Mitsubishi Motors Corp

Good afternoon, everyone. Thank you very much for joining in our fiscal year 2023 first quarter financial results briefing. I would like to introduce today's speakers. Takao Kato, representative executive officer, president and CEO. Kintaro Matsuoka, representative executive officer, executive vice president, CFO. In addition, we have Hiroshi Nagaoka, executive vice president, responsible for monodegree. Tato Nakamura, executive vice president, responsible for sales. Yoyuki Yokozawa, executive officer, responsible for corporate strategy management. And Susumu Noguchi, corporate officer, division general manager, corporate strategy management division for the Q&A session. Today, we would like to present our results for fiscal year 2023 first quarter. And after that, I would like to take questions from the floor. The meeting is scheduled to end at 4.15 in the afternoon. So first, Matsuoka-san, please. Please turn to page three. This is Matsuoka speaking. Now I would like to start the presentation. So the COVID pandemic started in 2020 is almost brought under control and the world is now focusing on normalizing the economic and social activities. Production constraints caused by the shortages of semiconductors and other components in the process are being resolved and the automobile production is increasing in many regions. On the other hand, the pace of recovery from the COVID pandemic varies in different regions with inflation and the rising of interest rates to control inflation, slowing down the economy, deterioration of consumer confidence and declining purchasing power. As shown in the slide, our fiscal year 2023 first quarter results improved significantly from the same period of the previous year thanks to the improvement of sales quality and our net revenue strategy, which we have been promoting since FY 2021. And then also a tailwind coming from the forex. The net sales increased 20% -on-year to 635.8 billion yen. The operating profit increased 47% -on-year to 45.2 billion yen. And the operating profit margin rose 1.3 points to .1% from .8% in the same period last year. The ordinary profit increased 25% to 61.8 billion yen and the net income after taxes increased 24% -on-year to 47.9 billion yen. Due to inventory shortages in some regions and the changeover period of the product cycle amid intensifying competition, the retail sales volume declined 10% -on-year to 195,000 units. Please turn to page 4. This slide explains the factors behind -on-year changes in operating profit for the first quarter of FY 2023. The volume and mixed selling price showed a total favorable turnaround of 30.5 billion yen, mainly due to increased volume in ASEAN, North America, and Europe and mixed selling price improvement from our net revenue strategy that we have been promoting. Sales expenses decreased by 4.6 billion yen -on-year as a result of strict management of incentives by monitoring the situation in each market and segment. The advertisement expenses were increased as planned, mainly for new model launches. Procurement cost, shipping cost decreased. The operating profit by 15.2 billion yen in total due to the impact of raw material prices, which rose significantly from the second half of the previous fiscal year. Product enhancement and inflation as well as the negative impact on the shipping cost caused by the vessel shortages mainly on Oceania and European routes, although some were partially offset by procurement cost reduction. There were no significant changes in R&D expenses and other items. The impact at the profit was minor. Regarding the forex, while the depreciation of the yen against the US dollars in euro had a positive impact, the deterioration of the Thai baht, which is a cost currency for us, had a negative implication. So in total, the profit increased by 14.4 billion yen -on-year and the profit increased on a constant currency basis as well. Please turn to page 5. Next, I will explain the sales volume for the first quarter of FY 2023. Although overall demand was generally firm, inventory replenishment was delayed due to supply shortages of some vehicles by the shortage of some parts, as well as vessel shortages in Oceania, the Middle East, Europe, and other regions, resulting in a 10% -on-year decrease to 195,000 units. The following pages show an overview of sales in our major regions. Please turn to page 6. First, about the ASEAN region. TIB in the ASEAN countries seems to vary from country to country, except for the Philippines, which is showing a solid growth, even when good prices continue to increase at high pace. The overall recovery in demand is slow, although the degree of growth differs among the countries. Under this environment, our retail sales volume was 59,000 units, down by about 9% -on-year. In Thailand, where we are in the changeover period of models, both volume and market share decreased. In order to maximize the sales of new Triton, which will be launched shortly, we are promoting to clear up the inventory of old Triton and preparing for the sales from all aspects. In Indonesia, TIB recovery was slow, and in the commercial vehicle segment, which is subject to stricter import quotas under the TVP, we lost the market share due to a delay in obtaining the import quota for TVP, and leveraging the new compact SUV, which will be launched in August, we aim to increase the overall market share. In the Philippines, the high inflation in subsiding and the country's central bank left interest rates unchanged in May. We secured a high market share as a result of increased sales of Mirage and other models, as well as our focus on Expander and Triton, and L300 as core models. Regarding TIB in Vietnam, the deterioration on business sentiment is becoming more serious. Going