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					ANNUAL REPORT 2010




Contents

Daihatsu Group Characteristics  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 1


Main Lineup  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 2


2010 Financial Highlights  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 3


Management Message -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 4


Special Feature: Ecological Compact Cars                                                                            -  -  -  -  -  -  -  -  - 8


Review of Operations
Procurement Innovation  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 10
Production Innovation  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 11
Operations in Japan -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 12
Operations Overseas  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 13
Consigned Production and OEM  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 14


Corporate Governance/Corporate Social Responsibility  -  -  -  -  -  -  -  -  -  -  -  -  - 15


Financial Section
Consolidated Six -Year Summary  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 17
Review of Operations  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 18
Consolidated Balance Sheets  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 23
Consolidated Statements of Income  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 25
Consolidated Statements of Changes in Net Assets  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 26
Consolidated Statements of Cash Flows  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 27
Notes to consolidated financial statements -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 28


Investor Information  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  -  - 38




  Disclaimer
  This annual report contains forward -looking statements regarding future plans, strategies, and operating performance
  forecasts and estimates for Daihatsu and its subsidiaries and affiliated companies. Statements that are not historical fact are
  expectations derived from management’s assumptions and opinions based on its judgment of information available as of the
  date of this report. Such statements contain risks and uncertainties that include but are not limited to economic fluctuations,
  severe competition in automobile markets, market demand, exchange rates, taxation systems and changes in various other
  systems. Consequently, the reader should understand that actual performance may differ from forecast results.
 Daihatsu Group Characteristics

A Specialized Compact Car Manufacturer
Moving Forward as a Member of                                                                 Consolidated Net Sales
the Toyota Group                                                                              (Year Ended March 31, 2010)

DAIHATSU MOTOR CO., LTD. develops, manufactures                                               The main pillars of business from which the Company
and sells compact cars. Founded in 1907 through a                                             generates consolidated net sales, centering on mini
consortium between industry and academia to produce                                           vehicles, are operations in Japan; consigned production
a Japanese internal combustion engine, Daihatsu is a                                          and OEM, which are based on collaboration with the
Japanese automaker with a history dating back more                                            Toyota Group; and overseas sales, which focus on
than a century.                                                                               Indonesia and Malaysia.
    Daihatsu has held the top share of the Japanese
market for mini vehicles since the fiscal year ended                                          Consigned
                                                                                              production/
March 31, 2007, a level of success it has earned by                                           OEM
developing cars that meet market needs—vehicles that
have excellent fuel economy and are reasonably
                                                                                              31%
priced—and by increasing customer satisfaction
through dealer innovation. In addition to its core
market of Japan, Daihatsu extends its business to                                             Overseas
overseas. We produce vehicles for local sale in
Indonesia and Malaysia, and export CBU vehicles to
                                                                                              19 %                                               Japan   50 %
other countries.
    Furthermore, in pursuing an operational tie -up
with TOYOTA MOTOR CORPORATION (Toyota), in
                                                                                              No. 1 Share of Mini Vehicle Sales
1998 Daihatsu became a consolidated subsidiary.
                                                                                              in Japan
Now as a member of the Toyota Group, we are                                                   During the fiscal year ended March 31, 2010, sales of
building cooperative business that takes                                                      new mini vehicles in Japan totaled 1,698,000 units*,
advantage of development synergies, including                                                 down 6.1% from the preceding fiscal year.
consigned production and original equipment                                                       In this market, our share of mini vehicle sales
manufacturing (OEM).                                                                          topped the market for four consecutive fiscal years,
    In 2008, Daihatsu also started supplying products on                                      as we maintained a sales figure of around 600,000
an OEM basis to FUJI HEAVY INDUSTRIES LTD. (FHI),                                             units since 2006. There are two reasons for this
which is in business tie -up agreement with Toyota.                                           success, the first being the careful attention we pay to
                                                                                              customer input, incorporating this information into
                                                                                              our development of attractive products. Second,
                                       Toyota
                                                                                              among other contributions, since 2005 we have offered
                                                                                              a high level of standardized service throughout Japan
                                                                                              and forged ahead with dealer innovation.
                                        Hino                       Daihatsu
                                                                                              * Data from the Japan Mini Vehicles Association


                                                                                              Mini vehicles
                                                                                              The definition of “mini vehicle” is prescribed
                                                                                              by the Road Transport Vehicle Act
            TOYOTA Group Manufacturing Companies Worldwide                                    enforcement guidelines of the Japanese
                       P.T. Astra Daihatsu Motor                                              Ministry of Land, Infrastructure, Transport
                                                                                              and Tourism. At present, maximum
                                                                                                                                                660cc
Note: By becoming a part of manufacturing and sales network of the Toyota Group, the
      Daihatsu Group’s overseas sales and manufacturing subsidiaries have played a
                                                                                              specifications for mini vehicles are a length     3,400mm
      significant role in boosting the market share of the Toyota Group, particularly in       of 3.40 m, width of 1.48 m, height of 2.00 m
      Asian markets.                                                                          and displacement of less than 660 cc.




                                              DAIHATSU MOTOR CO., LTD.                    1   ANNUAL REPORT 2010
 Main Lineup

Centered on Mini Vehicles
  Mini vehicles                                                                       Compact passenger cars




           MOVE CUSTOM                            TANTO                                            BOON                               Be-go




                                                                                           BOON Luminas                               COO
             MOVE Conte                      TANTO EXE CUSTOM


                                                                                      Overseas production models
                                                                                      Indonesia

            Mira CUSTOM                           ESSE




                                                                                           XENIA                                              TERIOS


                                                                                                           Gran Max (pickup)
              Mira Cocoa                          Copen
                                                                                      Malaysia




                                                                                            Myvi                                              VIVA
             ATRAI WAGON                       TERIOS KID                                                        ALZA


  Mini commercial vehicles                                                            Welfare vehicles




             HIJET TRUCK                        HIJET CARGO                                 TANTO Sloper                   TANTO WELCOME SEAT



Mini Vehicle Features

     Parking Made Easy                                    Short Turning Radius                                 Small but Safe
A mini vehicle                                      On average, mini                                       Total Advanced Function (TAF) body, designed to
occupies a footprint                                vehicles have a                                        augment safety in the event of a collision, and
of 5.03 m2, or only          Footprint 65%          minimum turning                                        a Safety -Oriented Friendly Interior (SOFI). In
                             that of a                                                       Turning
65% of the space                                    radius of only 4.5 m.                    radius        addition to meeting Japanese and European
                             passenger car
required by a 2,000 cc                              Sharp turning                            of 4.5 m      standards for collision safety, our vehicles are
passenger car. A                                    capabilities make                                      highly rated for their meet overall collision
mini vehicle needs                                  mini vehicles easier                                   safety and pedestrian
only around 5m2 of                                  to operate on                                          safety according to
parking area, 65%                                   narrow roads,                                          standards that have
of that required for a                              country lanes and                                      been set by Japanese
2,000 cc passenger                                  in mountainous                                         government -affiliated
car, and parallel                                   regions.                                               organizations.
parking is easy.                                    * Data from the Japan Mini                                 Front -end collision
                                                      Vehicles Association                                     Side collision
* Data from the Japan Mini
  Vehicles Association



                                       DAIHATSU MOTOR CO., LTD.                  2   ANNUAL REPORT 2010
  2010 Financial Highlights
Years ended March 31


                                                                                                                                                                                     Millions of yen
                                                                                                                        2010                               2009                      2008

For the year:
    Net sales                                                                                                      ¥1,574,727                      ¥1,631,395                      ¥1,702,602
    Operating income                                                                                                      40,747                            38,191                     65,201
    Net income                                                                                                            21,162                            22,074                     34,940
    Cash flows from operating activities                                                                                132,011                             76,087                     74,070
    Free cash flow*                                                                                                       84,777                             (8,524)                  (27,050)


Amounts per share (yen):
    Net income–basic                                                                                                      ¥49.66                            ¥51.80                     ¥81.92
    Cash dividends                                                                                                          12.00                             12.00                        17.00


At year-end:
    Total assets                                                                                                   ¥1,134,105                      ¥1,098,368                      ¥1,152,498
    Total net assets                                                                                                    396,332                            365,114                   385,889
    Common stock                                                                                                          28,404                            28,404                     28,404
    Number of employees                                                                                                   39,985                            39,019                     37,165


Ratios (%):
    Return on equity                                                                                                             6.4                                6.8                     10.8
    Equity ratio                                                                                                                30.2                               29.2                     28.5

* Free cash flow is the sum of cash flows from operating and investing activities.




Net sales                                                           Operating income                                                   Net income

(Billions of yen)                                                   (Billions of yen)                                                  (Billions of yen)
2,000                                                               80                                                                 40

                               1,702.6                                                                                                                      34.7     34.9
                     1,637.1             1,631.3                                               65.2                                             33.5
                                                   1,574.7
1,500                                                               60                                                                 30
           1,347.9                                                                      54.3
                                                                             48.6
                                                                                                                                                                            22.0    21.1
                                                                                                                 40.7
1,000                                                               40                                    38.1                         20




 500                                                                20                                                                 10




    0                                                                0                                                                  0
            2006      2007      2008      2009      2010     (FY)           2006        2007   2008       2009   2010    (FY)                  2006         2007     2008   2009    2010    (FY)




                                                       DAIHATSU MOTOR CO., LTD.                       3     ANNUAL REPORT 2010
Management Message


 Concentrating Management Resources
 on the Production of Compact Cars that
 Offer Fuel Efficiency, Affordable Pricing
 and Conservation of Resources
 Initiatives Under the New Organizational Structure Designed to
 Speed Up Processes, Aimed at Enhancing Management




         Koichi Ina               Kousuke Shiramizu                  Katsuhiko Okumura
           President                      Chairman                         Vice Chairman




                       DAIHATSU MOTOR CO., LTD.   4   ANNUAL REPORT 2010
                                                                                                  Management Message




Japanese Market Remains Opaque,                                    Bhd., a consolidated subsidiary (fiscal year from
but Indonesian and Malaysian                                       January 1 to December 31), reported robust sales of its
Markets Recover                                                    locally produced Viva and Myvi models, and in
During the fiscal year ended March 31, 2010, the                   November 2009 the company introduced the Alza, a
Japanese economy continued to feel the effects of the              compact multipurpose vehicle (MPV). As a result,
global economic malaise that commenced in the                      Perodua succeeded in outperforming the market, with
autumn of 2008. The automobile market, however,                    sales slipping only 0.4%, to 167,000 vehicles.
enjoyed a 3.8% increase in unit sales, to 4,882,000                      However, exports of completed vehicles suffered a
vehicles, supported by government economic stimulus                major decline as a result of the global economic
packages that included a tax exemption and subsidies               downturn. Consigned production and OEM were
for purchases of environmentally considerate cars.                 down overall, although benefiting from robust
Sales of mini vehicles slid 6.1%, to 1,698,000 vehicles,           consigned production of the Toyota PASSO, which
although sales during the January–March quarter were               meets Japan’s tax exemption requirements. Sales
up year on year.                                                   of engines produced on consignment for Toyota
    In Japan, the Daihatsu Group launched two new                  increased, centered on engines for compact cars. In
mini vehicles, the Mira Cocoa and the Tanto Exe, in an             September 2009, Daihatsu began to supply FHI with
effort to expand its range of models eligible for eco -car         mini vehicles on an OEM basis, with full -fledged supply
tax breaks in the second half. As a result, sales in Japan         commencing in April 2010.
of new mini vehicles came to 596,000 units, down 3.7%
from the preceding fiscal year but earning the Company
a market share of 35.1%—its highest to date.
    Overseas, the economies of Indonesia and
Malaysia, where we have production bases, were
lackluster as a result of the worldwide economic
slowdown. However, the automobile markets in these
countries began to recover in the second half of the
fiscal year, as their economies stabilized. In particularly,
the Indonesian automobile market is shifting to a
growing phase, culminating in sales for the year of
                                                                   TANTO EXE CUSTOM
560,000 units, down 2.2% year on year. P.T. Astra
Daihatsu Motor (ADM), a consolidated subsidiary,
enjoyed a 2.2% increase in sales, to 83,000 vehicles,
owing to strong sales of the Xenia, a locally produced
compact passenger car.
    Automobile sales in Malaysia during calendar 2009
amounted to 537,000 vehicles, down 2.0% from the 2008
figure. Reversing this trend in the January–March 2010
quarter, however, the market saw a 22.4% increase in
sales, compared with the same quarter of the preceding
year, to 147,000 vehicles. Perodua Manufacturing Sdn.              XENIA, Indonesia




                                DAIHATSU MOTOR CO., LTD.       5   ANNUAL REPORT 2010
                                                                                                    Management Message




Cost-Cutting Keywords:                                             Developing Measures Optimized to
Simple, Slim, Compact; and                                         Meet Circumstances in Each Area
Procurement Reform                                                 of Business
During the year, Daihatsu strove to increase its competitive       In the fiscal year ending March 31, 2011, although we
strength in the market for mini vehicles and compact               anticipate an economic recovery, we expect ongoing
cars throughout companywide initiatives to slash costs.            difficulties in the Japanese market for mini vehicles,
From a production perspective, we reviewed our                     particularly reflecting an end to the eco -car subsidy in
domestic production system in light of our Simple,                 the second half. Accordingly, we forecast a 2.8%
Slim, Compact (SSC) concept, seeking to reform our                 decline in unit sales, to 1,650,000 vehicles.
plants into highly -efficient and cost -saving facilities.             In Japan, we plan to invigorate sales through a
    To survive in a future environment that is likely to be        complete redesign of a flagship vehicle model in the
characterized by increasingly severe price competition             second half.
on a global basis, Daihatsu has announced a new                        Overseas, we expect economic growth to continue
procurement action policy, corresponding to                        in the Indonesian and Malaysian markets. We will focus
procurement reforms. Accordingly, we have begun a                  on sales promotion activities, enhancing attractive
major overhaul of our parts procurement activities. By             features of our models and pushing forward with
aggressively cultivating new suppliers and working                 initiatives aimed at improving the corporate structures
with existing suppliers to trim costs, by March 31,                of ADM and Perodua, thereby boosting profitability.
2012, we aim to slash procurement costs on 30% of                  Particularly in Indonesia, we anticipate ongoing
purchased parts.                                                   economic expansion fueled by rising domestic demand,
                                                                   causing resurgence in the automobile market. In
Sales Down, but Higher Operating                                   preparation to take advantage of the major opportunity
Income and Ordinary Income                                         these conditions present, in the fiscal year ending March
As a result of these conditions, the Daihatsu Group’s              31, 2011, we will reinforce our operations in the areas of
unit sales declined 6.7% during the year, to 1,274,000             development, production, quality control and sales.
vehicles, and net sales fell 3.5%, to ¥1,574.7 billion.                With regard to production, we will extend the
Operating income, however, improved 6.7%, to ¥40.7                 SSC -oriented successes in compact -car production
billion, and ordinary income expanded 11.1%, to ¥43.8              and the expertise we have accumulated at Daihatsu
billion. Net income fell 4.1%, to ¥21.1 billion.                   Motor Kyushu Co., Ltd. (Daihatsu Kyushu), to our plants
    The Group awarded a year -end dividend of ¥7.00                in Japan, as well as in Indonesia and Malaysia. We also
per share. Added to the interim dividend of ¥5.00 per              will strive to boost the overall efficiency of the Daihatsu
share, cash dividends for the full year stood at ¥12.00.           Group and reconfigure our production systems. By
                                                                   simultaneously implementing these improvements
                                                                   and the procurement reforms that are currently
                                                                   underway, we plan to enhance our ability to generate
                                                                   sales and profits.




