exchange, we think that we have RSS level of 6.9 percent. And by 25, we are aiming towards 7 percent of the operating margin. But in May, when we close our books, or next fiscal year, when we announce our forecast for next fiscal year, I think that we will be able to declare that we have achieved our goal two years earlier.

The

fourth quarter, as for the decline, I'm just firmly coming to your answer. The fourth quarter, compared to the past three quarters, you say that we will see a decline. Well, Kodachi will explain about the details here,

but especially the suppliers. We have the cost adjustments plus in America, U.S. The wage increase from January we began. And so there's that cost plus. It's always the case, but we

have a fluctuation of a quarterly number because of the cost and also R&D. And so these are going down in the fourth quarter.

So please, Mr. Kodachi, Mr. Yokoyama,

thank you for the question. The third quarter versus fourth quarter, and the fluctuation is the profit. As Fujima has already explained, yes, just to give you some numbers, as was said, the third quarter, just the three months, we have some 380 billion already profit. And the full year forecast, if you deduct this, according to our curve, the fourth quarter, we are expecting some 170 billion. So there is a drop of some 200 billion quarter. But the reason is because the assumption is the foreign exchange. So this is different. In the fourth quarter, we are estimating 140 yen against the dollar. The third quarter, the average was about 146 yen against the dollar. And therefore, because of this difference, according to our plan, the permit was 140. So there is a minus 80 billion or so. Meanwhile, the third quarter was that the supplier. There was a permit of some 50 billion. And therefore, this part will be netted.

And what remains is the

fourth quarter, queued cost, also R&D expense. Well, there will be the model of development, timing, and all the various activities that are underway, which will influence this. But we think that expenses are more skewed towards the fourth quarter. And this is about 220 billion compared to three to four. It's a negative in the fourth quarter.

And

as I explained, the cost part. Again, North America, mainly, the wage increase and labor costs and inflation, in fact, and the cost is on the rise. These things also have aggravated the cost situation. Plus, seasonality with the suppliers, so we have some adjustments to be made. And these all combined, the cost is about 80 billion yen, third to fourth quarter negative.

So about the upside and downside, I have to add. Upside is

the foreign exchange. It's 146, 47 years. So it's difficult to predict the foreign exchange rate. But if it continues until March, then according to a competitor plan, it will be on the upside.

Meanwhile, the downside, North America economy and also

the impact of the earthquake, these will be the downside factors. But through our sales activities, we want to minimize the downside as much as possible. That is all from me. Thank you.

Mr. Yokoyama, about China, about the

production capacity, I forgot to mention this,

so I have

to answer that part of your question.

Well, last time

when we made our financial announcement, production situation in China, as I said earlier, we have 1.2 million units capacity. About to renew the,

we

have a dedicated factory, two factories, so it will come to 1.7 million units. And the worst of these new factories are,

I'm

sorry, it's currently 1.49 million plus the new will be 1.7. We think that 1.2 million is the appropriate level, so we have to make adjustments for the remaining half a million. And for China, we are talking with our partners.

Now, in terms of how we see the issue, I think

our partner sees it the same way. We are on the same page

in

regards to this issue, however,

especially in China, when it comes to

employment, they are very sensitive. And so I cannot give you any details here, but from the second quarter, as we're saying this, so compared to that, we are on the same page with our partner and moving forward. This is the progress report, and we have to make adjustments for half a million units, and we have to talk to them about how this will be done. That is all from me. Thank you. Thank you.

Thank you, Mr. Okuyama. So

next

question,

Anike Azia, Taki Sanfis,

Mr. Taki.

Taki from Anike Azia,

can you hear me? Yes,

please. Thank you. I have two questions.

I will go one by one. First question is about current EV sales trend. In the main market in Western countries, it is slowing down a bit. Instead of hybrid cars, I think they are popular. I hear that. How do you see that situation now? Will that be a kind of waiting expectations, or will that be a kind of a tailwind for your businesses? You have a target of 2040, and what is the impact of that on electrification strategy?

Thank you very much,

Taki Sanfis. Yes, we get this question quite frequently these days, but in terms of the Western countries' markets, the EV growth is kind of slowing down a bit, and in the US, EV ratio is about 8% recently. That's my understanding. And for us,

I think

such things can happen. So we were imagining this kind of thing could happen, but in the long run,

for

2035 or 2040,

in line

with the carbon neutrality trend, we need to push forward electrification initiatives. Nevertheless, this is our idea as a mobility company. So as of now, 20% in 2030, 40% and 80% in 2035, 100% in 2040, this is the