forward, the government support and other measures will be initiated, and automobile demand is expected to recover moderately. While closely monitoring these trends, we will strengthen our network to launch a new compact SUV, and provide support such as training for sales and service staff for the launch. In Malaysia, although there were concerns about the reactionary decline from the economic stimulus package in FY2022, the sales have been stronger than expected. Sales of our mainstay product, the Expander, was strong, but sales of the Triton declined due in part to reluctance to buy the current model in anticipation of the new launch of the new model. Please turn to page 7. Next is about our domestic business. Although the TIB in Japan did not reach the -COVID-19 level, it has exceeded the previous year's level consecutively since September 2022, indicating that the market is still on the road to recovery. Our sales for both registered cars and K-cars exceeded the previous year's level. Our K-cars continued to be affected by the past supply shortages, so we could not link those models to our retail sales performance in a full manner. Delica Mini went on sales on May 25, has maintained strong orders from pre-orders, and has already exceeded 20,000 units, far exceeding our expectations. Together with Delica D5, we will do our best to promote the outdoor image and Mitsubishi Motors' nest to expand synergetic sales, and at the same time, we will deliver Delica Mini to customers who have been waiting for a long time at the earliest possible timing. We will continue to permeate and establish our branding to appeal our values. In addition, we will strengthen and consolidate all functions to achieve our sales plan by enhancing management support for dealerships and training for sales staff. Please turn to page 8. Next is the situation of our North American business. TIB in the North American market rose by 17% -on-year due to the vehicle supply shortages improved by a recovery in production and an increase in fleet demand. In addition to the improved inventory level, we maintained strong sales momentum, especially in the Outlander and the Outlander PHEV. In particular, the new Outlander PHEV, which was launched in November last year in Canada, has been well received, resulting in a record high sales volume. Despite initial fears of recession, the consumer spending in the US is stronger than expected. The sales environment is gradually normalizing as inventory types are seizing and incentives are increasing. We will strive to expand the sales of the strong Outlander series while maintaining the quality of our sales activities. Next, CEO Kato will explain the FY2023 forecast. Mr. Kato, please turn to page 10.

We recognize that the first quarter of FY2023 got off to a solid start in a sales environment that was generally in line with our expectations. In particular, mixed-sense and in-price improvements have been accumulating due to the promotion of our net revenue strategy. In addition, the Japanese yen has weakened against the US dollars and other currencies more than we assumed at the beginning of the fiscal year. Taking these factors into account, we have revised our full-year forecast for FY2023 as shown in this table. We have revised net sales from 2,700 billion to 2,780 billion yen, operating profit from 150 billion to 170 billion yen, ordinary profit from 150 billion to 170 billion yen, and net income from 100 billion to 110 billion yen. In the second quarter and beyond, we will continue to build a foundation for the next leap by promoting our net revenue strategy and steadily succeeding in launching new models, although the macroeconomic environment is still highly uncertain, as we had assumed at the beginning of that time. Please turn to page 11. This slide shows the factors behind the changes in operating profit forecast for FY2023 from the previous fiscal year. We expect a total positive impact of 115.8 billion yen on volume, mix, and selling prices, mainly due to the impact of new models to be launched one after another through the second half of the fiscal year and the improvement of mix and selling prices by promoting the net revenue strategy, despite supply constraints due to semiconductor and vessel capacity shortages and so on. As for selling expenses, we assume an increase in incentives as a result of changes in the competitive environment. We will also formally increase advertising expenses in preparation for the new model launches, which will lead to a sales increase. Regarding procurement and shipping costs, we expect material cost hikes due to inflation and decrease in energy and labor costs to proceed as forecasted at the beginning of the fiscal year. In addition, increases in R&D expenses and labor and general expenses are forecasted to continue within our expected range at the moment. Regarding the impact from foreign exchange rates, we have a factor in the exchange rates for the first quarter, and the negative impact is now 30.6 billion yen compared to the negative impact of 50.6 billion yen in our previous forecast. Please turn to page 12. Now sales in the first quarter of FY2023 were generally at the level incorporated in the plan at the beginning of the fiscal year. Retail sales volume declined year over year due to sluggish overall demand in ASEAN region, our main market, and the shortage of vessel capacity. From the second quarter onward, new models will be launched one after another around the world. In addition to Delica Mini, which has been well received in the domestic market, the new Titan will be launched soon. After that, we will finally launch a new compact SUV as a strategic vehicle for the ASEAN market. In Europe, we expect to see the full-fledged impact of new ASX and the coat. In addition