                                 DAIHATSU MOTOR CO., LTD.      6   ANNUAL REPORT 2010
                                                                                                 Management Message




Making Compact Cars Ever More                                   e:S a supremely ecological mini vehicle is its extremely
Appealing Through a More Robust                                 small environmental footprint throughout the vehicle’s
Corporate Structure and a                                       life, from production to end -of -life disposal. Building on
Reformed Profitability Mechanism                                the e:S as a foundation and integrating the anticipated
An ongoing emphasis on fuel performance as an                   results of procurement reforms that are currently
environmental warming countermeasure, abetted by                underway, in 2011 we plan to launch a vehicle that
government policies introducing eco -car tax rebates            offers 30km/ℓ fuel efficiency into the Japanese market.
and subsidies, have brought down eco -car prices more               In our other pillar of business, consigned
swiftly than we had anticipated. Such changes in our            production and OEM, the number of vehicles we are
operating environment have reduced the relative merits          commissioned by Toyota to manufacture falls on an
of mini vehicles—fuel efficiency and affordable prices.         annual basis. Upon developing compact cars that are
We have also begun to see the precursors of major               more competitive and appealing, we aim to
change in the automobile industry, such as revisions to         aggressively propose the production of such vehicles,
fuel efficiency standards in 2020 and a major tax               thereby expanding our OEM business.
overhaul in 2012.
    Key tasks in preparing ourselves to respond flexibly        Bringing in the Next Decade, the
and in a timely manner to these changes in the                  Next Century
operating environment include the new system that will          Our future role as a member of the Toyota Group is to
reinforce our overall corporate structure. We also will         leverage our accumulated expertise to introduce into
speed up development of compact cars that are fuel              the market compact cars that are fuel efficient,
efficient, affordable and conserve resources, and               affordable and conserve resources. We will channel
expedite their launch into the market. Furthermore, we          management resources into new developments in
must complete current initiatives to cut costs and              Indonesia and Malaysia, which experiencing a wave of
reform procurement activities. Such efforts are essential       growth. We also will work to strengthen our corporate
to success in surviving upcoming changes in the                 structure and complete a production system that puts
operating environment by reforming our profit structure.        SSC concepts into practice.
                                                                    First, we will complete the construction of a unique
Promoting Efforts to Reinforce the                              business model that will enhance mini vehicle profitability,
Development of Highly Efficient,                                paving the way for our success over the next decade
Inexpensive Compact Cars                                        and into the next century. We will maintain this solid
Daihatsu exhibited a concept model, the e:S, at the             sense of commitment as we carry out reform and strive
41st Tokyo Motor Show, held in October 2009. By                 to boost profitability.
incorporating technologies to enhance fuel efficiency,              More than ever, we would like to express our
the e:S pushed the envelope on environmental                    gratitude to shareholders and other stakeholders for
performance, a conventional strength for mini vehicles.         their understanding and support.
As a result, without employing a motor assist, the e:S
achieved fuel efficiency reaching 30km/ℓ using a                                                              August 2010
conventional gasoline engine. Another factor making the



                                          Kousuke Shiramizu               Katsuhiko Okumura                 Koichi Ina
                                          Chairman                        Vice Chairman                     President




                              DAIHATSU MOTOR CO., LTD.      7   ANNUAL REPORT 2010
                                                                                                   14

                                                                                                     0
                                                                                                           2001     2002      2003     2004      2005     2006      2007     2008         (FY)
                                                                                                   Notes:
                                                                                                   1. Average fuel consumption is calculated by taking into account the rated fuel efficiency
                                                                                                      and the number of units sold.
                                                                                                   2. Figures in parentheses are CO2 equivalent values.
                                                                                                   3. Figures for all passenger cars are from the Japan Automobile Manufacturers Association,
                                                                                                      Inc.; figures for mini passenger cars are based on a survey of mini vehicle manufacturers.




           Special Feature:                                                                        LCA Index Results (Trial Calculations of CO2 Emissions)



           Ecological Compact Cars                                                                   Disposal       Maintenance         Operation


                                                                                                                                                  –13%
                                                                                                                                                         Manufacture         Materials




            Pursuing Total Environmental Performance on Compact –30%
            Cars from the Standpoint of Lifecycle Assessment (LCA)


Raising the Environmental                                                                          transmission (CVT). Such developments are evidence of the
Performance of Compact Cars                                                                        Company’s proactive efforts Hijet,
                                                                                                              Hijet,                        to make vehicles that e:S,     are
                                                                                                                                                                   gasoline-powered
                                                                                                       gasoline-powered                    hybrid
                                                                                                   lightweight and offer good environmental performance.
                                                                                                                                   (sales discontinued)                (reference)
Facing such factors as increasingly severe global environmental                                    Daihatsu’s Mira, a mini passenger car, boasts fuel
                                                                                                   Note:
                                                                                                   1. Operation is based on the results of 100,000 km (10 years) of operation, running in 10-15
problems and rising crude oil prices, in recent years hybrid                                       consumption of only 26.0km/ℓ* (when operating in a 10 -15
                                                                                                      mode cycle
                                                                                                   2. Based on Daihatsu Research
vehicles (HVs) have grown in popularity, particularly in                                           mode cycle), an extremely low figure for a non -hybrid
developed countries, based on the belief that low fuel                                             gasoline -powered vehicle that operates without a motor assist.
consumption equated to being environmentally considerate.                                          * Based on Daihatsu research, as of August 2010

Compact cars, particularly mini vehicles, led the charge in
creating vehicles that delivered environmental performance by                                      Resources Consumed in Automobile Production
virtue of their low fuel consumption and resource savings.
                                                                                                   (Millions of tons)
      In rural areas where public transport options are limited,                                   15                                                                Reduction of
compact and lightweight mini vehicles are an essential mode
                                                                                                                                                                     approximately
of transportation. In addition to having a short turning radius                                                                                                      6%
and being easy to use, they consume less fuel than compact                                                                                                           (830,000 tons)
                                                                                                           Resources consumed
cars (B -segment and above), making them easier on the                                                      during production of              Resources
environment and reducing gasoline expenditure. In this                                                       all compact cars                consumed in
respect, the average fuel consumption of mini passenger cars
                                                                                                          (B-segment and above)            production of mini
                                                                                                   10
                                                                                                                13.75 million tons          passenger cars
sold during the fiscal year ended March 31, 2009, was
19.9km/ℓ (when operating in a 10 -15 mode cycle). This                                                                                      12.92 million tons
                                                                                                     0
amounts to a savings of approximately 20% compared with
                                                                                                   Notes:
average fuel consumption of 16.9km/ℓ (when operating in a                                          1. Calculated on the basis of vehicles manufactured in 2006
                                                                                                   2. Prepared by Mitsubishi Research Institute, Inc., on the basis of data from the Japan
10 -15 mode cycle) for all passenger vehicles (including mini                                         Automobile Manufacturers Association, Inc., and the Ministry of Land, Infrastructure,
passenger cars). The body, engine and other major components                                          Transport and Tourism

of mini vehicles tend to be compact and lightweight, which
also curtails resource consumption during production.
      Daihatsu has developed a three -cylinder engine that is                                      Efforts to Reduce Environmental
lightweight and features superb combustion efficiency, as well                                     Impact from LCA Standpoint
as a lightweight and compact continuously variable
                                                                                                   A vehicle’s environmental impact has wider implications than
Average Fuel Consumption on Mini Passenger Cars                                                    its environmental performance in terms of fuel use and
                                                                                                   exhaust emissions while in operation. Rather, a vehicle’s true
      Mini passenger cars          All passenger cars (including mini passenger cars)
                                                                                                   environmental impact requires an understanding of the
Average fuel consumption (km/ℓ)
                                                                                                   environmental footprint at all stages—including production,
                                                                         19.93
20                                                    19.18     19.53                              distribution and sales. Daihatsu uses the LCA method to
                          18.55     18.77    18.76
                 18.08                                                    (116g-CO2/km)            evaluate the environmental impact of a vehicle throughout its
         17.72
18                                                                       16.90
                                                      15.96     16.16                              lifecycle, from the extraction of raw materials to production,
16                        15.07     15.38    15.48                        (137g-CO2/km)
         14.32
                 14.94                                                                             distribution and use, through to disposal. We then introduce
14                                                                                                 initiatives to lower environmental impact at each stage.
                                                                                                         To reduce CO2 emissions at the production stage, we
  0
         2001    2002       2003    2004     2005     2006      2007     2008        (FY)          strive to integrate processes and shorten production lines to
Notes:                                                                                             make processes simple, slim and compact. We seek to
1. Average fuel consumption is calculated by taking into account the rated fuel efficiency
   and the number of units sold.                                                                   conserve energy through such methods as utilizing emitted
2. Figures in parentheses are CO2 equivalent values.
3. Figures for all passenger cars are from the Japan Automobile Manufacturers Association,         heat and through fuel conversion.
   Inc.; figures for mini passenger cars are based on a survey of mini vehicle manufacturers.




LCA Index Results (Trial Calculations of CO2 Emissions)
                                                 DAIHATSU MOTOR CO., LTD.                      8   ANNUAL REPORT 2010
  Disposal       Maintenance         Operation       Manufacture        Materials
                                                                                14

                                                                                  0
                                                                                                               2001   2002    2003     2004     2005    2006   2007   2008         (FY)
                                                                                Notes:
                                                                                1. Average fuel consumption is calculated by taking into account the rated fuel efficiency
                                                                                   and the number of units sold.
                                                                                2. Figures in parentheses are CO2 equivalent values.
                                                                                3. Figures for all passenger cars are from the Japan Automobile Manufacturers Association,
                                                                               Special Feature: Ecological Compact Cars
                                                                                   Inc.; figures for mini passenger cars are based on a survey of mini vehicle manufacturers.




      At the distribution stage, we encourage modal shifts                      LCA Index Results (Trial Calculations of CO2 Emissions)
(shifting from overland to sea transportation) when
transporting completed vehicles and parts. At the sales stage,                    Disposal                            Maintenance       Operation      Manufacture    Materials

we encourage dealers to conserve energy, leveraging our
Group’s strength in energy conservation.                                                                                                        –13%

   Lifecycle Assessment (LCA)                                                                                                                                            –30%
   For products, the environmental impact (such as CO2 emissions)
   is not only a function of product use. Rather, it involves the entire
   product lifecycle, from raw material extraction to manufacturing,
   distribution, use and through to disposal. LCA is a method of
   evaluating overall environmental impact by considering each of
   these stages. Adopting an LCA viewpoint allows a product’s total
   environmental impact to be considered from the planning and
   design stages.

