Suzuki Motor : Integrated Report 2022

Integrated Report

Suzuki Motor Corporation

Integrated Report 2022

Contents

Corporate Profile

• 001 Contents

• 002 Message from the President

• 004 Growth History

• 005 Financial and Non-Financial Highlights

• 007 Global Network

• 008 Major Product Lineup

• 009 Corporate Philosophy

Our Mission

011 Suzuki's Value Creation Process

012

Suzuki's Growth Strategy for FY2030

Value Creation

• 017 Business Overview [Automobile Business]

• 021 Business Overview [Motorcycle Business]

• 024 Business Overview [Marine Business]

Mechanisms for Enhancing Value Creation

• 025 Sustainability Policy

• 028 Environmental

• 032 Social

• 043 Directors, Auditors and Officers

• 044 Corporate Governance

• 051 Message from Outside Directors

• 052 Compliance System and Risk Management System

• 055 Risks and Countermeasures

• 056 Stakeholder Engagement

Data Section

057 11-Year Major Financial / Non-Financial Data

059 Financial Review

061 Consolidated Financial Statements

064 Company Information

065 Stock and Other Information

Editorial Policy

About this report

In order for the Suzuki Group to continuously grow for the next 100 years, the Company is promoting various initiatives. This report was published to help our stakeholders including shareholders, investors, and employees, to understand those initiatives. Financial and non-financial information are also available at our website.

Period covered

The period covered by this report is FY2021 (from April 1, 2021 through March 31, 2022). However, this report also contains descriptions of some activities which took place before or after that time period.

Information covered

This report covers information about not only Suzuki Motor Corporation, but also domestic and overseas Suzuki Group companies. (Unless "Group companies," "dealers," or "overseas" are indicated in each description, the information is related to Suzuki Motor Corporation alone.)

Referred guidelines

Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation by the Ministry of Economy, Trade and Industry International Integrated Reporting Framework by The International Integrated Reporting Council (IIRC) and other guidelines

Information disclosure systemCaution with respect to forward-looking statements

This report contains forward-looking statements based on the Company's judgments in line with current assumptions and information available at the time of publication. Therefore, these forward-looking statements involve risks and uncertainties. The Company does not guarantee that such forward-looking statements will be realized.

Please be advised that actual results may differ materially from those expressed or implied in the Company's forward-looking statements as a result of changes in a variety of factors.

Factors that may affect actual results include economic conditions and trends in demand in major markets, as well as volatility in foreign exchange rates (mainly the US dollar/yen, euro/yen, and Indian rupee/yen rates).

Financial information • Integrated • Business Report (PDF) • Financial Results (PDF) • Securities Report (PDF)	Non-financial information eport (PDF) • Corporate Profile (PDF) • Sustainability Report (PDF) • Corporate Governance Report (PDF)

Message from the President

We will deliver products and services of superior value, with the aim of being a company that is essential to people and society

Message from the President

Reflections on Suzuki's strengths as it celebrates its 103rd anniversary

Suzuki was founded in 1920 with loom manufacturing as its first business. In 1952, Suzuki entered the motor-vehicle field with the launch of the Power Free 36cc, 2-cycle auxiliary bicycle engine. Since then, Suzuki has contributed to peo-ple's comfortable and fulfilling lives by providing user-friendly and affordable products, including motorcycles and automo-biles. The Company has expanded its business not just throughout Japan, but also to international markets, providing people worldwide with a "means of mobility." We have con-tinued to make every effort to improve the daily lives of our customers as well as promote economic and social develop-ment. We are proud that we will soon be celebrating our 103rd anniversary.

Suzuki's strengths include its extensive product lineup, which it has developed over many years, and its unique value chain, which enables it to deliver those products to custom-ers around the world. Customers all across the world have

Toshihiro Suzuki

Representative Director and President

embraced our diverse product offerings, which include auto-mobiles, motorcycles, outboard motors and electric senior vehicles. This has allowed us to establish a strong manage-ment platform that is adaptable to changes in the external environment. Furthermore, Suzuki will move beyond the development, production, and popularization of products and services that satisfy customers' diverse needs. Looking ahead, we will meet the challenge of creating innovative next-generation mobility services that have an impact on people's daily lives and transportation infrastructure.