to the impact of new models, we expect the sales pace to gradually pick up as supply constraints ease and the market in ASEAN region recovers, which is expected in the second half of the year. Although we need to continue to pay attention to the market trends, we will execute what we need to do as planned and do our utmost to achieve the sales plan of 917,000 units planned at the beginning of this fiscal year. Please turn to page 14. In FY2023, we continue to focus on product renewal and the introduction of new models. This year, we have already launched three models, as you can see here so far. In Japan, we launched the Delica Mini in May. First on the concept of a reliable and active -high-dragons, Delica Mini is a -high-dragons that combines a spacious interior with powerful driving performance and bears the name of Delica Mini Van. Pre-orders have been accepted since January 2023, and the Bentley and Delica-like front-face, large diameter, 15-inch tires, and special shock absorbers, feature exclusive equipment for the four-wheel drive model, have been well received. The company has already received more than 20,000 orders, mainly from families and customers who want to enjoy outdoor activities. Together with Delica D5, we will further promote the outdoor image and Mitsubishi Motors' nest. Next, in Europe, the sales of ASX began in March 2023. The test drive events held from January to February 2023 received a lot of positive feedback, and orders for ASX were off to a good start, exceeding 9,000 units at the end of June. On the other hand, both production and logistics capacities are inadequate, and many customers are still waiting. We will do our utmost to accelerate production and shipment so that we can promptly deliver our products to our customers who have been waiting for those cars for a long time. And last June, we unveiled the new compact hatchback coat for the European market. Following ASX, the new coat, which will be supplied by Renault on OEM basis, will adapt the Alliance's CMF-B platform and be relaunched as a five-door compact hatchback in the European market for the first time in nine years. The new coat will be produced at Renault's Verso plant in Turkey and will be available in Europe through Mitsubishi Motors' SEDIS network from October this year. As with ASX, the response to the announcement has exceeded our expectations, and we strongly believe this model will also increase MMC's sales in the second half of the year. In September, we plan to hold a test drive event for the press and gradually increase the presence in the market. Please turn to page 15. On July 26, we will unveil our fully remodeled one-tone pickup truck, the new Triton, in Thailand for the first time in the world. In addition to its excellent durability, robustness, and off-road performance, the Triton has achieved the comfort and ride quality required for private use and has been well received in ASEAN, Central and South Americas, the Middle East, Africa, and other markets as a global strategic vehicle. The new Triton now in its sixth generation has a larger body size and powerful horizontal styling. The design concept is beast mode. In addition to the toughness and strength required of a pickup truck, the design concept expresses an imposing appearance that is both robust and agile, typical of Mitsubishi Motors. The world premiere of the new Triton, a rugged and dependable pickup that makes you want to go on any adventure, is scheduled to be streamed live on our special website. We hope you will join us. Please turn to page 16. We will have our world premiere for the new compact SUV at the upcoming 30th Gankindo Indonesia International Auto Show to be held from August 10. The new compact SUV features our driving modes, including a wet mode, first time for Mitsubishi Motors, to provide safe, reliable, and comfortable driving in severe weather and road conditions. This new compact SUV to be launched in our core market ASEAN region with a stylish and powerful foot-frest SUV design that offers both comfort and practicality in a compact body size with easy handling, spacious interior, and a variety of storage spaces. It is a SUV that makes everyday life exciting. In addition, the minimum ground clearance, the highest level in its class, was secured to ensure safety even on rough road surfaces. In consideration of the way compact SUVs are used in ASEAN region, the new compact SUV will be launched sequentially in ASEAN countries starting from Indonesia. In the future, we plan to add electrified vehicles to the lineup and expand the model to regions outside of the ASEAN region. We hope to develop it into a mainstay, a model like the crossover, MPV Xpander, which has become a global strategic vehicle from ASEAN's strategic model and is driving ourselves. While COVID-19 is finally on the verge of being resolved in 2023 after the three-year long pandemic, the speed of recovery has been slow, probably due to the effects of global inflation and monetary tightening to control it. The economic growth rates have slowed significantly, especially in emerging countries. Amidst such an unstable business environment, we promoted our strategy to improve the sales quality or net revenue strategy and tackled every issue with sincerity. And with the tailwind of a falling exchange rate, we were able to achieve record profits for the first quarter. We believe that the first year of our new midterm business plan, and boost our global sales volume as well. From this fiscal year, our company has entered into a new stage. We will achieve our goals for FY2023, the first year of the midterm plan, by taking on the challenges of further leaps and bounds continuously towards the next era of growth as a united company. Thank you very much for your attention.