EV

goals, and such goals are to stand. No change, and we will just simply go on for that. And we are sort of a latecomer in the EV area, therefore we need to make sure that we stay the customer viewpoints to find out and think what is the needs by the customers for the EVs, so that we can provide them to them to get a good profit from that. And that is the important point of this game. And therefore, we don't change the strategy. We simply go on what we do. And of course, the situation may change from time to time, and of course, there is a kind of a lag of several years and so forth. And then in 2020, such things can happen. And therefore, of course, for strategic spending, maybe we can adjust the cash out timing and so on as we go. In the meantime, unit sales should be supported by some means as well, and we will stay flexible to support the situation like that. But in terms of the hybrid, popularity is quite slowly. And for sure, out of the ICE models,

hybrid will be the kind of bridging technology

up until the carbon neutrality. For our hybrid, it has been really well-appraised so far in the United States. So, of course, the hybrid models are available, and we have a very good demand. And already, it's a 50-50 sort of a split between the ICE, petrol-based cars and hybrids. And hybrid demand is very good. And hybrids are available for high-grade models, and it is a profitable model set. And in terms of the incentives as well, hybrid models will not require much incentive. Because of that,

this

year, perhaps into summertime around, civic hybrid will be launched

by then.

And after the 2017 model onwards, hybrid will be the evolution model, such as more compact performance, profitability, body weight. Everything will be of evolution for the hybrid, and of course, we will evolve them further and further. And not much is about North American Western markets. However, in China, speed is a little bit different. In China, they have emerging manufacturers from China. They enter into the Vietnam, Thailand, where we need to battle in different ways. And we will keep watching the situation from the global viewpoints and also on the appropriate timeline, ideas so that we can compete there, too. Thank you very much. Second question. You talked about the challenging market situation in Asia, and you mentioned that several times. And closing for the first half, did you see any changes since the first half closing time? And what is the prospects of the upcoming situation of the Asia market? Maybe I can answer your question based on the motorcycle businesses because of the Asia. Since the last announcement, the change of the goals are not really happening. There's some differences. However, differences are always due to some good reasons in Thailand and Indonesia. Maybe in Thailand, as I said before, the loan credit assessment is tougher now, and the economy is a bit slowing down in Thailand. Of course, there are situations like that. However, at Honda, the O plus is doing good, and we are getting the shares are getting high. And although we have a higher share now, the market itself is tough in Vietnam. The exports of businesses are facing with a tough situation because of the economic stagnation. And I thought the economy would recover quicker. However, maybe this condition may continue to fall this year, 2024. And for Honda,

value 160. That's

something we have to compete. And its market share has marked a very high level. The negative thing could be

our own situation

in Indonesia. The market itself is growing in Indonesia, but in the second quarter, there was a rush issue of the airframes, because of which we had our youth sales falling down. But we had measures and actions to recover our trust by the customers. And we are getting the air sales recovery because of that effort. And Indonesia sales next term, it will be on the positive side, I believe. And in terms of the future prospects by different countries in Thailand,

first,

it will continue with a little bit of other negatives for a more while. And I don't know if it is related to the regulations, but there could be some upper limit for loans for the customers starting in April. And when that comes in, Thailand situation is a bit tough. And in India, if our issues are cleared, it will be fine. India, Brazil, Turkey, European countries, including Turkey, our positive situation to continue for a while.

So

thank you for your understanding. Thank you very much. Thank you very much.

I apologize for the instances of time.

The next will be the last question.

Nikkan Jidoshia.

Mizutori, please. Can you hear me? This is Mizutori from the Daily Automotive newspaper. I have two questions. The first is about China. Last time you said that it's about 1.1 million unit in sales that you're expecting for the full year. That was at the midterm. But is your forecast unchanged? Is that understanding correct? I want to double-check this. And having said that, next fiscal year, what is the forecast? Well, at the midterm announcement, I think that you were saying that you were thinking that the same trend will continue into next year. Does that remain the same? And the second, I'm always asking this question, but about the sales price and cost impact, the waterfall chart that you mentioned. And can you explain about the breakdown? So nine months and also the full year. So what are the factors that comprise these numbers? Thank you very much. In regards to China, the 1.1 million units that we're expecting for this year, this is what we announced at the middle of the year. Of course, the big CRV, these core models, we have invested a lot of our resources here. And if we underperform, then we think that our market performance as we shift to NEP will not be good for us. And therefore, we think that we're selling at a rather high price. But in order to maintain our presence, we think of that we need to maintain a certain volume for the sake of the future. And that is how we've competed. And as a result, the third quarter, we have slightly overperformed our plan. And it's plus 30,000 from the 1.1 million. And then the fourth quarter, there is the dealer inventory that has topped up, and therefore about 160,000. So we have narrowed down on our wholesale plan. But looking at the current situation, maybe the number could be larger. That is the impression that we get right now as of now. As for next fiscal year, the current 1.1 million units plus