Changes in the automobile industry's environment and Suzuki's response

The global automobile industry is in the midst of a once-in-a-century transformation period. The industry must tackle prior-ities such as contributing to carbon neutrality through environmental technology and sophistication of autonomous technologies that lead to improved traffic safety. These prior-ities have emerged as the key issues that will determine thefuture success of automakers.

Among the many challenges facing the automobile indus-try, we are placing special emphasis on electrification initia-tives to achieve carbon neutrality. Numerous automakers around the world are making a profound shift from traditional gasoline and hybrid vehicles to electric vehicles (EVs). Customers who are thinking about buying a car are increas-ingly asking us about the EV strategies that Suzuki will employ. Although we are moving forward with development in order to launch an EV into the market as soon as possible, I believe that we must also assess the EV product's design and the timing of its introduction to the market with a level head. For example, numerous customers drive Suzuki's com-pact cars, an area where we excel, because they support the affordability of those cars. A rise in the product price follow-ing the transition to EVs could diminish these advantages that Suzuki has in compact cars. We must also be cautious about whether the EV usage environment will be sufficiently developed in the future, particularly the expansion of charging infrastructure, which has a direct impact on user convenience. Suzuki will develop the right EVs for the right place at the right time, so to speak, that fit customer needs and usage patterns by balancing cost, driving range, and equipment. Our policy is to introduce EVs to the market at the proper time.

Aiming to be a company essential to people and society

The outlook for the automobile industry's environment remains unpredictable, primarily due to increased global geo-political risk and supply chain disruptions, in addition to the change of the whole life-style of human beings as a result of the spread of COVID-19. Automobile production constraints caused by tight supplies of semiconductors have not yet been completely alleviated. Under these conditions, we will continue to be cognizant of structural transformation, risk minimization, and sowing the seeds for the future, as we go about our daily operations.

Message from the President

As part of our structural transformation efforts, we will focus on simplifying operations, improving our corporate culture, and developing human resources. To dedicate ourselves to new types of work in areas such as electrification, carbon neutrality, and connectivity, we will identify wasteful jobs and processes that do not add value, and simplify operations by ceasing, changing, and systematizing operations in that sequence. Rather than thinking like we always have, we will need to transform our own mindset to deal with disruptive changes in conditions, as we harness digital technologies and other resources as needed. Transforming our corporate cul-ture is another priority. Here, we will reaffirm the principle to "Establish a refreshing and innovative company through teamwork," which is laid out in Suzuki's Mission Statement, and foster a lively organization and an ambitious corporate culture by encouraging thorough communication among employees. We are also devoting considerable effort to diver-sity programs. In order to make our workplaces comfortable and productive for both men and women, we have already begun revising various systems, such as childcare leave. Human capital management has recently emerged as a key perspective on human resource development, and through this lens we will view education and training programs as for-ward-looking investments in our personnel. We will develop human resources to ensure that all employees can imple-ment our Mission Statement and create corporate value.

In an effort to minimize risk, we have developed a system that can assess the impact of semiconductor shortages on production early on and adapt flexibly. We have accomplished this by requesting that our business partners maintain suffi-cient inventory and by visualizing our supply chains based onour trusting relationships with them. It is also crucial that we increase our efforts to enforce compliance. Suzuki inadver-tently triggered two separate cases of misconduct relating to fuel efficiency and emissions tests in 2016 and final inspec-tions in 2018. Since then, we have worked hard to restore trust by carefully adopting recurrence prevention measures and increasing compliance awareness among employees. These efforts are never-ending. We have commenced opera-tions at the Kosai Plant's new final inspection building, and have put in place a mechanism to ensure that tests are per-formed correctly using cutting-edge equipment. Moreover, we have continued to conduct Remember 5.18 activities, which are conducted annually with participation by all officers and employees, to ensure that the incidents of misconduct are not forgotten. We are determined to build a robust compli-ance system in terms of both tangible and intangible factors.