Now, we would like to take questions. Apology for the listeners in the English channel. English channel is for listening only. If you have a question, please use the hand up button in Webex. And if you are joining us by telephone, then press the star button and then press 3. And we will indicate who will be the next person to ask a question. So once your name is asked, please make sure to state your organization and name. And once your name is called, use the star button and also 6 to unmute yourself. And if you want to cancel the request of your question, then use the star button and also 3. So the first person will be Mr. Yoshida. Mr. Yoshida, can you hear us? From city. Thank you very much, Nana. I could unmute myself. So the first question will be for Triton and also say new compact SUV. So there's a lot of attention from the market for those segments, for example. So the Triton will be introduced to Thailand ahead of other markets. But I'm sure the economic situation like financing situation is not going to be easy. So how are you planning to compete with new models like Triton? Because just focusing on the I'm sure you're focusing on existing customers and existing segments of targets as well. But we would like to know your confidence level with the new models. And then the second question will be about the progress of Q1. So there was an impact coming from the Forex. So if you could touch on other like, for example, volume or mix or price, if you could talk a little bit more on the items other than the Forex. And then I believe that the mix and the pricing situation probably worked well in your performance, especially for I would like to know the breakdown 25.5 billion and how the mix product mix and pricing contributed to this result. Thank you very much. So first question is about how are we going to sell the FXC Triton in Thailand? So this is Nakamura speaking. I'm in charge of sales. So as you pointed out, Thailand, especially in pickup market, is quite slow right now. So not just us, but our competitors are also struggling, piling up this inventory. And we're not exempted from that. So the situation is not easy. But at the same time, preparing for new Triton. So we are working hard to clear up the inventory of the old, like current Triton. And some dealers actually already are clear up the inventory and they are waiting for the new models to come in so they can start selling a new model. And dealers as well. So some of the things that we have worked on with dealers for the past few years is to refreshing the dealers. So in other words, each area in Thailand, we have replaced some dealers with more like strong dealers. And then last year we invited them to look at the new Triton, looking at the frame and also like new suspension, because this is a full model change. So our dealer partners are quite excited with this new model. And we have a very good mood already built up for selling new Triton. And so I know the market situation is not easy, but we will prepare ourselves to make sure that the introduction of the Triton will be a success. And this is Matsuoka speaking. Among the operating profit, your question is about the mixed selling price and why we have a good impact on this area. So main reasons is, as you stated in your question, rather than a volume, it is more to do with volume mix that really worked in our favor for the Q1 result. So among the volume, North America worked in our favor the most. And apart from North America, if I may have to state, so the volume mix is basically is the big reason. And this page shows the total volume and also the mixed favorable result. So excluding North America, you can tell that apart from North America, mix selling price is the one that worked in our favor for non-North American markets. Isha-san, do you have additional comments? So about the first question about Thailand. So the market situation is, so looking at the competitors volume in June, looks like the tightening of the financial situation over there is getting more serious. So whether it is for good or for worse, but if you could comment a little bit more on the current market momentum in general. And also the second is again about Q1. So what is the progress of your internal say target for Q1? And if there are any changes from your original plan outside of the Forex, then I would like to know. So about the, this is Nakamura again about the first question. So as you pointed out, so the pickup market, the situation is not good. Although the environment is tough, but interest rate. And now we can kind of foresee where the ceiling will be. So we expect the situation will recover, but still we cannot lower our guard. And I'm sure our competitors are struggling before us. We will continue to focus on the pickup truck and we will make sure to sell them. And also, so we had a pickup truck campaign last month and it is an internal target, but 6,000 units pre-order is the target. But we already have 7,000 customers showing an interest. So the market situation in general is difficult, but I believe that we can have a good start for the launch of the new Triton, I believe. And this is Matsuoka speaking. And so the progress status against our internal plan, I think that's what your question is. So overall, we have a good impact coming from the Forex situation, but when it comes to volume and also product mix, so they kind of offset each other. So the volume, so there were certain regions where the target volume was not achieved, but still, the performance wise they achieved because of the Forex. But if you look from a different perspective, we have in some areas reallocated our efforts to certain models where we can get more benefit from the Forex situation. And so, but overall, we believe that we are on the line with our target or the plan. Thank you very much.