                                                                                                   Hijet,                                    Hijet,                     e:S,
                                                                                            gasoline-powered                                hybrid               gasoline-powered

Developing a Next-Generation                                                                                                         (sales discontinued)           (reference)
                                                                                Note:
Compact Eco-Car                                                                 1. Operation is based on the results of 100,000 km (10 years) of operation, running in 10-15
                                                                                   mode cycle
                                                                                2. Based on Daihatsu Research

Based on LCA concepts, Daihatsu has worked to make the
most of conventional technologies to create compact cars
that deliver high environmental performance. Now, we aim to                     Pushing the Envelope of
leverage this experience to create the next generation of                       Environmental Performance
                                                                                Resources Consumed in Automobile Production
compact cars. One example of such efforts is the e:S, a concept
                                                                                (Millions of tons)
car that we exhibited at the Tokyo Motor Show in 2009.                          As a next -generation powertrain technology, we have
                                                                                15                                                                 Reduction of
     The e:S employs a three -cylinder engine, such as is                       developed a two -cylinder direct -injection turbo engine that
                                                                                                                                                   approximately
common on current -day mini vehicles, but this is a new -model,                 features ultra -low fuel consumption and generates full torque     6%
highly efficient engine. The model also utilizes a new idling -                 at low speed. Drawing from electric fuel cell (830,000which        vehicles, tons)
stop mechanism and an ultra -lightweight body featuring superb                           Resources consumed
                                                                                are considered to be highly environmentally considerate, we
                                                                                          during production of                Resources
aerodynamics. Through this combination of technologies, the                     developed compact cars                      consumed in
                                                                                            all a Precious Metal -free Liquid -feed Fuel Cell
                                                                                        (B-segment and above) production of mini
vehicle achieves low fuel consumption of only 30km/ℓ (when                      (PMfLFC). This cell provides extremely high fuel cell
                                                                                10                                        passenger cars
operating in a 10 -15 mode cycle).                                                           13.75
                                                                                performance,millionittons
                                                                                                     but requires no platinum or other costly
     Without relying on such techniques as motor assist, the                    precious metals.                         12.92 million tons
                                                                                  0
e:S makes the most of the such mini vehicle characteristics as                         Going forward as a car company, Daihatsu plans to
                                                                                Notes:
being compact, lightweight and highly efficient. In addition to                 continue contributing to the development
                                                                                1. Calculated on the basis of vehicles manufactured in 2006 of mini vehicles and
during vehicle operation, the consumption of resources during                   other compact cars Association, Inc., and the Ministryof data from the Japan
                                                                                2. Prepared by Mitsubishi Research Institute, Inc., on the basis high levels of
                                                                                                               that deliver extremely of Land, Infrastructure,
                                                                                   Automobile Manufacturers
production is also reduced, thereby minimizing lifecycle                        environmental performance at reasonable prices.
                                                                                   Transport and Tourism

energy consumption and CO2 emissions. In a comparison of
our gasoline -powered and hybrid Hijet models using an LCA                      Roadmap of Core Daihatsu Mini Vehicle Powertrain Technologies
index, the HV was calculated to have a 13% lower environmental

                                                                                                                                                       3rd
                                                                                   Environmental performance




impact. However, the model showing the largest reduction
was the much more lightweight e:S. Despite being a gasoline -                                                                                                    Precious Metal-free
                                                                                                                                                       stage
powered vehicle, the environmental impact of the e:S was                                                                                                         Liquid-feed Fuel Cell
                                                                                                                                                                 (PMfLFC)
30% lower than the HV.                                                                                                               Next generation
                                                                                                                                     eco-engine for
                                                                                                                                     mini vehicle

                                                                                                               For e:S
                                                                                                               Second-generation
                                                                                                               KF engine plus
                                                                                                                                        2nd
                                                                                                                                        stage
                                                                                                               “eco IDLE” function


                                                                                                                 1st
                                                                                                                 stage
                                                                                                                                                               EV
                                                                                                                                                                                  Time




The e:S, a concept model at the Tokyo Motor Show




                                           DAIHATSU MOTOR CO., LTD.        9    ANNUAL REPORT 2010
 Procurement Innovation

Cutting Costs in Partnership with Suppliers to Hone Our
Global Competitive Edge
By partnering with suppliers to cut costs and scouting out new suppliers, we aim to trim costs on 30%
of purchased parts by the end of fiscal 2012.


Achieving Mutually Sustainable                                                                                     Aiming to Trim Costs on 30% of Purchased
Growth                                                                                                             Parts by the End of Fiscal 2012
To prevail in the global price competition, Daihatsu drastically                                                   As part of our efforts to ensure completely open and fair
overhauled its procurement activities for purchased parts, which                                                   business practices, we are recruiting new suppliers from all
constitute approximately 70% of vehicle production costs, and                                                      across the globe, and continue to receive applications on our
announced a new procurement action policy in September 2009.                                                       website. The number of suppliers Daihatsu has commenced
Some 430 companies, including new suppliers, participated in a                                                     transaction with based on new applications is also increasing
public information session that was open to the media.                                                             steadily. We will continue procuring an extensive array of
     Our procurement reforms entail joining forces with                                                            suspension -function parts and resin parts from manufacturers
suppliers in cost -cutting measures that will lead to mutually                                                     in Japan and overseas that we have yet to do business with.
sustainable growth. Daihatsu is promoting the following three                                                           One aspect of our comprehensive cost -cutting
policies to procure optimally low -priced, quality parts and                                                       implemented in collaboration with suppliers is maintaining
materials for mini vehicles and compact cars.                                                                      an efficient delivery system suited to our dual production hub
(1) Daihatsu will construct new, low -cost procurement infrastructure                                              structure in Kansai and Kyushu. Coordination between
    based on open and fair practices without adhering excessively to
    past procedures.
                                                                                                                   suppliers and our purchasing and R&D divisions to increase
(2) Thorough cost cutting will be implemented in collaboration with                                                the use of common parts (thus reducing the number of
    suppliers to achieve mutual growth and build relationships based                                               different parts) is also yielding steady benefits, particularly
    on trust.
(3) Senior management will carry out the principle of genchi-genbutsu                                              in cost reduction. Through such initiatives, procurement
    (going to the actual place where a problem has occurred and                                                    professionals are being soundly cultivated; they maintain
    clarifying the problem with one’s own eyes) and establish a
    professional procurement organization with a thorough understanding                                            extensive personal familiarity with the genchi-genbutsu
    of value founded in products, manufacturing, and costs.                                                        principle (going to the actual place where a problem has
                                                                                                                   occurred and clarifying the problem with one’s own eyes)
                                                                                                                   and a thorough understanding of products, manufacturing
Cost Structure and Approach to Cost-Cutting
                                                                                                                   and costs.
Reducing the costs of internal manufacturing and procurement                                                            In its role as the compact car manufacturer in the Toyota
through Design Capability Enhancement*
                                                                                                                   Group, Daihatsu is striving to develop a business model
                                      Costs incurred through to internal vehicle manufacturing
  Internal manufacturing
           costs
                                        Lower cost through promotion of the SSC                                    appropriate for the mini vehicle business in short order, and to
                                        principle in manufacturing
                                      Procurement expenses for parts and transportation
                                                                                                                   attain globally viable business deployment through production
                                      costs and others from suppliers                                              of vehicles that are fuel efficient, priced affordably and
    Procurement costs                       Procurement Reform
                                                                                                                   resource -conserving.
                                              Dramatic changes to the structure of
                                              procurement tasks and their procedures!

* Design Capability Enhancement: Optimizing design, including materials and their amounts, to ensure
  necessary and sufficient product function, performance and quality.
  The diagram shown above is for illustration purposes, and the bar graph does not reflect the actual ratios.



Daihatsu’s Ideal Procurement Reforms

Provide better products                                                                      A group of procurement                                                   Create quality cars at
 to the customer more                                                                     professionals who know value                                                optimal low prices for
      inexpensively                                                                                                                                                   mini vehicles together
                                                                                          Comprehensively trim costs in
                                           Provide information from the                    partnership with suppliers           Eliminate each other’s wasteful
                                          perspective of specialized fields                                                  practices by learning about materials,
                                            Proposals to reduce costs                                                          product methods and distribution
 Administration
   Division                                                                                             Purchasing
                    Production                Cut costs by mutually                                      Division            Build trust relationships for
                                                                                                                                                                            Supplier
                     Division               enhanced communication                                  Decide suppliers and            mutual growth
    R&D                                                                                                 place orders
   Division
                                          Propose cost-cutting measures from the                                                 Create products and new
                                                perspective of procurement                                                   transportation systems and others
                                           Provide inexpensive, quality products

                                               Learn about products,                                                                 Establish a
                                               production and costs                                                                new supply base




                                                         DAIHATSU MOTOR CO., LTD. 10                               ANNUAL REPORT 2010
 Production Innovation

Pursuing High-efficiency, Low-cost, Environmentally
Friendly Production under the SSC Concept
Daihatsu’s principles of Simple, Slim and Compact (SSC) are pursuing to efficiency throughout our
production in Japan. We aim to operate high efficient plants specializing in mini vehicles to realize
low-cost, environmentally friendly production.


Increasing Production Capacity in                                       Saving Space and Reducing
Kyushu Plant to Reduce Losses due                                       Environmental Impact by Reforming
to Long-Distance Transportation                                         Production Methods
In November 2007, operations began at Japan’s first plant               Daihatsu is introducing various of new production methods at
specializing in producing mini vehicles, Daihatsu Kyushu’s Oita         these plants to achieve top level productivity.
(Nakatsu) No. 2 Plant. By simplifying equipment and                           For example, at the Oita (Nakatsu) No. 2 Plant we have
integrating processes based on the SSC concept, we                      adopted a “jigless”* body welding line and vehicle conveyance
achieved the same annual production capacity as the No. 1               via a simple conveyor, thereby saving vast amounts of space
Plant, at 230,000 vehicles per year, but with only half the             and efficient production process. The jigless method,
building floor space and about 60% of the capital investment.           wherein robots are used for positioning and welding without
      In August 2008, we completed an engine plant in the city          jigs and hence only require a change in the program used
of Kurume, Fukuoka Prefecture, that specializes in engines for          when a different type of vehicle goes into production, has
mini vehicles. Through operation of the Kurume Plant with its           obviated the need to replace large, specialized jigs as had
yearly production capacity of approximately 216,000                     previously been required. Moreover, in the painting process
engines, we have shortened the time required for delivery of            we now arrange the vehicle bodies perpendicular to the
engines to the Oita (Nakatsu) Plant from three days (when               direction of conveyance, which has shortened the required
transported by ship from our Shiga Plant) to only 150 minutes.          conveyor length. We even had success incorporating the SSC
This change also reduced shipping costs by approximately                principle at the Kurume Plant, where equipment was
75%. Furthermore, in October 2009 production of CVTs was                simplified, other capital investment in production
commenced at the Kyushu Plant of our consolidated                       processes were lightened and the area of the building floor
subsidiary Akashi -Kikai Industry Co., Ltd.                             area was reduced.
      In this manner, by increasing capacity of major                         Besides Japan, the production structure improvements
components of mini vehicles in Kyushu, we are building an               incorporating the SSC concept have also been implemented
efficient domestic production structure that reduces                    in our plants in Indonesia and Malaysia. The money saved in
shipping costs and time and energy usage.                               costs cut by this adoption of SSC goes to fund product and
                                                                        technology development, and contributes to more attractive
                                                                        products with enhanced environmental functions and safety
                                                                        technologies. Daihatsu considers the compact cars produced
                                                                        at plants where SSC has been introduced, with their excellent
                                                                        energy savings and reduction in CO2 emissions, as “true
                                                                        eco -cars” and intends to continue providing these vehicles to
                                                                        many customers in the future.
                                                                        * Jig: A device that secures work objects and controls cutting tools and other devices.
                                                                          Jigs are also used in machining and welding.

A Simple, Slim and Compact Production Structure

     Concentrated production base locations                                        Comparison of Oita No. 1 and No. 2 Plants
     reduce transportation energy costs.
                                                                                                                     No. 2 Plant          No. 1 Plant        Effect (Merit)
     Approximately   75% reduction                   Three days by        Shiga
                                                                                    Production capacity             230,000 units        230,000 units           None
                                                      ship from Shiga
                                                                                    Capital investment               ¥23.5 billion        ¥40.0 billion      Approx. 40%
        Reduced to                               Head Office,                       Building floor space               50,000 m2            110,000 m2        Approx. 50%
                                                 Head (Ikeda) Plant
         150                                                                      Note: Production capacity is based on two shifts with no overtime, annual
                                                                                        production capacity; figures are estimations.
       minutes                                   Kyoto Plant
                                                                                  Profile of Engine Plants                           Comparison of KF Engine Lines at the
                Oita                             Shiga (Ryuo) Plant                                                                  Kurume Plant and the Shiga No. 1 Plant
                                                                                                   Kurume             Shiga
                                                                                                                                                                 Effect (Merit)
                                                                                   Production
       Kurume                                                                      capacity         216,000         1,300,000
                                                                                                                                                Capital investment Approx. 40%
                                    Oita (Nakatsu)                                 (annual)          units             units          Overall
                            No. 1 and No. 2 Plants                                 Capital                                                         Volume        Approx. 60%
                                                                                   investment ¥10.0 billion     —
                                                                                   Building                                           Machining Line length Approx. 50%
                                                                                                          2 317,000 m2
                             Kurume Engine Plant                                   floor space 13,000 m                                &
                                                                                  Note: Production capacity is based on two shifts    Assembly No. of processes Approx. 20%
                                                                                        with no overtime, annual production
                                                                                        capacity; figures are estimations.




                                  DAIHATSU MOTOR CO., LTD. 11           ANNUAL REPORT 2010
 Operations in Japan

Remaking Dealer Outlets and Reforming Our Sales Approach
To create an environment more attractive to women, who represent approximately 70% of Daihatsu
drivers, we are imbuing our dealer outlets with a more casual and comfortable atmosphere, and
enriching the hospitality aspect of our customer service to attain even greater customer satisfaction.