In terms of sowing the seeds for the future, we will work on carbon neutrality in India, Suzuki's largest market. The Indian government aims to achieve carbon neutrality in 2070, which is far later than Japan's target year of 2050. In India, there are still concerns about the supply of stable electricity, and fossil fuels play an important role in the power mix. Furthermore, the number of customers who can afford to buy expensive EVs is limited. In this context, Suzuki will need to collaborate with individuals to promote carbon neutrality so that India may strengthen its economy and its people can enjoy greater prosperity.

Specifically, we are focusing on the business of refining biogas obtained from cow dung. Cows are plentiful in India, and their dung produces methane, a gas with a high green-house gas effect. We are considering refining carbon neutral fuel for automobiles from this methane. This business is also expected to have other benefits, such as revitalizing farming communities, creating new jobs, and improving the energy self-sufficiency rate.

In terms of EVs, starting with the introduction of commer-cial mini-vehicle EVs in Japan in FY2023, we will then launch EVs in Europe and India in FY2024. Regarding Japanese mini-commercial vehicles, we are pursuing development while researching on-site usage patterns, driving character-istics and other factors, and coordinating our efforts with the Commercial Japan Partnership (CJP). For mini-EVs, we would like to explore questions such as "How do people truly usemini-vehicles as a means of mobility in regional areas of Japan?" and "What would an EV look like that customers who are now driving Suzuki vehicles could switch to without diffi-culty?" We will seek answers by confirming the "Three Actuals"-visiting the actual place, seeing the actual thing and understanding the actual situation, in order to develop the right EVs for the right place at the right time. We would like to develop products with value that only Suzuki can offer and that customers do not yet realize they need. Through our products, we want customers to say things like "This is the type of car I was looking for," or "I really appreciate this service," referring to their whole experience with Suzuki, including how products are sold and what kinds of services are provided.

Once again, I believe that the ideal profile of Suzuki for the future is to become a lifestyle infrastructure company that makes people happy and healthy and revitalizes the economy by resolving the daily mobility issues of numerous people through efforts such as the construction of infrastructure and the introduction of next-generation mobility services. We will continue to deliver products and services of superior value, with the aim of being a company that is essential to people and society. As we pursue sustained growth in our corporate value, we will also work diligently toward carbon neutrality and the realization of a sustainable society.

Growth History

• * The graph below is based on non-consolidated figures until FY1976 and consolidated figures from FY1977.

• * Until FY1974, the accounting period was six months.

  Net sales (billion yen)

  Operating profit (billion yen)

• * Operating profit has been disclosed since FY1960.

Net salesOperating profit

4,000

400

Suzuki's historic models

Automobile prototype completed in 1939

1955 Launched Suzulight

1967 Launched Fronte

1970 Launched Jimny

1979 Launched Alto

1983 Launched Cultus

1988 Launched Escudo

1993 Launched WagonR

2004 Launched Swift

2006 Launched SX4

2014 Launched Hustler

2018 Launched SpaciaGear

(Swift)

(Vitara)

3,000

300

Launched Power FreeLaunched Colleda 250TT

1965 Launched T20

1972 Launched GT380B

1981

1983

1985

Launched GSX1100S KATANALaunched RG250Γ Launched GSX-R750

1999 Launched Hayabusa

2002 Launched Skywave

2019 Launched KATANA

(Burgman) 650

2,000

200

2006

1965

Launched outboard motor DF300

Launched outboard motor DF55

2017 Launched outboard motor DF350A

2022 Launched outboard motor DF140BG with Micro-Plastic

Growth History

Collecting Device

1,000

100

1950s

1974

1974

Suzuki Loom Works at the time of founding

A46 Single-sided automatic four-shuttle loom

Launched motor chair Z600

Launched Suzuki House

1982 Launched ATV LT125

1985

Launched electricsenior vehicle ET10

1999 Launched electric senior vehicle ET-4A

1940

1950

1960

1970

1980

1990

2000

2010

2020

(FY)

Non-consolidated basisConsolidated basis

Major management topics

Starting out as a loom manufacturer, ambition for carsTransformation to an automobile manufacturer

Taking on the world: Growth as a global company

Working toward the next 100 years

YearMonth

Topic

YearMonth

Topic

YearMonth

Topic

YearMonth

Topic

• 1909 Oct.

