Yamaha Motors

Introduction

Ever since its founding as a motorcycle manufacturer on July 1, 1955, Yamaha Motor Company has worked to build products which stand among the very best in the world through its constant pursuit of quality; and at the same time, through these products, it has sought to contribute to the quality of life of people all over the world. Following on the success of our motorcycles, Yamaha began manufacturing powerboats and outboard motors in 1960. Since then, we have used our engine and FRP technology as a base to actively expand and diversify our areas of business. Today our fields of influence extend from the land to the sea and even into the skies as our business divisions have grown beyond our Motorcycles operations to include Marine operations, Power Product operations, Automotive Engine operations, Intelligent Machinery operations, Sky operations and our PAS operations.

corporate mission

We create "kando"

'Kando' is a Japanese word for the simultaneous feelings of deep satisfaction and intense excitement that we experience when we encounter something of exceptional value. At Yamaha Motor, we believe that Kando can be generated by products and services that surpass customers expectations.

We strive to achieve our corporate mission by adhering to three principles:

We must remain keenly aware of customers' evolving needs to provide them quality products and services of exceptional value that surpass their expectations.

We can and will earn a fair profit by putting forth a superior effort to satisfy our customers.

Our corporate environment should be staffed with autonomous, empowered employees.

In cultivating our employees' creativity and abilities, we will establish an equitable system of evaluation and rewards.

As a good corporate citizen, we act from a worldwide perspective and in accordance with global standards.

We will work locally to better the social environment, and think globally in helping preserve the natural environment.

1. Management Policy for 2004

There is some sense of anticipation that the Japanese economy will recover in 2004, reflecting the bottoming out of stock prices. However, business conditions remain unpredictable for Yamaha Motor, resulting from such factors as uncertainty in the U.S. economy, due mainly to the situation in Iraq and the appreciating yen against the U.S. dollar.

In 2004, we plan to expedite the reforms spelled out in our medium-term management plan. By implementing global strategies and establishing a profitable structure, we will swiftly build a robust corporate structure capable of withstanding exchange rate fluctuations even if the yen continues to become stronger.

To this end, we will address the following three priority themes this year.

Priority Themes for 2004

(1) Final resolution of medium-term management issues

To improve profitability, we will strive to achieve a 30 percent cost reduction and to return low profitability businesses to the black. We will work harder to build a system that can withstand and overcome ever-intensifying competition with consistently superior, attractive products.

To solidify the foundation of our businesses in China, India and ASEAN countries, we will continue to be aggressive in launching new products, thus driving both sales and profits beyond planned targets. In particular, we intend to finalize and implement business strategies for our China operations in 2004.

To promote a growth strategy, we are committed to expanding our mainstay businesses, while developing original business models in new domains such as biotechnology.

To enhance our financial structure, we will maximize tangible fixed assets groupwide from a consolidated management standpoint, thus aiming to achieve a higher return on investment.

(2) Unifying the accounting term to achieve far-reaching consolidated business reform

In the next fiscal year, Yamaha Motor Co., Ltd. in Japan will change the date of its accounting term, from the current March 31 to December 31.

More than 80% of our consolidated sales are derived from overseas markets. By accurately reflecting seasonal fluctuations in business performance for our mainstay products in the financial statements, and by unifying the accounting term with other group companies, including consolidated subsidiaries, we can further promote our globalization programs.

Since this unification of the accounting term will renovate the corporate management cycle, we view the change as an aspect of our consolidated business reform program.

(3) Launching the YAMAHA CCS21 campaign groupwide

This year, Yamaha Motor will launch its CCS (Customer and Community Satisfaction) 21 campaign, which links management and employees in a tight web of shared interest and close communication. It is designed to involve each and every Yamaha Motor Group employee in the effort to achieve prosperity for both our business and our people.

In fiscal 2004, we will place special emphasis on developing human resources. We will initiate a program designed to strengthen in-house communication, clarify our view of ethics and standards of conduct, and help employees better understand the "Yamaha