Rolling Out a New Type of                                                                      Pursuing More Sensitive
Customer-Focused Dealer Outlet                                                                 Customer satisfaction
For four consecutive years since fiscal 2006, Daihatsu has                                     In addition to the reforms in our dealer outlets, we have
maintained the top share position in Japan’s mini vehicle                                      advanced “the Café Project” since 2005, which entails a
market, which accounts for approximately 35% of the                                            revamped selling style aimed at further enhancing customer
country’s new car sales. The Company also placed two                                           satisfaction.
models in the top ten of Japan’s new vehicle sales ranking for                                       Employees dress in a friendly and casual manner and
fiscal 2010.                                                                                   pay close attention to customer needs with a recognition of
     One initiative supporting these domestic sales is the                                     the importance of hospitality. Interiors are coordinated in
sales innovation activities Daihatsu has undertaken since                                      seasonal themes, and we offer customers beverages and
2005. Approximately 70% of Daihatsu drivers are women. To                                      special sweets made by a popular patisserie. In the area of
create dealer outlet environments that attract female                                          maintenance services, we require staff mechanics to
customers, we have instituted Daihatsu New Outlet                                              carefully explain procedures to customers before, during
Standards at all Daihatsu dealer outlets in Japan, changing                                    and after maintenance.
our sales style from making home calls to attracting                                                 In May 2009, “the Café Project” entered a new stage in
customers to dealer outlets. For example, to make dealer                                       its development. Classifying the project as an activity to raise
outlets more distinguishable we unified their exterior colors                                  customer satisfaction by creating dealer outlets that are
with a bright and friendly red, white and beige color scheme.                                  becoming of Daihatsu, the entire staff is actively working to
By coordinating their interiors with wood tones, we make                                       cultivate customer service and outlets that fit Daihatsu’s image
outlets more comfortable to enable customers to relax in a                                     (familiar, caring and sensitive), as distributors set their
casual atmosphere as they view vehicles. As of April 2010,                                     respective goals and identify challenges.
453 of our approximately 660 dealer outlets employed the                                             According to an internal survey, the level of customer
Daihatsu New Outlet Standards.                                                                 satisfaction* had risen from 73.0 points to 81.0 points as of
                                                                                               2009 in the four years since “the Café Project” started. The
                                                                                               project has stimulated active discussion about ideas to
Domestic New Vehicle Sales Ranking by Manufacturer (Fiscal 2010)
                                                                                               improve customer satisfaction, as well as information sharing
                      Brand                     Model                  Sales (Units)
                                                                                               so as to learn from the examples of other outlets. It has
       1           Toyota                    PRIUS                       277,485
                                                                                               also significantly increased the enthusiasm of our employees.
       2           Suzuki                    WAGON R                     193,430               * Internal customer satisfaction survey data
       3           Honda                     FIT                         173,154
       4           Daihatsu                  MOVE                        162,423
       5           Daihatsu                  TANTO                       161,576
       6           Toyota                    Vitz                        125,253
       7           Toyota                    PASSO                       101,360
       8           Suzuki                    ALTO                          99,245
       9           Toyota                    COROLLA                       96,765
     10            Honda                     INSIGHT                       96,616
    Note: Data from the Japan Mini Vehicles Association/Japan Automobile Dealers Association
    Two Daihatsu vehicles ranked in the top 10.




                                               DAIHATSU MOTOR CO., LTD. 12                     ANNUAL REPORT 2010
  Operations Overseas

Augmenting Our Production and Sales Structure to
Expand Business in Growth Markets
Daihatsu has been enhancing its product advantage, production and sales structure in the growth
markets of Indonesia and Malaysia as it creates the foundation of a compact car business praised
globally.


Indonesia                                                                             Malaysia
Strengthening Functions as a                                                          Solidly Maintaining the Top Share
Production Center to Prepare for                                                      of National Car Sales for the
the Market’s Growth Stage                                                             Fourth Consecutive Year
                               The expanding Indonesian                                                         Among the countries in Southeast
                               market plays a pivotal role in                                                   Asia, Malaysia is one of the most
                               the Company’s global                                                             industrialized and advanced, with
                               strategy. Production is                                                          relatively high income levels and an
                               undertaken by P.T. Astra                                                         already -high vehicle ownership ratio
 XENIA                         Daihatsu Motor (ADM), a joint                          ALZA
                                                                                                                among citizens. Furthermore, to
                               venture with 61.75% capital                                                      cultivate the automotive industry
participation by Daihatsu. Including the Toyota brand of                              Malaysia has initiated a policy of encouraging the
consignment and OEM vehicles it supplies, ADM accounted                               production of vehicles considered “National Cars,”* which
for more than 40% of vehicles produced in Indonesia in 2009                           constitute the largest share vehicles.
(January through December). Share of vehicles sold in                                       In light of these market characteristics, Daihatsu
fiscal 2010 edged up 0.6 percentage point to 14.8%,                                   produces and sells National Cars via a joint venture,
maintaining the No. 2 share position from the preceding                               Perodua Manufacturing Sdn. Bhd., thereby contributing to the
fiscal year.                                                                          development of the Malaysian automobile industry. These
       Although Indonesia’s automotive market is currently                            models include the Viva (based on the Mira) and the Myvi
still in the development stages, sales are growing primarily                          (based on the Boon). With the product assessed as being fuel
for passenger compact cars, such as the Xenia (seats 7 -8                             efficient and safe and meeting high quality standards, Perodua
people), which are suited to Indonesia where families tend                            has a considerable advantage in this market place and has
to be large. In the fiscal year, ADM achieved robust                                  achieved a good presence as National car.
earnings, owing to market growth from the economic                                          In November 2009, we introduced the Alza MPV (based
recovery, improvements to ADM’s productivity and a                                    on the Boon Luminas), successfully attracting a customer
stronger revenue structure. The company will continue                                 base not covered by the Viva or the Myvi. As a result, sales
increasing sales and profitability.                                                   share in calendar 2009 inched up 0.6 percentage point year
       Moreover, ADM has exported the Terios to the Middle                            on year, to 31.1%, thereby cementing a fourth straight year in
East, Africa, Asia and Central and South America since                                the top share position.
2007. In 2008, ADM started to export the Gran Max to                                        We will continue leveraging our extensive product line to
Japan, to be sold as Toyota’s Townace/Liteace. This proves                            bolster sales promotion activities, and work to reinforce the
that ADM -produced vehicles meet global quality standards.                            company’s quality through further increases in productivity
Moving forward, Daihatsu will continue to build the                                   and cost -cutting.
foundation for a compact car business praised globally,                               * National Car (policy plan): A production plan for popularly priced cars advocated and
                                                                                        contributed to primarily by the national government, both directly and indirectly. In
taking advantage of its expertise cultivated in Japan                                   Malaysia the concept was propounded by former Prime Minister Mahathir bin
                                                                                        Mohamad in the 1980s.
regarding fuel efficiency, affordable price and
conservation of resources.




Unit Automobile Sales Ranking in Indonesia (Fiscal 2010)
                 Brand                   Sales (units)               Share (%)
   1        Toyota                        219,768                       39.3
   2        Daihatsu                        83,129                      14.8
   3        Company A                       72,338                      12.9
   4        Company B                       50,642                        9.0
   5        Company C                       45,946                        8.2
Note: Data from the Association of Indonesia Automotive Industries (Gaikindo), on a
      wholesale basis                                                                 Myvi




                                              DAIHATSU MOTOR CO., LTD. 13             ANNUAL REPORT 2010
 Consigned Production and OEM
We cooperate with Toyota in a variety of ways, emphasizing our strength in the compact car
business. In 2008, we developed cooperative arrangements in development and manufacturing
together with Toyota and Fuji Heavy Industries, with which we have a business alliance. Going
forward, we endeavor to expand our OEM through competitive vehicle development pursuing fuel
efficiency, affordable price and conservation of resources.


Main Aspects of Cooperation
Consigned
                      Production at Daihatsu’s plants of another company’s brand of vehicle or engine developed by that company.
Production
                      Manufacture and supply vehicles of that Daihatsu developed or produced but will be sold under another
OEM
                      company’s brand.
                      Development of vehicles jointly with another company. (Vehicles under another company’s brand would be
Joint Development
                      classified as consigned production.)

Production in Japan
                   Arrangement                                   Brand                                       Models

Consigned production                                Toyota                          Probox/SUCCEED, Porte

Joint development/consigned production              Toyota                          PASSO, bB

                                                    Toyota                          Rush, PASSO SETTE
OEM
                                                    Subaru (Fuji Heavy Industries) DEX, Dias Wagon, PLEO, LUCRA


Production Overseas
                          Production
      Arrangement                           Brand           Production Company                                Model
                           Country

Joint development/   Indonesia            Toyota       Astra Daihatsu Motor          AVANZA
consigned production Malaysia             Toyota       Perodua                       AVANZA

OEM                     Indonesia         Toyota       Astra Daihatsu Motor          Townace/Liteace (for the Japanese market), Rush


Consigned Engine Production
     Engine Type              Emissions                      Brand                            Models Equipped
                                                       Toyota            Vitz, BELTA, PASSO, iQ
KR                  1000cc gasoline
                                                       Daihatsu          BOON

                                                       Toyota            PASSO, iQ, COROLLA
NR                  1300cc gasoline
                                                       Daihatsu          BOON

                                                       Toyota            Vitz, BELTA, Ractis, bB, Rush
SZ                  1300, 1500cc gasoline
                                                       Daihatsu          COO, Be -go

TR                  2000, 2700cc gasoline              Toyota            HIACE

KD/KZ               2500, 3000cc diesel                Toyota            LAND CRUISER, PRADO

                                                       Toyota            DYNA
B                   3700, 4100cc diesel
                                                       Daihatsu          DELTA




PASSO/Toyota                                 LUCRA/Subaru                                   AVANZA/Toyota (Indonesia)




                                 DAIHATSU MOTOR CO., LTD. 14             ANNUAL REPORT 2010
 Corporate Governance/Corporate Social Responsibility
Daihatsu has established the Daihatsu Group Philosophy and the Daihatsu Group’s Basic CSR
Principles in order to pursue its mission of “making compact cars loved around the world” while
achieving globalization of the Group. Daihatsu also has distributed Daihatsu Group Action Guidelines.
In accordance with our philosophy, principles, and guidelines, we are striving to enhance our corporate
governance in a manner that satisfies all stakeholders, including our customers.


Overview of Daihatsu’s Corporate                                                  outside auditors, one is an independent corporate auditor filed
Governance System and Reasons                                                     at the Tokyo Stock Exchange, and two auditors are former
                                                                                  members of our parent company, Toyota.
for Adopting This System
Daihatsu has adopted a corporate auditor system, with audits                      Current Status of Internal
by outside auditors (including independent auditors) and by
                                                                                  Control System and Risk
statutory corporate auditors. This arrangement ensures that
the management supervisory function is sufficient.
                                                                                  Management System
     At the end of the fiscal year (as of March 31, 2010),                        Daihatsu’s internal control system reflects its adoption of a
Daihatsu had 12 directors, and the Board of Directors held                        corporate auditor system as stipulated in the Companies Act
17 meetings in fiscal 2010 to make decisions on operations                        of Japan, which involves the supervision and decision -making
and to supervise the directors in the execution of their duties.                  on business execution by the Board of Directors as well as
In addition, other important management issues were                               auditing by the corporate auditors and the Audit Committee.
determined at the vice presidents’ meetings. On June 29,                          In addition, Daihatsu carries out auditing through the Internal
2006, the Company introduced the executive officer system                         Auditing Department on a regular basis to examine and
and the functional business group system. The Company’s                           evaluate activities and systems according to the Company’s
Articles of Incorporation stipulate that the number of Board                      management policies from a fair and just position.
Members shall be 15 or less, and they totaled nine as of June                     The Company is also audited by independent auditors, and its
29, 2010.                                                                         corporate auditors exchange opinions with them as needed.
     As of March 31, 2010, the Company had four corporate                         With the aim of improving the corporate value and assuring the
auditors, two of whom are outside auditors, and the audit                         reliability of financial reports and compliance with laws and
committee held 16 meetings during fiscal 2010. Based on the                       regulations, we established the Internal Control Committee,
auditing policy and plan, the corporate auditors audit the                        chaired by the executive vice president and with division heads
directors’ execution of duties by attending the Board of                          as committee members. Our Internal Control Committee
Directors’ meetings and other important meetings, examining                       adjusts internal control systems based on the Financial
important documents, receiving information from the internal                      Instruments and Exchange Law and the U.S. Sarbanes -Oxley
auditing department, visiting business locations, and                             Act and seeks to enhance the companywide internal control
examining subsidiaries.                                                           system by managing personal and other classified information.
     As of June 29, 2010, the Company has four corporate                                For operations that require control, risk management,
auditors, of whom three are outside auditors. Of the three                        and compliance in each division, in addition to the control


Internal Control Structure

                                           Monitor                                                        Report                Various committees
       Audit Committee meeting                               Board of Directors meeting
                                                                                                                             Export, Environmental, etc.
                   Report                                           Policy      Report                                             Report

                                                             Internal Control Committee
                                                     • Chairman: Executive Vice President
                                                     • Regular committee meetings are held twice a year.
                                                     • An additional meeting can be held if needed.
                                                     • All matters related to internal control are covered.

