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NISSAN MOTOR COMPANY

GLOBAL COMMUNICATIONS

Q&A: NISSAN AND SUZUKI AGREEMENT

Key Messages:

• Nissan and Suzuki have a well-established relationship through the existing supply of the Moco minicar. This expansion of the business cooperation affords both companies the opportunity to exploit new customer segments and benefit from industrial synergies in key emerging markets. This is another example of a win-win agreement for both Nissan and Suzuki
• The new car for Europe is not a replacement for the Micra – in fact, it will compete in the segment below Micra and is an extension of the Nissan line in Europe. To be competitive in this market – like many other manufacturers – we needed to look for a partner with expertise in this market and with a low-cost manufacturing base. This strategy is totally in-line with Nissan Europe’s growth and profit objectives and we are confident that Suzuki is the right partner at the right time.
• Expansion into new customer segments is a key part of Nissan’s global growth strategy. This partnership allows both Nissan and Suzuki to realize many new opportunities, while retaining each partners distinctive brand identities and core industrial strengths.

COOPEARTION

Q1:      Why are Nissan and Suzuki expanding their partnership now? Is this linked to GM selling off its equity stake in Suzuki?

A1:     For Nissan, Suzuki is a trusted existing partner and through the current OEM supply agreement with Moco, we have built a mutually beneficial relationship. Nissan has a number of specific requirements for certain products and we found Suzuki offered us the best combination of product and industrial opportunities. You will need to talk to Suzuki concerning their specific strategy on this partnership.  

Q2:      Will Nissan buy an equity stake in Suzuki or vice versa?

A2:     This agreement is expanding an already existing cooperation and we do not comment on future speculation on this coopeartion.

Q3:      Do you have any concerns about carrying out this expanded cooperation without a capital tie-up?

A3:     No. This is a win-win situation for both companies and we do not see the need for a capital tie-up at this time.

Q4:      When did negotiations begin?

A4:     Talks began after summer 2005 with Nissan initiating talks about extending cooperation.

Q5:      When will the contract be signed and under whose names?

A5:     Last May, Nissan Shiga, COO and Suzuki Tsuda, President reached basic agreement to progress discussion for collaboration. We will sign contracts for each individual projects as we go forward.

Q6       Why aren’t Nissan’s CEO and Suzuki’s chairman present at today’s press conference?

A6:     This is an extension of our current cooperation. From the beginning, discussions have been held between Nissan’s COO and Suzuki’s president so it is only natural that these two executives should make the announcement.

Q7:  Is there a possibility of an alliance in other areas besides OEM and     cross-manufacturing (eg. product planning, technological development, purchasing, etc.)?

A7:   We are studying collaborating in purchasing for the cross-manufactured model produced in Suzuki’s India plant but we have nothing to announce.

Q8:      When did Nissan and Suzuki originally establish their cooperation?

A8:     In 2003 with the OEM supply of the Moco minicar for the Japanese market.

Q9:      Are you concerned with the perception that Nissan is unable to build its own mini cars/A-segment vehicles?

A9:     No. Through our existing agreement with Suzuki, we have built up a relationship of trust and cooperation for mutual benefit.  For Nissan, it affords us the opportunity to quickly enter these segments with minimal investment.  

ALLIANCE

Q10:    How does this expanding partnership with Suzuki impact the Renault-Nissan Alliance? 

A10:   This cooperation has no effect on the Renault Nissan Alliance. Our partners at Renault are fully aware and supportive of this expanded partnership.

Q11:    Why did you not partner with Renault for any part of this new agreement?

A11:   In all areas of this new agreement, Suzuki offered the best solution and a win-win for both partners. Renault has been fully consulted throughout the discussions and is very supportive of the final agreement.

MINIVAN

Q12:    What minivan model will Nissan provide to Suzuki?

A12:   We cannot answer that at this time. This will be announced in the near future.Nissan will provide the Serena minivan to Suzuki under an OEM supply agreement for the Japanese domestic market.

Q13:    Where will the minivan that Nissan produces for Suzuki be built?

A13:   We cannot answer that at this time. This will be announced in the near future.The Suzuki minivan will be produced at the Nissan Shatai plant in Japan – the same plant that manufactures the Nissan Serena.

Q14:    When will the Suzuki version go on sale?

A14:   Production of the Suzuki version will start in the second half of 2006 – you will need to ask Suzuki for their specific sales plan.