Thank you very much, Mr. Yoshida. Let's move on. From Oka San Securities, Naruse San, please. My name is Naruse with Oka San Securities. Can you hear me? Yes. I have two questions from my side, starting with the first question about the first quarter. Year over year basis, and according to your presentation earlier, North America's performance was better than you expected, and you are facing a very tough situation in ASEAN. So I want to know what's going on in North America market and the study of free to business increased. And lately, looking at your sales performance or sales environment that was mentioned as well, just like Thailand, I want to hear more about North America market, including performance in the first quarter as well as the current situation. That's my first question. The second question is, thank you, Juan. You have made an upward revision in your forecast due to FX. And I understand you have been internally managing your business very much in detail. Maybe you want to separate the reasons from FX and others, but I want to know the reasons behind the upward revision in your forecast and also the balance sheet in the projection and so forth. I heard of those numbers three months ago too. So I want to know your views on the forecast for this year too. To answer your first question about North America, I'm going to walk you through. And Naruse, thank you very much for your question. Concerning North America, as you said, things are going very well right now, especially Outlander and Outlander PHEV. We have those two models. Last year, because of the lack of vessels for safe freight and due to other reasons, there was no enough supply from our side to our customers. In Canada, there was land transportation and some disruption in the ports and so forth. But we have been able to supply sufficient volume to our customers. We have been able to fulfill customers' needs concerning supply of our cars. And in North America, we have US, Canada, Puerto Rico, and also Mexico. And especially in the US, there is a strong demand for fleet, 40% -over-year growth for fleet business only compared to last year. We don't want to give a large discount in order to get the fleet business. That's not our intention. But we have the repurchase demand. And customers want to buy those fleet cars, then we have the same level of margin as the dealer's margin. So for fleet, for 90% supply has been achieved. It's not 100%, but we were able to achieve 90%. Concerning Canada, like Quebec and also British Columbia, there are two states and there is good subsidy or support from the government. And we have a strong demand for that in Mexico too with a new outlander and expander too. Things are going well as well. So we have good dealers and many dealers are good in Mexico. We have been able to find those good dealers. So we want to appeal our pricing and we want to shift from our strategy. So for your second question, the upward revision of FX was incorporated. The first point is ASEAN. Because of new models, volume has increased. I think we can achieve volume increase with new models. And those have been incorporated into our plans. And looking at the current business situation, like ASEAN, high interest rate seems like it's now completed. As an example, a market like Vietnam, economic stimulus program has been implemented. So we can expect good performance in the second half. That's one view. On the other hand, in Vietnam there is an economic stimulus program being executed by looking at the actual market situation. There are some uncertainties. Concerning ASEAN market, we need to closely watch how the market is going to develop going forward. And economy in China too. We do have some concerns. So economy in China, like ASEAN and also Australia, could be impacted due to the slowdown in Chinese economy. Those aspects, we need to keep watching how the situation is going to evolve. But this time, we wanted to include the upward revision from effects, fluctuation only, into our forecast. And North America, status momentum is extremely strong right now, like in the U.S. We did not have the intention to increase the volume, but the market is asking for more supply, supply of volume, and new model compact SUVs, those have been announced. We have been getting very positive feedback from the market already, but still we do have some uncertainties, as we mentioned already, and we want to closely watch how the market is going to evolve. That's why we only incorporated the revision from effects impact only. Concerning dividends, as long as we can keep achieving our midterm plan targets, then we should have enough resources to pay more dividends. But if we have more resources to pay dividends, we want to increase the dividends. But that's not the direction, because in the future there will be a need for the electrification, like introduction of electrified vehicles that require a high amount of investment. So we want to strike a balance when we make a decision for future dividends. I see. Thank you very much. So just to double-check with you, North America, you said there is a stronger momentum, a strong demand, you have a lack of supply, you have strong orders from dealers. And from MNC's perspective, was there any particular change in the market? But there is no particular change in the market. There is momentum and economic conditions are favorable. That situation has been continuing. I think that's the reason. And in Canada, there still is a disruption in their logistic network. So there is a lack of shipment or lack of supply, and the customers are proactively placing orders. I think that's the case in Canada. Thank you.