                                      Instruct   Report                              Instruct    Report

                                 Each division of the Company                           Control center
                                                                                (department responsible for
                                                                              control of each affiliated company)

                                  Employees’ Voice              Hearing
                                                                                                                             Report
                                   Helpline System                                   Instruct    Report

                                                                    Suggest                                        Hearing
                                                                                   Af liated companies
                                    Audit Division
                                            Cooperate                                           Investigate
                                                            Corporate Auditors audit




                                    DAIHATSU MOTOR CO., LTD. 15                   ANNUAL REPORT 2010
                                                                                            Corporate Governance/Corporate Social Responsibility


activities carried out regularly, we ensure internal audit activities                           from a broad perspective, offer advice to directors and exchange
thorough control by means of supervision by the Export                                          opinions with other corporate auditors. Prior to meetings of
Management Committee, the Daihatsu Environmental                                                the Board of Directors, these outside auditors receive
Committee, the Joint Labor -Management Conference,                                              briefings from related internal departments on agenda items.
and the Functional Labor -Management Coordinating                                               If outside auditors do not attend these meetings, they are
Committee. For the Company’s subsidiaries and other Group                                       provided with materials and explanations the content of the
companies, we ensure the enforcement of internal control                                        meetings, either beforehand or promptly afterward.
activities through the affiliated -company management system.
     Daihatsu has published the Employee Action Guidelines
summarizing appropriate conduct as a corporation as well as
                                                                                                Accounting Audits
the basic attitude and conduct policies of employees                                            During the fiscal year under review, the Company’s
concerning their relationship with society, business partners,                                  accounting audits were executed by certified public
and external organizations. On the occasion of establishing the                                 accountants Shigeru Takahama and Shinya Deguchi.
new Group Philosophy, in March 2007 we issued the Daihatsu                                      Assisting audit operations were 12 other certified public
Group Action Guidelines in order to thoroughly implement                                        accountants and 16 others.
compliance throughout the Group. In addition, in 2002 we
established the Employees’ Voice Helpline system, whereby
                                                                                                Environmental Accounting
an employee can offer pertinent information in anonymity, in
the event that a threat of conduct contrary to the law, social
                                                                                                (Non-Consolidated)
ethics, human rights, or internal company regulations might                                     In accordance with the Ministry of the Environment’s
take place in the workplace or in the case when such conduct                                    Environmental Accounting Guidelines, Daihatsu maintains
has already occurred. The system enables the Company to                                         an awareness of environmental -related investments and
take measures to prevent such occurrences or to take quick                                      maintenance costs. In fiscal 2009, environmental conservation
actions in the event of an emergency.                                                           costs came to ¥13.6 billion, or 1.2% of nonconsolidated
                                                                                                net sales.
Personal Relationships with                                                                                                                                                      (Millions of yen)
Outside Auditors                                                                                   Environmental Conservation Cost                           FY2010                FY2009
                                                                                                              Category                                 Investment Cost       Investment Cost
To fulfill the role of viewing the company fairly from a societal                                1. Business Area Cost                                    283     2,773          863      2,921
standpoint, absent any special -interest relationships with the                                     (1) Pollution Prevention Cost                         133     1,476          489      1,509
Company, and to judge the execution of management tasks                                             (2) Global Environmental Conservation Cost            116      381           297        453
objectively, as of March 31, 2010, Daihatsu had appointed                                           (3) Resource Recycling Cost                             34     916             77       959
two outside auditors. Their role is to ensure that management                                    2. Upstream/Downstream Cost                                 0     308              0       240
functions in an objective and impartial manner.                                                  3. Environmental Conservation Cost, Administrative         12     832             76       759
     Outside auditors attend Board of Directors meetings and,                                    4. Environmental Conservation Cost, R&D                  950     8,462          697      9,178
                                                                                                 5. Environmental Conservation Cost, Social Activity         0           0          0           0
                                                                                                 6. Environmental Remediation Cost                           0           3          0           3
Information Transmission Route During Crises
                                                                                                 Subtotal                                               1,245 12,378           1,636 13,101
                                                                                                 Total                                                           13,623                  14,737
                  President


   Corporate             Vice President
    Auditors                (Meeting)


                                                           Legal and Information
 Crisis Countermeasures Division                             Gathering Group
                                                                                                                               Included in FTSE4Good for
   Crisis Countermeasures Division Head
                                                         Government & Industrial                                               third consecutive year
                                                             Affairs Group
         Department in crisis
    Group Heads or Executive Officers                                                               A Socially Responsible Investment (SRI) index is a share
   (Factory Heads, Department Heads)                                                               index comprised of corporations that meet globally
                                                           Victim Support Group
                                                                                                   recognised standards in their corporate social responsibility
    Supervisory            Public Relations                                                        (CSR) activities. The FTSE4Good Global Index is a global
      Group                     Group                   Consumer Support Group                     SRI index, managed by the FTSE Group (a company
                                                                                                   co -owned by the Financial Times and the London Stock
                                                                                                   Exchange) and has included Daihatsu in its index for three
      Mass Media Support Group                                                                     years since 2008.
                                                                                                        Daihatsu engages proactively in environmental
In 2009, the scope of Countermeasures Division activities was approved by the Board
of Directors to include the execution of appropriate crisis management in emergency                conservation and social contribution activities. Reports on
situations, such as fires, accidents or scandals. The resolution defines the role of each          these initiatives are available on our website.
department in a crisis situation, allowing an integrated response on a working level as
well as on a consolidated basis.




                                                DAIHATSU MOTOR CO., LTD. 16                     ANNUAL REPORT 2010
 Consolidated Six-Year Summary
Years ended March 31


                                                                                                                                                                         Millions of yen
                                                2010                      2009                     2008                    2007                     2006                  2005

For the year:
    Net sales                              ¥1,574,727                ¥1,631,395              ¥1,702,602              ¥1,637,124                ¥1,347,972              ¥1,176,245
    Operating income                             40,747                    38,191                   65,201                  54,373                    48,638                    40,116
    Net income                                   21,162                    22,074                   34,940                  34,730                    33,523                    25,871
    Capital investment                           36,745*     1
                                                                           76,700*     1
                                                                                                  111,749*     1
                                                                                                                            77,590*    1
                                                                                                                                                    114,039*     1
                                                                                                                                                                            101,795
    Depreciation                                 72,945*1                  83,654*1                 66,487*1                65,143*1                  60,773                    51,486
    R&D expenses                                 43,734                    44,209                   44,213                  46,724                    47,803                    40,354


Amounts per share (yen):
    Net income—Basic                             ¥49.66                    ¥51.80                   ¥81.92                  ¥81.38                    ¥78,14                    ¥60.26
    Cash dividends                                 12.00                     12.00                    17.00                   15.00*   3
                                                                                                                                                       12.00                      9.00


At year-end:
    Total assets                           ¥1,134,105                ¥1,098,368              ¥1,152,498              ¥1,124,762                ¥1,027,228                 ¥884,937
    Total net assets                           396,332*      2
                                                                         365,114*      2
                                                                                                  385,889*     2
                                                                                                                          369,599*     2
                                                                                                                                                    303,306                 240,545
    Common stock                                 28,404                    28,404                   28,404                  28,404                    28,404                    28,404
    Number of employees                          39,985                    39,019                   37,165                  36,043                    33,011                    29,562


Ratios (%):
    Return on equity                                   6.4                       6.8                   10.8                    11.1                      12.3                     11.2
    Equity ratio                                     30.2                      29.2                    28.5                    28.5                      29.5                     27.2

Notes:
*1. Excluding assets for lease.
*2. The Company adopted the “Accounting Standard for Presentation of Net Assets in the Balance Sheets” (Accounting Standards Board of Japan (ASBJ) Statement No. 5, issued on
    December 9, 2005) and the “Implementation Guidance for Accounting Standard for Presentation of Net Assets in the Balance Sheets” (ASBJ Guidance No. 8, issued on December 9,
    2005) from the fiscal year ended March 31, 2007.
*3. Including commemorative dividends of ¥2.




Consolidated Unit Sales                                                                                                                                                             Units
                                                2010                      2009                     2008                    2007                     2006                    2005

Daihatsu Vehicles
     Domestic
        Mini Vehicles*                         561,661                   580,140                  561,628                 567,301                   550,738                 532,695
        Compact Cars                               6,179                     6,912                    9,025                 18,939                    13,039                    17,998
        Subtotal                               567,840                   587,052                  570,653                 586,240                   563,777                 550,693
     Overseas                                  300,621                   357,829                  374,286                 342,423                   286,708                 267,823
     Total                                     868,461                   944,881                  944,939                 928,663                   850,485                 818,516
Consigned / OEM
     Consigned Domestic                        220,078                   223,111                  245,368                 262,512                   187,372                 177,635
                       Overseas                138,684                   131,816                  109,549                   97,090                    95,452                    63,865
     OEM Vehicles                                46,967                    65,621                   36,187                  27,801                     9,184                     2,474
     Total                                     405,729                   420,548                  391,104                 387,403                   292,008                 243,974
        Total                                1,274,190                 1,365,429               1,336,043               1,316,066                 1,142,493               1,062,490
Parts for Overseas
Production (sets)                                25,040                    18,710                   18,130                    5,890                    8,220                     9,400
Consigned Engines                              552,911                   470,183                  433,599                 385,026                   368,616                 256,631
Note: Vehicles that one 3.4m or less in length, 1.48m or less in breadth, 2.0m or less in height and engine displacement of less than 660cc are categorized as mini vehicles.




                                               DAIHATSU MOTOR CO., LTD. 17                         ANNUAL REPORT 2010
 Review of Operations


Scope of Consolidation and Application of                                           fiscal year ended March 31, 2007. We strove to enhance our
Equity Method                                                                       portfolio of compact cars, as well, launching a completely
During the fiscal year ended March 31, 2010, Daihatsu Motor                         redesigned Boon, a compact passenger car, in February 2010.
Co., Ltd., had a total of 60 consolidated subsidiaries and                                Overseas, our consolidated subsidiary in Indonesia, P.T.
accounted for 22 companies by the equity method.                                    Astra Daihatsu Motor (ADM) posted strong sales of the locally
                                                                                    produced Xenia, bolstered by a campaign offering low interest
Overview                                                                            rates on car loans. Such sales strategies helped push up unit
Conditions during the fiscal year under review were extremely                       sales year on year. Perodua, our consolidated manufacturing
challenging, as the Japanese economy continued to feel the                          and sales subsidiary in Malaysia, enjoyed solid sales of its Viva
effects of the global economic recession stemming from                              and Myvi models. In addition, Perodua launched a new
financial instability in the United States that commenced in the                    compact passenger car, the Alza, in November 2009, enabling
autumn of 2008. Government economic stimulus packages                               the company to maintain the country’s top slot in new vehicle
prompted signs of recovery, but the overall economic outlook                        sales for the fourth consecutive year. However, exports of
remained intransparent.                                                             completed vehicles plunged, affected by the global recession.
     In the automobile industry, government tax breaks and                          In China, where Daihatsu is working to improve management
subsidies for purchasers of environmentally considerate cars                        efficiency by consolidating its management resources, the
prompted a 3.8% year -on -year increase in total domestic unit                      Company revised its business framework with FAW Jilin
sales, to 4.88 million vehicles. However, this increase was                         Automobile Co., Ltd.
focused primarily on the market for compact cars (B -segment                              In consigned production and OEM, tax breaks and
and above), which saw a 10.0% increase. Unit sales of mini                          subsidies for purchasers of environmentally considerate cars
vehicles, meanwhile, were down 6.1% year on year, falling for                       prompted robust sales of the Toyota PASSO and other
the third consecutive year. The situation in overseas markets                       models. However, overall sales in this category declined year
was more positive, and the Group’s principal overseas                               on year, owing to such factors as lower sales of vehicles not
markets of Indonesia and Malaysia entered a recovery phase                          eligible for this tax break.
in the autumn of 2009.                                                                    As a result, the Group’s domestic unit sales fell 19,212,
     Under these conditions, in Japan the Daihatsu Group                            or 3.3%, compared with the previous fiscal year, to 567,840
introduced the new model Mira Cocoa in August 2009 and                              units. Overseas unit sales decreased 57,208, or 16.0% year
the Tanto Exe, a new mini passenger car, in December. In                            on year, to 300,621 units. Consigned production and OEM fell
addition, we strove to expand the number of vehicle models                          14,819, or 3.5%, to 405,729 units. Accordingly, our total unit
subject to tax breaks for purchasers of environmentally                             sales fell 91,239, or 6.7% year on year, to 1,274,190 units.
considerate cars. As a result, we have held the top share of                        Unit sales of consigned engines advanced 82,728, or 17.6%
the mini vehicle market for four consecutive years, since the                       during the year, to 552,911 units.




