Automotive Systems Business Strategy - Hitachi Global

1 Hitachi , Ltd. 2017. All rights 8, 2017 Hitachi IR Day 2017 Automotive Systems Business StrategyPresident & CEOH itachiAutomotiveSystems, Seki Hitachi , Ltd. 2017. All rights Systems Business Strategy [Contents] Hitachi , Ltd. 2017. All rights Business ConceptContribute to Society by Providing New Solutions for Vehicle Manufacturing to Solve Social IssuesMeet the needs of society with an Advanced Vehicle Control system that integrates social infrastructure and services with vehicle environment, safety and information technologiesCorporate CredoWe will contribute to the realization of an affluent society by creating new value-added Systems , products and services through the harmonization of people.

2 Vehicles and Automotive SystemsHitachi fields of Automotive device businessSocial InfrastructureServices Accident EliminationTraffic Congestion ReductionComfort ImprovementMobility Support for the ElderlyEnvironmental ConservationEnvironmentAdvanced Vehicle Control SystemSafetyInformation Hitachi , Ltd. 2017. All rights Business StructureStructure the Automotive Systems Business segment around Systems and products inenvironmental, safety, and information fields that together form an advanced vehicle control systemPT Combustion Control SystemHybrid/electric Vehicle SystemEngine Management SystemEnvironmental Field: 40%Safety Field: 40%Integrated Chassis Control SystemAll-round External Recognition SystemAdvanced Drive Control SystemCar Information SystemInformation Field, Other.

3 20%AdvancedHuman-Machine InterfaceTelematics Communication UnitIn-vehicle Information Device SystemElectric Powertrain SystemPTDiv.: Powertrain & ElectronicPowertrain Systems Division, ENDiv.: Engine &Chassis Division, Drive Div.: Drive Control Systems Division, Aftermarket Div.: Aftermarket billion yenOverseas Revenue Ratio60% Hitachi , Ltd. 2017. All rights , + %97%( )100%112%115%( )Influence ofcurrencymarketfluctuations( )+ The deviation factors of the FY 2016 forecast in Hitachi IR Day 2016 and the comparison between the forecast and result excluding currency exchangerateResult( )+ Influence of currency marketfluctuation( )(billion yen)ForecastDeviation factorsEBIT ratioAdjusted operating income ratioRevenues51-3.

4 Summary of FY2016 Capacity utilization rate improved although Business forecast*1was not achieved due to the influence of currency market fluctuations99%FY201682%85%51%60%FY2018F Y2016FY2018To address exchange risks, enhance Global procurement and accelerate local production for local consumptionForecast1 trillion billion yenForecast60 billion billion yenForecast59 billion billion yen94%112%ResultvsTargetLocal procurementratePure local rate*2(China)*1: Forecast as of 2016IR Day.*2: The rate at which overseas group companies locally procure both parts and materials that are produced ( ) billion yenDeviation( ) billion yenDeviation+ yenForecastForecastResultResultCapacityU tilizationImprovementInfluence ofcurrencymarketfluctuationsOperatinginc omeAssetsales, factorsDeviation factorsThe forecast ratio exclu.

5 Currency market fluctuation The forecast ratio exclu. currency market fluctuation The forecast ratio exclu. currency market fluctuation Hitachi , Ltd. 2017. All rights ,0001,2001,4001,6001,80002,0004,0006,000 8,00010,00012,00014,00016,00018,000FY201 5(Result)ResultFY2016(Result)FY2017(Fore cast)FY2018(Target)FY2020(Target)+ + ratio of FY 2015 result excluding currency market fluctuation*(*Premising the same overseas sales rate as FY 2016 after FY2017)106%106%115%1, , , , the potential for growth,aiming for a growth rate that substantially exceedsthe market growth rate by FY2020 CAGR.

6 Compound Annual Growth RateRevenuesPowertrain & Electronics Control & Chassis Control Systems Division Car Information Systems (Clarion) Aftermarket Division/Others Adjusted Operating Income(Ratio)EBIT(Margin) Automotive market growth rateSchedule-basedCAGRFY17-20: Overseas revenue ratio for Global customer basesRevenues(billion yen)Adjusted Operating Income/EBIT(billion yen)1-4. Business Performance Hitachi , Ltd. 2017. All rights for the ratio in revenues between conventional products and electronics products56%FY2020(Target)Increase the ratio of electronics products while maintaining base in conventional products71-5.

7 Portfolio TrendsFY2016(Result)Electrification and autonomous driving products are the growth drivers to driven more high earnings structure. FY2018(Target)1, yen44%53%47%21%50%50%Electronics ProductsConventional Products1, yen26%Growth yenElectrification and autonomous driving products18%Electrification and Autonomous Driving Products Increase from 20% to 30% Hitachi , Ltd. 2017. All rights Systems Business Strategy [Contents] Hitachi , Ltd. 2017. All rights congestionDriving WorkloadsSafe driving support vehicles becomepopularAccident elimination2-1.

8 Automobile Society Issues and SolutionsSocial trendsSocial needsElectrification SystemKeys to solve issues in automobile society are Electrification, Autonomous Driving, and of ITComfort improvementTraffic controlTraffic congestion reductionPersonal mobility for the elderly people becomes widespreadMobility support for the elderlyAutonomous Driving SystemData centerHitachi Automotive Systemsprovides Systems and devicesthat SupportHitachi Group SolutionsSocial issuesConnected ServicesAdvanced vehicle control systemEnvironmentEnvironmental regulations become strengthenedEnvironmental conservationEnvironmental issuesSafetyInformationTraffic

9 AccidentsAgingsocietyElectricDriveSystem Autonomous Driving SystemConnected service Hitachi , Ltd. 2017. All rights (Lv4,5)AD(Lv4)PHEVAD(Lv3)AD(Lv4,5 HEV EVAD(Lv3)HEV PHEVAD(Lv3)AD(Lv4,5)HEV PHEV EVAD(Lv4,5)AD(Lv3)HEV PHEV EVHEV PHEV EVAD(Lv3)2-2-1. Market Trends Roadmap of Electric-driven andAutonomous Driving Vehicles201520252030 Autonomous vehicles based on electric-drive cars will be introduced intothe market continuously from around 2020 Automobile manufacturers are accelerating market introduction of electric and autonomous vehiclesPublic Information released by automobile manufacturersSource survey VW GM FordRoadmap of Top 5* Japanese, , and European automobile manufacturers2020 Autonomous vehicles(Highway))

10 Electric-driveAutonomous vehicles(Highway)Electric-driveAutonomou s vehicles(Highway)Electric-driveAutonomou s vehicles(Highway)Electric-driveAutonomou s vehicles(Highway)Electric-driveSource: Arthur D. Little Japan, Inc.* Based on production volume in FY2016 NissanToyotaHEV: Hybrid Electric Vehicle, EV: Electric Vehicle, PHEV: Plug-in Hybrid Electric Vehicle, AD: Autonomous Driving Present Hitachi , Ltd. 2017. All rights unitsA16%B13%C10%D8%E8%F6%Others39%Chang es in Global Production Volume by Powertrain TypeMarket Shares of Electric-driven Vehicle OEMs in 2030 Global electric vehicle production volume will increase sharply, driven by China, the world s largest automobile market2-2-2.