Thank you very much. Now from Goldman Sachs, security, Izawa-san. So this is Izawa speaking from Goldman Sachs. Thank you. Thank you. So I have two questions. The first one is, again, so your achievement status against the full year forecast, especially for the sales expenses and then also procurement costs and shipping costs and others, if you could share with us the opportunities and then also risks, because I think those will be the major expenses. So if you could elaborate on those three, that would be appreciated. And another one, since China was mentioned, I know it may not directly have an implication on the operating profit, but I would like to receive an update on the Chinese business from the opportunity and risk perspective. So that's first. And the second question is that I know this is Masaoka-san at the CEFO, first time attending a briefing session like this. So I would like to hear from Mr. Masaoka about his declaration of determination being a CEFO for the future. This is Masaoka speaking. So first about the achievement status from the full year perspective, and I think your question is mainly on the expenses. So about the sales allocation, so about the sales, I think we are on the line of the target. And then also for the incentives and also the advertisement cost, we incorporated them sufficiently. And also for the advertisement cost is mainly for the new models, but those parts are fully incorporated into our full year assumption. And we are on the track for those and also about the procurement cost. So of course, cost reduction activities in this area is ongoing and we will continue to do so. But for the raw material, there's still a downside risk for the raw material cost at the moment. So compared to the end of March, like the previous year, compared to that, the steel price is more or less stable. But still, materials centered around steel, we cannot dispel the risks fully. So we do incorporate some of the risks coming from the steel as a part of the forecast and also other costs. The vessel cost, especially for special shipping, we expect some steel in the future. But for that one, as much as possible, we will manage and make sure that we will ship the products to the regions where the profits can be secured. So even if the vessel cost or shipping cost increases, but that's in proportion to the sales increase. But apart from that, there's nothing specific that I need to mention at the moment for the expenses. And then also another one is about the semiconductor part. And so Matsuoka-san mentioned about the vessel shipping cost, but those costs or the risks are already a part of our plan. But we have about, we believe the 50,000 units can be negatively affected because of those regions. But the semiconductor parts and also the vessel availability are improving. But so I don't think the risk will become larger than what we already incorporated into this assumption. Because from time to time we manage to secure the vessels out of the blue. Things like that are happening. So I said the negative implication of 50,000 units, but maybe that could improve. So there's both sides to it. So I would like to add the additional comment. And about the China business. So looking at the current environment in China, the situation is quite difficult. That is our understanding. And any cost related to the business in China, for example, like a loss. So we already expected a certain amount as a risk, and that is already a part of our assumption or the forecast. So if you could think in that manner, we would appreciate that. Thank you. And this is Matsuoka again. So my declaration of my determination. So we are an OEM rolling out business globally, and I assume this position as a CEO for. And this is so I know this is worth doing, but at the same time I feel the burden of coming from this position. But I know so I need to always be aware of the corporate value. But at the same time, we are in the industry that is facing a drastic change. So we need to determine the risks and we need to understand which risks to take and manage them well and also to invest well. And nine KPIs, which we presented as a part of the MTP. And of course, I wasn't involved in the planning back then, but I believe that these nine KPIs are quite well designed. Personally, I believe that. So where or what action do we need to take so that as an overall the KPIs will improve? Like we have a very good transparent matrix that we can use. So I will continue to monitor the nine KPIs under the current MTP and then implement actions such as improving the sales price, which is already part of the initiatives we presented in them under the MTP. And also, I believe that having a dialogue with people like you continues to be important as well. So we I appreciate your kind advice and feedback. Thank you very much.