          (Reference) Trends in the Domestic
          Mini Vehicle and Compact Car
          (B-segment and above) Markets                                                     Consolidated Unit Sales

          (Thousands of units)                                                              (Thousands of units)
          5,000                                                                             1,500
                                                                                                                           1,340    1,370
                                                                                                                   1,320                         1,270
          4,000      3,910                                                                          1,140
                                 3,590
                                             3,430
                                                                   3,180                    1,000
          3,000                                         2,890


                             2,030
          2,000 1,950                    1,890       1,810      1,700
                                                                                              500

          1,000



              0                                                                                 0
                    2006         2007      2008        2009       2010     (FY)                      2006          2007    2008        2009        2010    (FY)

                        Mini vehicles       Compact car (B-segment and above)                           Daihatsu vehicles (Domestic)          Daihatsu vehicles (Overseas)
                                                                                                        Consigned vehicles (Domestic)         Consigned vehicles (Overseas)
          Note: Data from the Japan Mini Vehicles Association/
                Japan Automobile Dealers Association                                                    OEM vehicles




                                                      DAIHATSU MOTOR CO., LTD. 18   ANNUAL REPORT 2010
                                                                                                                                                                    Review of Operations




Business Performance                                                                                                     Operating Expenses
During the fiscal year, the Daihatsu Group’s consolidated net                                                         Cost of sales was down ¥63.8 billion, or 4.7%, to ¥1,285.0
sales slipped 3.5%, to ¥1,574.7 billion. Operating income                                                             billion as a result of the fall in net sales and other factors. The
grew 6.7%, to ¥40.7 billion, while income before extraordinary                                                        cost of sales to net sales ratio fell 1.1 percentage points year
items and income taxes and minority interests rose 11.1%, to                                                          on year, to 81.6%. Owing to miscellaneous cost increases,
¥43.8 billion. Net income for the year stood at ¥21.1 billion,                                                        selling, general and administrative expenses rose ¥4.2 billion,
down 4.1% from the preceding fiscal year.                                                                             or 1.7%, to ¥248.9 billion.
      Comparing operating income with the preceding term,
positive factors amounted to ¥36.2 billion. Of this amount,                                                              Other Income and Expenses
successful cost reduction efforts were responsible for ¥12.3                                                          Although gain on sales of fixed assets decreased ¥1.7 billion,
billion, and lower miscellaneous expenses for ¥23.9 billion.                                                          foreign exchange gains amounted to ¥4.5 billion. As a
Meanwhile, changes in sales volumes and in the model mix                                                              consequence of this and other factors, the Company’s net
had a ¥33.7 billion negative impact. The difference of ¥2.5                                                           other income and expenses was positive, up ¥1.8 billion from
billion accounts for the increase in operating income during                                                          the previous fiscal year.
the year.
                                                                                                                         Income Taxes (Current and Deferred)
   Net Sales                                                                                                          Income taxes rose ¥1.1 billion, or 9.7%, compared with the
In the Japanese market, in August 2009 we launched the Mira                                                           previous fiscal year, to ¥13.5 billion, mainly due to a ¥2.2
Cocoa, a new -model mini passenger car, and announced                                                                 billion increase in income before income taxes and minority
another new -model mini passenger car, the Tanto Exe, in                                                              interests.
December 2009. However, domestic sales fell nevertheless.
Overseas, sales in Indonesia of the locally produced Xenia                                                               Minority Interests in Net Income of Consolidated
were solid, and in Malaysia sales of the Viva and Myvi were                                                              Subsidiaries
favorable. Consigned production and OEM benefited from the                                                            ADM in Indonesia recorded a year -on -year increase in net
PASSO and other models that fall into the category of                                                                 income, leading to minority interests in net income of
environmentally considerate cars eligible for tax breaks and                                                          consolidated subsidiaries, which is subtracted from
subsidies. However, sales of vehicles not eligible for such tax                                                       consolidated income, of ¥7.1 billion. This was ¥2.0 billion
benefits declined, and exports of completed vehicles                                                                  higher than during the previous fiscal year.
dropped, impacted by the global recession. As a result of the
above, the Daihatsu Group’s consolidated net sales dropped
¥56.6 billion, or 3.5%, compared to the previous fiscal year.




                                                                           Net Income &                                                    Net Income per Share (Basic) &
Net Sales & Operating Income                                               Net Income to Net Sales Ratio                                   Cash Dividends per Share

(Billions of yen)                                      (Billions of yen)   (Billions of yen)                                        (%)    (Yen)                                                        (Yen)
2,000                                                              80      60                                                       3      100                                                      25
                                  1,702.6 1,631.3                                  2.5
                      1,637.1          65.2                                                                                                               81.38     81.92
                                                  1,574.7                                                                                   80 78.14                                                20
1,500                                                                60                         2.1   2.1
         1,347.9           54.3                                                                                                                                          17
                                                                           40                                                       2
               48.6                                                                                                                                            15
                                                                                  33.5         34.7   34.9                                  60                                                      15
                                                              40.7                                              1.4                                                           51.80      49.66
1,000                                           38.1                 40                                                  1.3                         12
                                                                                                                                                                                       12          12
                                                                                                               22.0      21.1               40                                                      10
                                                                           20                                                       1
  500                                                                20
                                                                                                                                            20                                                      5



     0                                                               0       0                                                      0         0                                                     0
           2006         2007        2008     2009         2010     (FY)            2006        2007   2008     2009      2010       (FY)           2006     2007      2008      2009        2010    (FY)

              Net Sales           Operating Income                                       Net Income     Net Income to Sales Ratio                     Net Income per Share (Basic)      Cash Dividends per Share




                                                                 DAIHATSU MOTOR CO., LTD. 19                          ANNUAL REPORT 2010
                                                                                                                                                                    Review of Operations




 Financial Position and Performance                                                                                 billion decrease in loans and debts.
 Analysis                                                                                                                 As a result, cash and cash equivalents increased ¥48.2
 This annual report contains statements pertaining to the                                                           billion, to ¥111.7 billion.
 future. These statements are judgments as of the end of the
 fiscal year under review (March 31, 2010).                                                                            Trade Notes and Accounts Receivable
        The Daihatsu Group’s segments by business category                                                          Owing partly to an increase in sales in the second half of the
 include the automobile related business and other                                                                  fiscal year, trade notes and accounts receivable rose ¥12.6
 businesses. The percentages of the automobile related                                                              billion, to ¥301.2 billion.
 business to all segments were 99.5% of net sales and 98.8%
 of operating income. With regard to sales of each segment by                                                          Property, Plant and Equipment
 geographical area, the percentage of Japan is the highest,                                                         While we made a capital investment of ¥36.7 billion (excluding
 and in the fiscal year under review, the percentages of Japan                                                      lease assets), depreciation amounted to ¥72.9 billion
 to all geographical segments were 80.0% of net sales and                                                           (excluding lease assets), which resulted in total property, plant
 68.4% of operating income (excluding inter -area sales and                                                         and equipment of ¥438.3 billion, a year -on -year decrease of
 transfer).                                                                                                         ¥25.7 billion.
        Comparing the financial position of the Daihatsu Group
 as of the end of fiscal 2010 with that of fiscal 2009, total                                                          Investments in Securities
 assets increased ¥35.7 billion, to ¥1,134.1 billion; total                                                         Investments in securities increased ¥6.6 billion, to ¥70.8
 liabilities amounted to ¥737.7 billion, up ¥4.5 billion; and total                                                 billion, mainly due to an increase in net unrealized holding
 net assets came to ¥396.3 billion, an increase of ¥31.2 billion.                                                   gains.
        An analysis of the changes in major accounting items is
 stated on the following page.                                                                                         Loans and Debts
                                                                                                                    Long -term debt increased ¥25.6 billion, but short -term debt
    Cash and Cash Equivalents                                                                                       dropped ¥44.2 billion. Accordingly, total loans and debts
 Net cash provided by operating activities amounted to ¥132.0                                                       stood at ¥180.7 billion, down ¥18.5 billion from the previous
 billion, mainly attributable to income before income taxes and                                                     fiscal year.
 minority interests of ¥41.7 billion and depreciation of ¥78.4
 billion. Net cash used in investing activities stood at ¥47.2                                                        Net Assets
 billion, including payments of acquisition of property, plant and                                                  Buoyed by net income of ¥21.1 billion, net assets increased
 equipment of ¥46.9 billion. Net cash used in financing                                                             ¥31.2 billion, to ¥396.3 billion.
 activities was ¥37.5 billion, mainly resulting from a ¥27.2




Return on Assets & Return on Equity                                Total Net Assets & Equity Ratio                                      Total Assets

(%)                                                                (Billions of yen)                                            (%)     (Billions of yen)
15                                                                 600                                                           36     1,500

      12.3                                                                  29.5                             29.2       30.2
                                                                                       28.5       28.5
12               11.1      10.8                                                                                                         1,200               1,124.7 1,152.4 1,098.3 1,134.1
                                                                                                                        396.3                    1,027.2
                                                                   400                 369.5      385.8                          24
                                                                                                             365.1
 9                                                                                                                                        900
                                         6.8                               303.3
                                                  6.4
 6                                                                                                                                        600
                                                                   200                                                           12
      3.5         3.2          3.1
 3                                      2.0       1.9                                                                                     300



 0                                                                    0                                                           0          0
      2006       2007      2008        2009      2010   (FY)                2006       2007       2008       2009       2010    (FY)               2006      2007    2008    2009    2010     (FY)

            Return on Equity         Return on Assets                          Total Net Assets          Equity Ratio




                                                          DAIHATSU MOTOR CO., LTD. 20                               ANNUAL REPORT 2010
                                                                                                                                                      Review of Operations




Research and Development Activities                                                                        sales were down 3.5% year on year.
Research and development expenses for the year totaled                                                          Sales promotion initiatives at ADM, our subsidiary in the
¥43.7 billion.                                                                                             country, were successful, and sales of the Xenia, a compact
     The Daihatsu Group operates under the slogan                                                          passenger car, were solid. As a result, ADM claimed the
“Innovation for Tomorrow” in pursuit of its mission: “making                                               second -largest share of the Indonesian market for the second
compact cars loved throughout the world.” We aim to develop                                                consecutive fiscal year.
cars that have high fuel efficiency and high quality, offer strong                                              In Malaysia, sales were firm for our compact passenger
environmental and safety performance and are available at an                                               cars, the Viva and the Myvi. In addition, customer response
affordable price. We promote an aggressive product                                                         was positive to the Alza, a seven -passenger MPV introduced
development approach that incorporates all these facets.                                                   in November 2009. This solid performance earned Perodua,
     In recent years, economic recession and rising global                                                 our manufacturing and sales subsidiary in Malaysia, the
environmental awareness have prompted customer needs for                                                   number one share of the Malaysian market for the fourth
more compact, lighter and affordable cars. To meet these                                                   consecutive year.
needs, Daihatsu is channeling its management resources into                                                     The Daihatsu Group’s principal overseas bases, in
the development of technologies and products that heighten                                                 Indonesia and Malaysia, are growing rapidly. Ongoing growth
the allure of compact cars, with their advantages of fuel                                                  is particularly pronounced in Indonesia, centered on internal
economy and affordability.                                                                                 demand, and the automobile market is expected to
                                                                                                           accelerate from recovery to a growth phase. We plan to take
Management’s Recognition of Current                                                                        advantage the major opportunity this market growth presents
Status and Future Policy                                                                                   to bolster sales in this region and reinforce our profit -
   Domestic Sales                                                                                          generation capabilities.
The Japanese mini -vehicle market in the fiscal year ended
March 31, 2010, shrank to 1.70 million units . This volume is                                                 Significant Issues
forecast to shrink further in the fiscal year ending March 31,                                             Compact cars are increasingly a focus of attention because of
2011, to 1.65 million units. Furthermore, the outlook is unclear                                           their environmental friendliness and superior fuel performance.
because of the possibility of a downturn in vehicle sales in line                                          Accordingly, we are stepping up initiatives to ensure our
with the end of subsidiaries for purchasers of environmentally                                             ongoing market survival by bringing to market compact cars that
considerate cars. Daihatsu expects to sell 580,000 mini                                                    are fuel efficient, affordably priced and resource -conserving.
vehicles, approximately the same number as in the fiscal year                                                    Every year, customers grow increasingly quality
under review.                                                                                              conscious. To respond appropriately to their demands, we
     Although we expect market conditions to remain difficult,                                             have redoubled our “customer -first” focus and quality
we aim to invigorate sales in the second half of the fiscal year                                           assurance initiatives.
through the complete redesign of a flagship vehicle model.                                                       Simultaneous to implementing these initiatives, we will
                                                                                                           accelerate efforts to curtail costs, reform procurement
   Overseas Business                                                                                       methods and transform our profit structure to be responsive
In Indonesia, although market recovered in the second half,                                                to future changes in the operating environment.



Research and Development Expenses                         Capital Investment & Depreciation                                   Consolidated Net Sales by Region (FY 2010)

(Billions of yen)                                         (Billions of yen)                                                   (Billions of yen)
50     47.8                                               150
                    46.7                                                                                                         Europe                      Others
                           44.2   44.2   43.7                                                                                    41.2                        16.0
                                                                                                                                 (% change –24.8%)           (% change –61.3%)
40                                                        120 114.0                     111.7


30                                                          90                                      83.6                          Asia
                                                                              77.5               76.7                             387.8
                                                                                                                 72.9
                                                                                 65.1        66.4                                 (% change +12.8%)
                                                                       60.7
20                                                          60

                                                                                                             36.7                                 Japan
10                                                          30                                                                                    1,129.5
                                                                                                                                                  (% change –5.2%)

 0                                                           0
       2006         2007   2008   2009   2010   (FY)               2006        2007        2008       2009       2010 (FY)

                                                                      Capital Investment          Depreciation                                    Total 1,574.7




                                                 DAIHATSU MOTOR CO., LTD. 21                               ANNUAL REPORT 2010
                                                                                                     Review of Operations




Business Risks                                                       Risks Concerning Changes in Product Costs
Among the business performance and financial situation items      We purchase large volumes of raw materials and parts with
stated in this annual report, the following risks could have an   which to manufacture our products, and these are subject to
important influence on the decisions of investors.                fluctuations in supply and demand in world markets, changes
                                                                  in the economic climate of the producing countries, increases
   Risks Concerning Changes in the Economic Climate               in distribution costs and other factors that result in purchase
Political and social disruptions in Japan and major overseas      price increases. This, in turn, raises the Group’s cost of
markets of the Group, such as Indonesia and Malaysia, bring       production, which may adversely affect the Group’s business
about changes in the economic climate, which in turn can          performance.
affect the Group’s business performance.
      Furthermore, the Daihatsu Group, which follows a               Risks Concerning Fluctuations in Exchange Rates
management strategy of concentrating resources on the             Fluctuations in exchange rates alter the yen equivalents of the
compact car business -chiefly mini vehicles -is subject to the    Group’s foreign currency sales to overseas markets as well as
risk that demand in major markets will grow less receptive to     the yen equivalents of the foreign currency purchase amounts
compact cars, thereby affecting the Group’s business              and other figures in the foreign currency financial statements
performance.                                                      of overseas subsidiaries, which can adversely affect the
                                                                  Group’s business performance.
   Risks Concerning Changes in Product Prices and
   Market Evaluation                                                 Risks Concerning Changes in Legal Requirements
In the automobile industry, business performance can be           We conduct business based on laws and regulations related
temporarily affected when a drop in production prices and         to environmental matters, such as emissions control and
other adverse situations are caused by an oversupply and by       automobile recycling, as well as on laws and regulations for
intensified price competition due to the introduction of          taxes in the countries where we are developing our business.
comparable models at lower prices from other companies.           Revisions of these laws and regulations may affect the
     Although the Group takes consumer demand trends into         Group’s business performance.
careful consideration with introducing new vehicle models,
lower -than -expected market reception to the Group’s new           Risks Concerning Product Recalls
models or a sharp drop in the standing of existing models         Unpredictable product defects that render the Group’s
could affect Group’s business performance.                        products unable to meet safety standards in Japan and other
                                                                  countries in which it conducts operations could make the
                                                                  Group liable for reparations or require a large -scale recall,
                                                                  which could affect the Group’s business performance.