Q15:    Are you worried about cannibalization in the domestic market (selling a cross-badged Nissan as a Suzuki)?

A15:   No. Both companies have benefited from the Moco OEM agreement and we are confident that the same will apply for minivan the Serena OEM supply.

Q16:    What points of differentiation will you make between the Nissan version of this minivan and the Suzuki version?

A16:   You will need to talk to Suzuki concerning their specific product plans.

MINI VEHICLE

Q17:    What mini vehicle will Suzuki provide to Nissan?

A17:   We cannot answer that at this time. This will be announced in the near future.Suzuki will provide the Alto minicar under an OEM agreement to Nissan – for sale in the Japanese market only.

Q18:    Where will this mini vehicle be produced?

A18:   We cannot answer that at this time. This will be announced in the near future.

The new Nissan minicar will be produced at Suzuki’s NAME plant in Japan.

Q19:    When will the Nissan version go on sale?

A19:   The new Nissan minicar will go on sale in the second half of FY2006 – we will provide more details closer to launch.

Q20:    What points of differentiation will you make between the Nissan version of this mini vehicle and the Suzuki version?

A20:   We will release more details of the new Nissan minicar closer to launch – including the name, product specification and design details.

Q21:   What is Nissan’s outlook for the minivehicle market?

A21:   The mini-vehicle market is a huge market with sales of 1.95 million units in   

Fiscal year 2005, accounting for one-third of overall demand. In order to maintain profitable growth, Nissan needs to secure revenue in a variety of different segments. Increasing our mini-vehicle lineup will give current Nissan customers a greater range of choice. At the same time, we hope to capture new customers with our enhanced product lineup.

Q22:    With the current agreement, Nissan will have a total of four minivehicles (Moco, Otti, Clipper, new model) in its lineup. With this many models, are you considering the development or production of your own mini-vehicles?

A22:  Profit and unit sales from our existing three OEM minivehicles have been according to plan. We do not believe that it is necessary to develop and produce ourselves.

Q23:    In the future will Nissan dissolve its mini-vehicle OEM business with Mitsubishi and consolidate the business with Suzuki?

A23:  We have no such intentions at this time. The OEM business with Mitsubishi is a win-win situation and is going well.

Q24:    In dealing with mini-vehicles, aren’t sales of registered vehicles being

neglected?

A24:   Not at all. We are making day-to-day efforts to sell registered vehicles as well.

COMPACT PICK UP

Q25:    What compact pickup model will Nissan provide to Suzuki – the Frontier?

A25:   We cannot answer that at this time. This will be announced in the near future.Yes, Nissan will provide a special version of the Nissan Frontier for Suzuki that will go on sale across North America.

Q26:    Where will the compact pickup that Nissan produces for Suzuki be built?

A26:   We cannot answer that at this time. This will be announced in the near future.

The Suzuki version will be built at Nissan’s plant in Smyrna, Tennessee.

Q27:    When will the Suzuki version go on sale and what are the volumes?

A27:   You need to discuss with Suzuki details of their product, specific markets and launch timing.

Q28:    Are you worried about cannibalization in the N.A. market (selling a cross-           badged Nissan as a Suzuki)?

A28:   This entire new cooperation agreement is a win-win for both companies and we are confident that both partners and their respective new products will be successful in all global markets that apply.

Q29:    What points of differentiation will you make between the Nissan version of this pickup and the Suzuki version?

A29:   You need to contact Suzuki concerning their new pickup truck.

A-SEGMENT

Q30:    When will the new A-segment vehicle be sold by Nissan in Europe?

A30:   It will go on sale in 2008. 

Q31:    What will this vehicle compete with? 

A31:   We will announce product details, specifications, etc. closer to launch timing.

Q32:    Where will the A-segment vehicle be produced?

A32:   The model is likely to be built at Suzuki’s plant in India. We will release more details on the product in due course.

Q33:    Is this A-segment vehicle part of the Nissan Value-Up plan or in addition to the plan in terms of product launches?

A33:   This product will not be launched within the timeframe of Nissan Value-Up and will instead count as one of the many new products coming in our new three-year business plan, starting April 2008.

Q34:    Is this A-segment vehicle already sold in Europe by Suzuki?  If so, are you concerned about cannibalization, selling a re-badged Suzuki as a Nissan?

A34:   We will release more details on this new product in due course. This is a natural extension of our product line-up in Europe and will be smaller than the current Micra which is a B-segment car.