Are you good? Thank you very much. Mr. Yusawa, let's move on from Mizuho Security's Ishiyama-san. The floor is yours. Hello, my name is Ishiyama with Mizuho Security's. Can you hear me? Yes, we can. Please go ahead. If I have two questions, number one, asking market conditions, I want to know more in detail. I understand you're going to launch new models, but about the entire market, when you closed your previous fiscal year, you have formulated your baseline and you did not make any change in your plan. So you know that the market situation at the moment is better than you expected or worse than you expected. Would you please walk me through about the market situation? The second question is, in your presentation, you talked about the second half, you're expecting market recovery. So can you be more specific about the environment you're expecting in Thailand and Vietnam? I understand it was covered in earlier questions and answers. Would you please talk us through about the other markets as well? Thank you for the questions, Ishiyama-san. My name is Nakamura in charge of sales. I want to give you the answers. Concerning ASEAN, as you pointed out, the situation differs by market, which is in line with our expectation more or less. But there are some differences compared to our initial expectations, especially Vietnam. As you know, the demand was down by 40%, which is a very tough force. But the Vietnamese government, from July, in order to boost the demand for cars, they implemented some support programs. So the demand for cars in Vietnam should recover step by step going forward. On the other hand, as you see, Malaysia at the bottom, sales and service tax relief was implemented last year. And we were expecting a huge drop in our sales volume, but it did not decline that much. Of course, it was slightly decreased. But in the pickup truck, our demand is very strong in Malaysia. So expander and outlander, we want to keep setting those models strongly. In Thailand, the Philippines, and Indonesia, those are our key markets. The Philippines, as you know, our performance is very strong. And the demand is strong. And our market share, because our teams are in great effort, we have gained a lot of market share too. So at the same time, Thailand and also Indonesia, we are facing some slowdown. So the decline from those two markets, that should be offset by the Philippines. That's our aim. But Thailand, the pickup truck demand is weak at the moment. So looking at the entire market, we cannot relax. We need to stay prudent. But we have a current model. So we are setting down those existing inventories as we plant. So we are trying to splash water on the dry land. We want to focus on those key models to push ourselves more. Indonesia situation is a little bit complex. Demand is the same level as Alaska. But for the finished cars, we were not able to get the quarter for the import cars. We are struggling with that. But Expander, which has been localized already, and also the SUVs with five passengers, by setting those models strongly, we want to recover our sales performance. That's

all. Thank you very much, Mr. Ishiyama. Next, from Nomura Securities, Mr. Gurman. Can you hear me? Yes. So first question is about the North American market. And then for the first quarter as well, so North American market accounts for 59% of the overall result. And you mentioned that the U.S. market is quite strong. So if the current foreign exchange continues, and then from April to June, you already are selling in accordance with your plans. So if the current forex continues, and for the remaining nine months, you'll be able to get a good result for the rest of the year. Is it fair for me to say that? If you could elaborate on that point more, including the ratio of the fleet business. And the second question is about the business in China. So according to the media, 2700 associates in the GMMC offered a retirement package. So if you could share some of the facts, and also extra ordinary loss, I guess will be booked as soon as the number of people who accepted the package. But that kind of risk or the loss amount is already a part of the business plan. So first, this is Nakamura again in charge of SIOs. And I would like to respond to your first question about the U.S. market or the North American market. As you know, we are making good progress in that region, and we believe that we can continue to maintain that momentum. Or actually, I mean, we weren't deliberately trying to do this, but we're going to mirage and atrage. So these models, we are also receiving a lot of offers, but we haven't been able to provide enough supplies. But Outlander, Outlander, PeerTV, in those areas, we'd like to make sure to do our sales activities. And then if our current forex situation stays, then we may, we probably will overachieve. And about the fleet business, of course, the fleet business is in the scale of several thousand units. But because of the IRA, Outlander, PeerTV, so we would like to sell Outlander, PeerTV in the commercial list to a certain extent. But of course, the retail customers and also outside of America, the North American market as well, who would like to have the Outlander, PeerTV as well. So we're not going to push ourselves too much and go beyond our means to sell. But still, with the current situation, we believe that we'll be able to overachieve the budget. And for the North American market, so this is Kato speaking. I'd like to add some comments. So if we maintain the current level, then we believe that we'll be able to have a favorable result at the end of the year. But at the same time, the interest rate is increasing. So we do need to take it back. And that is slowing down the inflation rate. So in the future, if the US market or the economy there will slow down at one point or not, we need to carefully watch if there is a change in the speed of the economy and also about the Chinese business, about the package you mentioned. And as the media reported, yes, we are doing that. But this is, of course, not to let go of everybody. And also the scale of this package is a part of the plan. So if we're not expecting to see expense related to this package increase from what you see, then that's what we plan right now. So this is in line with our original plan. Thank you. And the North American market. So now with some, we'd like to talk from the corporate strategy. So about the North America, so among the growth in the overall TIB, the demand for rental car is on the increase up until last year. So we know, like including ourselves, like no OEM had enough stock to allocate to the rental business, but especially for like new outlanders, like we had no stock left for the rental business. But now that we have managed to stock up the inventory a little bit and now that we can circulate some of the vehicles to the business like rental, so we have restarted that too. So like Nakamura-san mentioned, the profitability for the rental business is the same as the dealer business. So the demand, in terms of balance between demand and supply, the demand is still outweighing the supply amount. So for the rental as well, we have managed to enjoy the good profitability from that business as well. So that was additional information. Thank you. And I'd like to ask one follow-up question about reducing the number of workers in China and then reducing the amount of production capacity. But you will continue to produce similar models through the similar number of dealers. So about the future plan. So this is still under the negotiation discussion with our partner. So I would like to refrain from talking about the plan for the future. Thank you.