                                                                  Moreover, risks other than those stated in the above, such as
                                                                  natural disasters, could also have a serious impact on
                                                                  investors’ decisions.




                                 DAIHATSU MOTOR CO., LTD. 22      ANNUAL REPORT 2010
 Consolidated Balance Sheets
March 31, 2010 and 2009


                                                                                                       Millions of yen
                                                                                    2010             2009
ASSETS
Current assets:
 Cash on hand and in banks                                                    ¥       52,869     ¥    41,068
 Deposits                                                                             59,259          22,547
 Trade notes and accounts receivable                                       (2)       301,206         288,599
 Merchandise and finished products                                                    61,427          67,061
 Work in process                                                                      17,459          21,006
 Raw materials and supplies                                                           17,076          15,269
 Deferred tax assets                                                       (5)        26,787          25,571
 Other                                                                     (5)        53,389          54,188
 Less allowance for doubtful accounts                                                  (2,280)        (1,665)
        Total current assets                                                         587,195         533,647




Fixed assets:
 Property, plant and equipment, at cost:
 Buildings and structures, net                                           (2)(4)      139,994         139,375
 Machinery, equipment and vehicles, net                                  (2)(4)      134,395         161,023
 Land                                                                                124,222         121,657
  Construction in progress                                                             3,582           7,477
  Other, net                                                                (4)       36,112          34,556
        Total investments and other assets                                  (1)      438,306         464,089




  Intangible fixed assets                                                              5,936           5,344




  Investments and other assets:
  Investments in securities                                              (2)(3)       70,886          64,262
  Long -term loans receivable                                                          6,995           8,275
  Deferred tax assets                                                                 19,957          17,629
  Other                                                                     (3)        5,398           5,522
  Less allowance for doubtful accounts                                                  (571)            (402)
        Total investments and other assets                                           102,666          95,287
        Total fixed assets                                                           546,909         564,721
Total assets                                                                      ¥ 1,134,105    ¥ 1,098,368




                                 DAIHATSU MOTOR CO., LTD. 23   ANNUAL REPORT 2010
                                                                                             Consolidated Balance Sheets



                                                                                                               Millions of yen
                                                                                          2010               2009
LIABILITIES
Current liabilities:
  Trade notes and accounts payable                                                    ¥   292,717          ¥ 289,422
  Short -term debt                                                              (2)       109,644             153,847
  Accrued income taxes                                                          (5)        12,924               4,142
  Accrued expenses                                                                         73,536              66,370
  Accrued bonuses for directors and corporate auditors                                           227              254
  Accrued product warranty                                                                  6,785               6,492
  Other                                                                         (2)        95,010              96,414
     Total current liabilities                                                            590,846             616,943


Long-term liabilities:
  Long -term debt                                                               (2)        71,096              45,458
  Deferred tax liabilities                                                                  5,439               5,112
  Accrued retirement benefits for employees                                                63,247              53,613
  Accrued retirement benefits for directors and corporate auditors                          1,720               2,843
  Other                                                                                     5,422               9,282
     Total long -term liabilities                                                         146,926             116,310
     Total liabilities                                                                    737,772             733,254



NET ASSETS
Shareholders’ equity:
  Common stock:                                                                            28,404              28,404
     Authorized—1,600,000,000 shares
     Issued and outstanding—427,122,966 shares (2010)
                                    427,122,966 shares (2009)
  Additional paid -in capital                                                              10,837              10,837
  Retained earnings                                                                       300,194             283,296
  Treasury stock, at cost—                                                                   (668)               (645)
     1,092,902 shares (2010)
     1,037,893 shares (2009)
        Total shareholders’ equity                                                        338,767             321,893


Valuation and translation adjustments
  Net unrealized holding gain on securities                                                12,846              10,128
  Foreign currency translation adjustments                                                 (8,899)            (11,805)
     Total valuation and translation adjustments                                            3,947              (1,676)
Minority interests in consolidated subsidiaries                                            53,618              44,897
     Total net assets                                                                     396,332             365,114
Total liabilities and net assets                                                  ¥ 1,134,105              ¥ 1,098,368




                                      DAIHATSU MOTOR CO., LTD. 24    ANNUAL REPORT 2010
 Consolidated Statements of Income
Years ended March 31, 2010 and 2009


                                                                                                            Millions of yen
                                                                                        2010              2009
Net sales                                                                            ¥ 1,574,727     ¥ 1,631,395
Cost of sales                                                                  (1)     1,285,071         1,348,529
     Gross profit                                                                       289,655           282,866
Total selling, general and administrative expenses                             (1)      248,907           244,674
     Operating income                                                                    40,747            38,191
Other income:
  Interest income                                                                          1,800             1,639
  Dividend income                                                                              847           1,018
  Gain on sales of fixed assets                                                                190             464
  Equity in earnings of affiliates                                                         3,152             4,102
  Foreign exhchange gains                                                                  1,284                —
  Miscellaneous income                                                                     2,985             3,578
Other expenses:
  Interest expenses                                                                        1,112             1,360
  Loss on sales and disposals of fixed assets                                              4,080             2,648
  Foreign exchange losses                                                                       —            3,296
  Miscellaneous expenses                                                                   1,972             2,232
     Ordinary income                                                                     43,842            39,455
Special income:
  Subsidy for facilities                                                       (2)          449                715
  Gain on sales of property, plant and equipment                                                —              556
Special loss:
  Expenses associated with the revision of the China Project                   (3)         2,015                —
  Advanced depreciation of fixed assets                                        (5)          323              1,043
  Impairment loss                                                              (4)          164                180
Income before income taxes and minority interests                                        41,787            39,503
Income taxes:
  Current                                                                                18,540            12,379
  Deferred                                                                                (5,023)              (55)
Minority interests in net income of consolidated subsidiaries                             (7,107)           (5,104)
Net income                                                                       ¥       21,162      ¥     22,074




                                      DAIHATSU MOTOR CO., LTD. 25   ANNUAL REPORT 2010
 Consolidated Statements of Changes in Net Assets
Years ended March 31, 2010 and 2009


                                                                                                                                                                      Millions of yen
                                                              Shareholders’ equity                               Valuation and translation adjustments
                                                                                                                  Net            Foreign         Total
                                                 Additional                          Treasury       Total      unrealized       currency valuation and                      Total
                                     Common       paid -in         Retained           stock,    shareholders’ holding gain     translation translation     Minority          net
                                      stock       capital          earnings            cost        equity     on securities adjustments adjustments       interests        assets
Balance at March 31, 2008             28,404      10,837           269,539             (563)      308,217        23,890         (3,950)    ¥19,939       ¥57,732         ¥385,889
Effect of changes in accounting
 policies applied to foreign
 subsidiaries                            —             —              (1,065)            —          (1,065)          —              —            —         (1,107)           (2,172)
Changes during the year
  Dividends from retained earnings       —             —              (7,252)            —          (7,252)          —              —            —             —             (7,252)
  Net income                             —             —             22,074              —          22,074           —              —            —             —            22,074
  Acquistion of treasury stock           —             —                  —             (81)           (81)          —              —            —             —                (81)
  Net change in items other
   than shareholders’ equity
   during the year                       —             —                  —              —              —        (13,761)       (7,855)     (21,616)     (11,726)           (33,343)
Total changes during the year            —             —             14,821             (81)        14,740       (13,761)       (7,855)     (21,616)     (11,726)           (18,602)
Balance at March 31, 2009            ¥28,404     ¥10,837          ¥283,296           ¥(645)     ¥321,893        ¥10,128      ¥(11,805)      ¥(1,676)     ¥44,897         ¥365,114
Effect of changes in accounting
 policies applied to foreign
 subsidiaries                            —             —                  —              —              —            —              —            —             —                —
Changes during the year
  Dividends from retained earnings       —             —              (4,265)            —          (4,265)          —              —            —             —             (4,265)
  Net income                             —             —             21,162              —          21,162           —              —            —             —            21,162
  Acquistion of treasury stock           —             —                  —             (23)           (23)          —              —            —             —                (23)
  Net change in items other
   than shareholders’ equity
   during the year                       —             —                  —              —              —          2,717         2,906        5,624         8,720           14,344
Total changes during the year            —             —             16,897             (23)        16,874         2,717         2,906        5,624         8,720           31,218
Balance at March 31, 2010            ¥28,404     ¥10,837          ¥300,194           ¥(668)     ¥338,767        ¥12,846       ¥(8,899)      ¥3,947       ¥53,618         ¥396,332




                                              DAIHATSU MOTOR CO., LTD. 26                        ANNUAL REPORT 2010
 Consolidated Statements of Cash Flows
Years ended March 31, 2010 and 2009


                                                                                                     Millions of yen
                                                                                      2010         2009
Cash flows from operating activities
 Income before income taxes and minority interests                                  ¥ 41,787     ¥ 39,503
 Depreciation                                                                          78,446      89,877
 Increase (decrease) in accrued retirement benefits for employees                       9,206        4,160
 Increase in accrued retirement benefits for directors and corporate auditors            (446)         265
 Decrease in allowance for doubtful accounts                                              446           (68)
 Interest and dividend income                                                          (2,648)      (2,657)
 Interest expenses                                                                      1,112        1,360
 Exchange loss (gain)                                                                    (160)         390
 Equity in (earnings) loss of affiliates                                               (3,152)      (4,102)
 Loss (Gain) on sales of fixed assets                                                    (190)      (2,549)
 Loss on disposal of fixed assets                                                       4,080        2,648
 Loss (Gain) on sales of short -term and long -term investment securities                  (4)           —
 Loss (Gain) on valuation of short -term and long -term investment securities              34            63
 Decrease (increase) in notes and accounts receivable                                 (10,217)     13,708
 Increase in inventories                                                                9,507       (9,341)
 Decrease in notes and accounts payable                                                  (719)    (27,528)
 Decrease in consumption taxes payable                                                  1,850         (659)
 Others                                                                                11,301     (14,658)
    Subtotal                                                                         140,234       90,412
 Interest and dividends received                                                        3,197        4,140
 Interest paid                                                                         (1,047)      (1,182)
 Income taxes paid                                                                    (12,263)    (17,283)
 Income taxes refunded                                                                  1,891            —
       Net cash provided by operating activities                                     132,011       76,087

Cash flows from investing activities
 Investments in time deposits                                                            (162)       (146)
 Proceeds from refund of time deposits                                                    146         126
 Payments for acquisition of fixed assets                                             (46,991)    (87,190)
 Proceeds from sales of fixed assets                                                      889       3,722
 Payments for acquisition of investments in securities                                     (6)       (283)
 Proceeds from sales of investments in securities                                           8          —
 Proceeds from purchase of investment in a subsidiary resulting in
   change in scope of consolidation                                                       186          346
 Decrease in short -term loans receivable                                              (2,206)       1,906
 Payments for long -term loans receivable                                              (3,603)      (4,015)
 Proceeds from collection of long -term loans receivable                                4,502          921
       Net cash used in investing activities                                          (47,234)    (84,611)

Cash flows from financing activities
 Net decrease in short -term debt                                                     (20,503)       5,502
 Proceeds from long -term debt                                                         34,971      29,038
 Repayments of long -term debt                                                        (41,691)    (15,722)
 Payments for acquisition of treasury stock                                                (5)        (522)
 Dividends paid                                                                        (4,265)      (7,252)
 Dividends paid to minority interests in consolidated subsidiaries                     (1,228)      (2,430)
 Repayments of lease obligations                                                       (4,799)      (5,455)
       Net cash provided by financing activities                                      (37,521)       3,157

Effect of exchange rate changes                                                          1,015      (4,169)
Net decrease in cash and cash equivalents                                               48,271      (9,535)
Cash and cash equivalents at beginning of year                                          63,468     73,004
Cash and cash equivalents at end of year                                         (1) ¥ 111,740   ¥ 63,468




                                      DAIHATSU MOTOR CO., LTD. 27     ANNUAL REPORT 2010
 Notes to Consolidated Financial Statements
Years ended March 31, 2010