  Michio Suzuki founded Suzuki Loom Works

  1911 1912

  • - Invented an upper and lower shuttle device and developed a two-shuttle tread loom that can weave striped patterns

    1952 1954

    • Jun. Announced the Power Free bicycle engine, entering the transportation equipment field

      • 1981 Aug.

      • 1982 Sep.

    • Jan. Commenced research on mini-carsEntered into business tie-up with General Motors Corp. (GM) Commenced automobile production at Pak Suzuki Motor Co., Ltd. in Pakistan

      • 2015 Jun.

        Toshihiro Suzuki appointed as president

        Sep.

        Announced the Mid-Term Management Plan SUZUKI NEXT 100 Acquired all the shares of Suzuki held by VW

  • - Invented a warp regulator, thereby completing the develop-ment of the Suzuki Power Loom

  • Jun. Company name changed to Suzuki Motor Co., Ltd.

  • 1983 Dec.

    • 1955 Oct.

• 1920 Mar.

  Suzuki Loom Manufacturing Co. incorporated with Michio Suzuki as president

  • 1957 Feb.

    Launched the Suzulight, blazing a trail for mini-cars Shunzo Suzuki appointed as president

    • 1990 Oct.

  • 1962 Mar.

    1929 1930

    • - Invented a card-saving device for the quad-shuttle loom, thereby completing the development of a sarong loom

  • 1965 Apr.

  • 1973 May

    • - Started exporting a sarong loom to Southeast Asia

• 1936 Aug.

Commenced research on automobiles

• 1974 Apr. Aug.

  Mission Statement established Entered the outboard motor field Jitsujiro Suzuki appointed as president Entered the medical equipment field Entered the housing field

  • 1992 Oct.

    Commenced automobile production at Maruti Udyog Ltd. (currently Maruti Suzuki India Limited) in India Company name changed to Suzuki Motor Corporation Commenced automobile production at Magyar Suzuki Corporation Ltd. in Hungary

    • 2017 Feb.

      Commenced automobile production at Suzuki Motor Gujarat Private Limited in India

      Concluded memorandum toward business partnership with Toyota

      Apr.

  • 2000 Jun.

    Masao Toda appointed as president

    Reached basic agreement with Toshiba and Denso to establish a joint venture company for production of auto-motive lithium-ion battery packs in India

  • 2003 Apr.

    1937 1939 1941

    • - Succeeded in developing an engine prototype

• 1975 -

  • - Completed a small four-wheel sedan prototype

    Suffered severe difficulties owing to delays in compliance with car emission regulations

    • 2008 Nov. Dec.

      Osamu Suzuki appointed as chairman and CEO Hiroshi Tsuda appointed as president Dissolved business tie-up with GM

      • 2019 Aug.

      • 2020 Mar. Nov.

        Entered into capital alliance agreement with Toyota Celebrated 100th anniversary

  • - Halted research on automobiles

  Chairman and CEO Osamu Suzuki additionally appointed as president

  • 2021 Feb.

• 1978 Jun.

Osamu Suzuki appointed as president

• 2009 Dec.

Signed framework agreement with Volkswagen AG (VW) for a comprehensive partnership

Announced the Suzuki Environmental Vision 2050 Announced the new Mid-Term Management Plan (April 2021 to March 2026) "Sho-Sho-Kei-Tan-Bi (Smaller, Fewer, Lighter, Shorter, Beauty)"

• 2022 Mar.

Invested approx. ¥150 billion in manufacturing of battery electric vehicles (BEVs) and automotive batteries in India

1952

1956