Thank you very much, Mr. Kunugimoto. So the next question should be the last question, Hakumori-san, with the driver's show. Hello, this is Hakumori speaking. I have two questions. Is that okay? That's fine. So the first question is about Thailand. Market share, your actual performance in the market. Now I understand that you have a net revenue strategy and you have been working on that in the past several years. And I understand you are towards the end of a life cycle for your models. So about 2019 was the peak in Thailand and your market share has been coming down each year. And for a peak of a truck, it was over 10%, but now down to 5% at the moment. So it seems like not only this year, but your market share has been declining each year. I understand that you are trying to focus on and prioritize your customers. But do you have enough competitive models and how much market share you can target to achieve? That's my first question. The second question is, looking at the Q1 mix and also selling prices, you have 25 billion yen more on -over-year basis, 25.5 billion yen more. I understand there was a big increase. And I understand you are still in the way to achieve your final goal. But do you think there's a growth rate when this growth is going to slow down? Because -over-year, you have such a big growth rate. And I don't think you can maintain that level for a long time. So for the first question about Thailand, Nakamura is going to give you the answer. Hakumori-san, thank you very much for your question. As you already pointed out, market share has been coming down since 2019. There are things we can do during a short time, and there are things we can do in the meantime. And we have been working on both so far. But this time, now we are launching a new Triton for our product lineup. Plus, maybe this was not announced in Thailand yet, but towards the end of the year, we want to launch Xpander Hybrid so that we can get demand from electrification of the vehicles. So that's about our product. Our sales capabilities and also the productivity and also replacing our dealers. We have been tackling those issues -by-step in the past several years. Because we did not have a new model, we were not able to attain tangible results. But we have replaced many of our dealers. And in October and November, we invited those local leaders to come to Japan, and we presented new models, and we motivated them to invest more. In addition to that, our marketing approach. In Bangkok, it's difficult to win, because in the pickup market, we have more demand in local areas in Thailand. So customers and also prospects, we are trying to gather customer data. So how we can attract those customers to repurchase Mitsubishi cars or switch from another brand to Mitsubishi. So we are conducting those marketing activities. And at the same time, we are using digital tools to conduct our marketing activities. In the past, it was difficult for us to achieve our good results. However, the sales capability enhancement took place in the past several years, and we have been strengthening our marketing activities too. So we want to regain our market share in the coming years. That's all. And that should be achievable. About the selling price hike, Kato wants to answer that question. In the past, we have launched a certain model. And there are two things we have done. The new Outlander gives a prestige image, and also it's well accepted by our customers too. The cars can give you very luxury or prestigious image. So we want to give new prices with the new models. We wanted to revise our prices for the new models with a luxury image. And with the existing models, we are setting those already. But do we have adequate selling prices with those current models? In each market, model by model, we are compared with our peers model by model. If our prices are lower than our peers, I mean, we have done such an analysis. If our price point is lower than our competitors equivalent model, then we have raised those prices. Our prices were relatively low compared to our competitors. And we raised our selling prices for those models and for many models. But for some regions, we do have opportunities for further price hikes. And we will take those actions accordingly. The next element is Mirage or in Japan, Alvea. Those models, our price point was quite inexpensive. It still is. You know, like low end, low price models. We want to reduce those models so that we can place a greater focus on higher end models. We want to shift our lineups towards higher end models. So that's the action we are going to take. And because of that, we should be able to raise our selling prices. We have a high expectation of that. To be more specific, Mirage in some regions, we are not setting those anymore. To replace Mirage or a compact SUV, of course in a compact SUV, the price point is higher than Mirage. That's obvious. And we want to shift our focus towards that compact SUV. And also seven passenger capacity, three role SUVs. We are planning to launch those models in the future. In the past, Alvea, R-London sports, we used to call those models under those names. Compared to those conventional models, we should be able to raise our price points. And based on the finish of those products, we should be able to lift up our prices. So through those measures, we want to be able to raise our prices further. Thank you very much. Thank you very much. Now it's time for us to finish. We want to put an end to today's presentation. Thank you very much for your attendance despite your busy schedule.