EV, the EN series, the second of the series will

be the first half. And the third series will be coming up in the second half of next fiscal year. And therefore,

if

it turns out to be 1.3 million this year, then we think that we can go beyond that. And about the second question, Mr. Kawaguchi,

thank

you for the question about the selling sales and also the cost impact and what we explained in the waterfall. Let me explain about that first, about the nine months. This

waterfall, 316

billion plus was what I explained, of which the pricing impact, this is about 270 billion or so. It's a plus 270 billion of the plus 360. So that is the one part. And the remaining 90 billion is the impact of the cost. That is the breakdown. About the pricing, this is mainly the automotive market. For each region, there are differences in inflation rate and also the customer situation plus model value added situation are different. And therefore, we have to examine these closely in determining the selling price. But because of this, we have the 270 billion for the automobile. It's about 200 billion attributable to pricing. The remaining cost, the plus impact, the manufacturing cost, also the drop in the purchase middle price, this has impact. We have these factors. And cost,

the labor cost is rising. Plus there's the inflationary trend.

And therefore, there is this cost decrease pressure. So the minus 27 billion. But meanwhile, the precious metal and material cost is going down. And so it's a plus 360 billion. And netting this is about a positive 80 to 90 billion yen. Now annually, how we see the fourth quarter with this throughout the year, the selling price impact, we think that will continue to have an impact because we'll continue the change. And also we change in selling price, we'll continue to have an impact. So we'll continue to see that in the fourth quarter. Annually, as I showed you in the full year forecast, the cost impact is about 430 billion plus, which 360 billion this is full year is the impact of the pricing. Meanwhile, the cost part, well, the material cost, yes, it is declining. But once the decline in pace slows down, then in the fourth quarter, we have incorporated that slowdown. The plus impact compared to last fiscal year will come down. Meanwhile, the cost, we think that the labor cost increase, the wage increase will continue to have an impact. The cost, the plus is about 80 billion, I said, but for the full year, it will be slightly less.

Over the past, the supplier,

we are consulting with the suppliers and sharing information and carrying out activities. That is all. Thank you.

Thank you

very much, Mr. Mitsutori.

Today, we did not get this question, but I would

like to appeal one

point. If you have time, although the time is already

finished, however, if you could stay on, please stay with us. So in terms of the summary of the error, the financial system didn't say it because it would be too long. But now, the thing is that why motorcycle businesses are so strong, that is the error frequently asked question. We would like the media people to understand that fully. Maybe you can write an article about that for your

own

writing. Thank you very much. Thank you. Then if you have time, please let me say this. Before COVID-19, in 2019, we had 20 million units sales globally. Now we have 188 billion units in the plans this term. But back in 2019, our OP was 290 billion yen, 14% hours. Now we have 500 million businesses. And the RP per unit is about 20 to 40,000 yen. The profits per one unit of the motorcycle. And then

we have

a near 40% global share. In some countries, we have 80% market share of the motorcycles. And then

we

have such sales commercial power. And we have a well-trusted brand power that is a fruit of the cumulative efforts of my predecessors. And then since 2010, we had mega module platform strategy in place, part trains, frames. We had a model or we had a commonality initiative across the models, across the regions. Because of that, we improved our profit structures. And we had also improved more contact with the customers with many more models available to them. And now in South America, in Europe, we have a high profit businesses, which is a good positive thing for us. In 2004, we used to be profiting from Asia. But now 60% of Asia, the rest are from the rest of the regions, which includes 20% in Brazil, 20% from Europe. That could be the kind of profit across the world. And then, of course, volatility can be seen in some countries with regions. However, the 20% are or asked.

Of

course, if we can sustain that level of our, it could be another story. However, I should say that we have established a structure to be robust against the volatility or changes. And such efforts, successful efforts in the last 20 years have fruited this way. And in the next 20 years of more than 10 businesses going forward, our technology power to create attractive models with the cost containment, commercial values, powers, financial power. So when everything is in place, first in the automobile area, then is shrinking the ice businesses in China. However, in motorcycle, the growth is still expected. Ice motorcycle growth, batteries will be added on, battery EVs will be added on to that. Therefore, this is still a growing business and battery EV know-how ahead of others. And we have manufacturing capital in place. And we have other efforts in our automobile. And we can get synergy from automobile to the motorcycle business areas, which can grow thanks to the synergy, I think.

Therefore,

I just wanted to say that we have the motorcycle businesses like the one I described. Thank you for your time.

I said 20% in

Europe, but 20% including the developed countries, including Europe, that includes US, Japan as well. So that's the precise term. So please understand our motorcycle businesses precisely. Thank you very much. Now we can conclude our press conference.

And our

financial statements are available on our website. And thank you very much, Yuzuru, for your participation. Thank you.