Q35:    What is the aim in introducing an A-segment vehicle in Europe?

A35:   The A-segment vehicle has outstanding fuel-efficiency, and we believe that it is a model that can be adapted to the European market. Based on this, we expect that the Nissan product lineup in European will be strengthened.

Q:      Will the A-segment vehicle be sold in India?

A:       Yes, the product will be sold locally if we produce there, as well as in Europe.

PRODUCTION

Q36:   What are the benefits of the cross-manufacturing agreement?

A36:  For example, in terms of the India operations there are more benefits, including cost savings, if Nissan uses the experience and know-how built up by Suzuki rather than building on our own.

Q37:    How will this impact production at Nissan, globally?

A37:   This new cooperation agreement includes many new products as well as future industrial ventures including sharing manufacturing facilities in emerging markets. More details will be released as this new agreement is implemented.  

Q38:    When will you begin cross-manufacturing in India? 

A38:   We can’t answer that at this time. This will be announced at a later date.We will start cross-manufacturing in 2008 at Suzuki’s plant in India.

Q39:   Does this mean that Nissan will not build its own plant in India?

A39:    We have not ruled out the possibility at this point.

Q40:    What other markets will you cross-manufacture in?

A40:   That is still confidential at this stage. More details to come.

Q41:   How does Nissan expect its future sales targets and market share in the India market to change in the future?

A41:   Nissan introduced the X‑TRAIL to the India market in August ’04 and established its sales company Nissan Motor India Private, Ltd. in February ’05. Our sales results were 144 units in FY05, but we have begun efforts to increase our presence in the market. Going forward we would like to work to expand sales further through the introduction of new models and other measures.

Q42:    Will Nissan expand its dealer network as it expands the number of models it sells in India? What would the amount of investment be in such a scenario?

A42:   The dealer network will be expanded in accordance with the scale of the new model introductions. We cannot disclose the investment figure.

Q43:    Will the A-segment vehicle be sold only in India and Europe? Will it be sold in other regions?

A43:   We will not rule out the possibility of selling it in other regions.

Q44:    If this cross-manufacturing is carried out, what will happen to the Sunderland Plant in England? Will it close in the future?

A44:  There are no plans to close the Sunderland Plant. It boasts the greatest efficiency of any plant in Europe and is continuing to contribute to improvements in Nissan’s results.

EMPLOYMENT

Q45:    Will this impact employment at either company?  If so, how?

A45:   We do not anticipate any impact on employment at current Nissan manufacturing facilities. You will need to discuss the specific impact to Suzuki with their representatives.

SUPPLIER ISSUES

Q46:    How will your suppliers be affected by this announcement?

A46:   Any new cooperation announcement like this represents an opportunity for suppliers to both companies. At this stage, it is too early to discuss any specifics.

NISSAN MINI-VEHICLE DATA

Unit sales

Minivehicle total and Moco total (by fiscal year from FY02)

・       Pickup trucks (FY05, by region)

OVERVIEW OF INDIA BUSINESS 

1) NSC

Company name: Nissan Motor India Private, Ltd. (NMIPL)

Location: Nariman Point, Mumbai

Established: February, 2005

Paid-in capital: 42 million rupees (approximately 0.1 billion yen)

Capital relationship: Nissan Motor Co., Ltd. - 99.76%, Nissan Asia Pacific Pte., Ltd. - 0.24%

Managing director: Yoshie Motohiro (first Nissan female executive to .)

Number of employees: 14

Operations: Import of Nissan vehicles, management of sales network, sales and after-sales support for dealerships

2)    Dealer network

5 dealers: Chennai, Mumbai, New Delhi, Bangalore and Hyderabad

3) Sales results (only vehicle sold is X‑TRAIL released in Aug ’04)

FY04: 131 units

FY05: 160 units

Milestones for Nissan’s business in India

’83:   Established Alwin NISSAN (ANL)

’85:   Production started (H40 Cabstar)

’89:  Established Mahindra Nissan Alwin (MNAL) (Mahindra & Mahindra (M&M) capitalize ANL)

’90:   Cash injection into MNAL

’94:   MNAL merged to Mahindra & Mahindra due to the excessive debt ( After this,   model has been produced under the M&M brand.

’01:   Finished KD parts supply from NISSAN

’04:  January Unveiled X‑TRAIL and announcement of Nissan's entry into India passenger market

’04:   August launched X‑TRAIL in Chennai, Mumbai, and Delhi