Significant Accounting Policies Forming the                           (b) Inventory valuation standards and methods
Basis of Presentation of the Consolidated                                 Finished products (manufactured vehicles)
Financial Statements                                                           Mainly stated at cost as determined by the cost
                                                                               average method (method of reducing book value in
1. Scope of consolidation                                                      line with decreases in profitability)
(Consolidated subsidiaries: 60)                                           Merchandise (parts/components)
All subsidiaries are included in the scope of consolidation.                   Mainly stated at cost as determined by the cost
     Kanbishi Co., Ltd., an affiliate accounted for by the equity              average method (method of reducing book value in
method until the fiscal year ended March 31, 2009, became a                    line with decreases in profitability)
subsidiary, owing to the acceptance of shares through a                   Merchandise (purchased vehicles)
capital increase, and was therefore newly included in the                      Mainly stated at cost as determined by the identified
scope of consolidation.                                                        cost method (method of reducing book value in line
     Shinmei Diecasting Kogyo Co., Ltd., which was a                           with decreases in profitability)
consolidated subsidiary through the year ended March 31,                  Raw materials
2009, was extinguished through a merger with consolidated                      Mainly stated at cost as determined by the last -in
subsidiary Akashi -Kikai Industry Co., Ltd.                                    first -out method (method of reducing book value in
                                                                               line with decreases in profitability)
2. Equity method                                                          Work in process
(a) Affiliates accounted for by the equity method: 22                          Mainly stated at cost as determined by the cost
    Major affiliates accounted for by the equity method are                    average method (method of reducing book value in
    Daihatsu Diesel Mfg. Co., Ltd., Metalart Corporation and                   line with decreases in profitability)
    Osaka Daihatsu Corporation.
           FAW Daihatsu (Jilin) Body Parts Co., Ltd., was             (c) Depreciation methods for significant depreciable assets
    excluded from the scope of equity method application
    owing to a transfer of Daihatsu’s stake in the company.              Property, plant and equipment (excluding lease assets)
           Kanbishi Co., Ltd., was excluded from equity method           Depreciation is principally computed using the declining
    application owing to its conversion to a consolidated                balance method.
    subsidiary.                                                                However, the depreciation of buildings (excluding
                                                                         attached facilities) acquired on or after April 1, 1998, is
(b) Affiliated companies not accounted for by the equity                 computed using the straight line method.
    method (a total of five companies, including Tono Daihatsu                 Furthermore, acquisitions made by the Company and
    Co., Ltd.) are excluded because they do not have a                   its domestic consolidated subsidiaries on or before March
    material impact on consolidated net income, retained                 31, 2007, that have been depreciated down to their final
    earnings and others individually or in the aggregate.                depreciation limit are depreciated in equal amounts of the
                                                                         difference between 5% of their acquisition price and their
(c) As for affiliates accounted for by the equity method, when           memorandum value over a five -year period from the fiscal
    their fiscal year -end is different from the Company’s fiscal        year after the fiscal year in which their depreciation limit
    year -end, their financial statements as of their fiscal year -      reached zero.
    end are used.
                                                                         Intangible fixed assets
3. Fiscal year of consolidated subsidiaries                              Depreciated principally using the straight -line method
The fiscal year -end for the following five consolidated
subsidiaries is December 31: Perodua Auto Corporation Sdn.               Lease assets
Bhd., Perodua Manufacturing Sdn. Bhd., Perodua Engine                    Lease assets related to finance lease transactions that do
Manufacturing Sdn. Bhd., DMCA Inc. and Tianjin Daihatsu                  not transfer ownership are depreciated using the straight -
Precision Machinery Co., Ltd.                                            line method over lease period, which corresponds to the
     For these subsidiaries, their financial statements as of            number of years of useful life, with a residual value of zero.
December 31 are used in the preparation of the Company’s                      Of finance lease transactions other than those
consolidated financial statements. When significant                      recognized as transferring ownership of the leased
transactions occur at those subsidiaries between their fiscal            properties to the borrower, transactions that commenced
year -end and the Company’s fiscal year -end, these                      before March 31, 2008, are treated for accounting
transactions are included in the consolidated financial                  purposes as operating lease transactions.
statements as necessary.
                                                                      (d) Policy for significant reserve allowances
4. Accounting policies
(a) Fair values of marketable securities and investment in               Allowance for doubtful accounts
    securities                                                           An allowance against losses caused by doubtful
                                                                         receivables and other bad debts is made based on
   Other securities                                                      historical credit loss ratios. With specific claims where
       With market quotations                                            there is an identified credit risk, an allowance is made for
            Stated at the market price on March 31, 2010                 estimated uncollectible amounts based on assessment its
            (with any unrealized valuation difference regarded           recoverability of individual receivables.
            under net assets, and with cost computed using
            the moving -average method)                                  Accrued bonuses for directors and corporate auditors
                                                                         To provide for the payment of bonuses for directors and
        Without market quotations                                        corporate auditors, the share of estimated bonuses to be
            Stated at cost, cost being determined by the                 paid to directors and corporate auditors for the fiscal year
            moving -average method                                       under review are accrued.



                                    DAIHATSU MOTOR CO., LTD. 28       ANNUAL REPORT 2010
                                                                          Notes to Consolidated Financial Statements



   Retirement benefits and pension plans                           Notes to consolidated financial statements
   To provide the payment of retirement and severance
   benefits to employees, accrued retirement benefits are          (Notes to consolidated balance sheets)
   provided for based on the total amount of projected
   retirement benefits obligation reduced by the fair value of     1.
   pension plan assets as of the fiscal year -end.                 (1) Accumulated depreciation on property, plant and
         Unrecognized prior service obligations are amortized          equipment
   on a straight -line basis over the average estimated                                                         ¥744,485 million
   remaining service years of the employees (15 -18 years)
   from the time such liability arose.                             (2) Other assets pledged as collateral
         Actuarial differences are amortized on a straight -line        (Assets pledged as collateral)
   basis over the average remaining service years of the                     Trade notes and accounts receivable ¥    86 million
   employees (14 -21 years) from the next fiscal year after the              Buildings and structures              7,562
   gain or loss occurs.                                                      Machinery, equipment and vehicles       171
                                                                             Land                                 13,577
   Accrued retirement benefits for directors, executive officers             Investments in securities               288
   and corporate auditors                                                    Total                                21,686
   To prepare for the payment of retirement benefits to
   directors, executive officers and corporate auditors, a              (Liabilities associated with the above)
   necessary amount determined in accordance with the                        Short -term loans                         ¥20,718 million
   internal rules is accrued at the end of the fiscal year.                  Other liabilities (current liabilities)        49
                                                                             Long -term debt (including current portion) 6,114
   Accrued product warranty                                                  Total                                      26,882
   To provide for expenses for after -sales service based on
   warranty certificates, service expenses in the amount           (3) Investments in Affiliates
   estimated to be incurred over the warranty period are                                                                Millions of yen
   accrued.                                                                              Category
                                                                                                                            2010
(e) Accounting procedure of consumption tax                        Fixed assets
    The tax -excluded method is adopted.                              Investments in securities (shares)                  ¥35,847
                                                                      Other assets (cash investment)                          171
5. Valuation of the assets and liabilities of
   consolidated subsidiaries
On the acquisition of a subsidiary, all of the subsidiaries’       (4) The Company received government and other subsidies (a
assets and liabilities that exist at the date of acquisition are       special subsidy for corporate structural investment, a
recorded at their fair value as of the date of acquisition.            subsidy for development and diffusion of a low -emission
                                                                       vehicle, gain on insurance adjustment, a subsidy for
6. Goodwill and negative goodwill                                      companies located in industrial parks in the city of Nakatsu,
Goodwill and negative goodwill is recognized as a loss or a            a subsidy for supporting new energy business, a subsidy
gain as incurred, due to immateriality.                                on business promoting the introduction of highly energy
                                                                       efficient systems for housing and structures, a subsidy from
7. Cash and cash equivalents                                           the city of Kurume for the transfer of industry, a regional
In the consolidated statements of cash flows, cash and cash            business promotion subsidy from Shimane Prefecture, a
equivalents are composed of cash on hand, deposits that                regional business promotion subsidy from Fukuoka
may be withdrawn on demand and highly liquid investments               Prefecture and a business expansion subsidy from the city
purchased with original maturities of three months or less and         of Izumo). Accordingly the following amounts are directly
which present a low risk of fluctuation in value.                      deducted from acquisition costs: buildings of ¥276 million,
                                                                       structures of ¥8 million, machinery of ¥341 million, tools
                                                                       and equipment of ¥5 million and land of ¥402 million.

Change in accounting policy                                        (5) On January 15, 2010, the Company’s consolidated
                                                                       subsidiary in Indonesia, P.T. Astra Daihatsu Motor, received
Partial Amendments to Accounting Standard for                          from the Indonesian tax authorities a notice of revision of
Retirement Benefits (Part 3)                                           values of inter -company royalty transactions to affiliated
From the fiscal year under review, the Company adopted the             companies during the fiscal year ended March 31, 2008,
“Partial Amendments to Accounting Standard for Retirement              of approximately 261.2 billion Indonesian rupiahs
Benefits (Part 3)” (ASBJ Statement No. 19, issued on July 31,          (equivalent to approximately ¥2,690 million at the
2008).                                                                 exchange rate prevailing on March 31, 2010), and a
      This adoption did not affect the Company’s income.               provisional payment was made on February 12, 2010. As
      Furthermore, this adoption did not create any variance in        the Company views as extremely irrational the stance of
retirement benefit amounts.                                            the Indonesian tax authorities, which is that no royalty
                                                                       payment deductions may be claimed, the Company
                                                                       submitted a written statement of objection to the
                                                                       authorities on April 14, 2010.
                                                                            In line with its submission of this written statement of
                                                                       objection, the Company reported its royalties under the
                                                                       comparable uncontrolled price method and, taking the
                                                                       possibility of a refund into consideration, stated this



                                    DAIHATSU MOTOR CO., LTD. 29    ANNUAL REPORT 2010
                                                                                Notes to Consolidated Financial Statements



   amount in the “other” category within “current assets.”              (Notes to consolidated statements of changes
        Having been subjected to a tax audit by the                     in net assets)
   Indonesian tax authorities during the year ended March 31,
   2009, the Company estimated its future taxation risk in the          1. Issued shares
   same manner as during the period prior to the decision to
                                                                        Class of shares                     Common stock (shares)
   levy this tax, stating the amount in “accrued income taxes”
   within “current liabilities.”                                        March 31, 2009                          427,122,966
                                                                           Increase                                        —
2. Contingent Liabilities                                                  Decrease                                        —
                                                      Millions of yen   March 31, 2010                          427,122,966
                                                          2010
Financial institution loans guarantee for employees        ¥61
Trade notes receivable, discounted                          86          2. Treasury stock
                                                                        Class of shares                     Common stock (shares)
                                                                        March 31, 2009                            1,037,893
                                                                           Increase                                   55,009
(Notes to consolidated statements of income)                               Decrease                                        —
                                                                        March 31, 2010                            1,092,902
(1) The following research and development expenses, in the
    amount of ¥43,734 million, were included in cost of sales           Note: Breakdown of the increase in the number of treasury stocks
    and selling, general and administrative expenses for the                  (common stocks) is as follows:
    year ended March 31, 2010.
                                                                             Increased shares by purchasing the financial shares  5,971 shares
                                                                             Shares attributable to the Company owing to changes
(2) The subsidy for facilities comprises delivered amounts of a                in investment ratios of affiliated companies      49,038 shares
    subsidy promoting the introduction of highly energy
    efficient systems for housing and structures, a regional
    business promotion subsidy from Fukuoka Prefecture, a               3. Items related to share options
    special subsidiary for corporate structural investment from         None
    Shiga Prefecture, a regional business promotion subsidy
    from Shimane Prefecture and a business expansion                    4. Cash dividends
    subsidy from the city of Izumo.                                     (1) Dividends paid in fiscal 2010
                                                                                                                    Resolution
(3) In relation to a brand changeover in China, the Company
                                                                                                       Annual general          Board of
    recorded signage disposal and other expenses of ¥1,031                                               meeting of            Directors
    million and a loss on the transfer of investment securities of                                  shareholders held on     meeting held on
    ¥984 million.                                                                                      June 26, 2009       November 2, 2009
                                                                        Class of shares              Common stock              Common stock
(4) During the fiscal year under review, impairment losses were         Total dividends
    recorded on the following assets.                                    (Millions of yen)                       2,132                     2,132
                                                                        Cash dividends per
Purpose       Category      Location                                     share                                    5                  5
Idle          Land          Tochigi Prefecture, other locations         Basis date                   March 31, 2009 September 30, 2009
                                                                        Effective date                June 29, 2009 November 30, 2009
   The Company classifies its assets by grouping the assets
   for vehicles and idle assets.
        Above assets will not be utilized in the future and their       (2) Dividends whose basis date belongs to fiscal 2010, but
   market value has already decreased significantly.                        effective date of dividends falls in the next fiscal year 2011.
   Therefore, the Company determined to write -down their                                                                       Resolution
   book value to a recoverable value. As a result, a special                                                                 June 29, 2010
   loss is recorded as the impairment loss (¥164 million)                                                                 Annual general meeting
                                                                                                                             of shareholders
   related to such write -down.
        In addition, the recoverable value is determined based          Class of shares                                       Common stock
   on their net sales price, and faire value is considered              Source of dividends                                 Retained earnings
   negligible. Market value for land is determined based on             Total cash dividends (Millions of yen)                         2,985
   the appraisal value as determined by a real estate                   Cash dividends per share                                            7
   appraiser.                                                           Basis date                                           March 31, 2010
                                                                        Effective date                                         June 30, 2010
(5) Advanced depreciation of property, plant and equipment is
    the amount of the compensation mentioned in (2) above as
    subsidies that are directly deducted from acquisition costs.




                                   DAIHATSU MOTOR CO., LTD. 30          ANNUAL REPORT 2010
                                                                                      Notes to Consolidated Financial Statements



(Notes to consolidated statements of cash                                     (As a lessor)
flows)                                                                        Acquisition cost, accumulated depreciation and net book
                                                                              value of leased assets were as follows:
1. Cash and cash equivalents at the end of the period are                                                                              Millions of yen
   reconciled to items on the consolidated balance sheets as                                                                               2010
   follows:
   (As of March 31, 2010)                                                     (1) Acquisition cost:
                                                            Millions of yen       Machinery, equipment and vehicles                         ¥ 41
                                                                2010              Other (property, plant and equipment)                       28
Cash on hand and in banks                                    ¥ 52,869                Total                                                  ¥ 70
  Time deposits with original maturities of                                       Accumulated depreciation:
   more than 3 months                                                (388)        Machinery, equipment and vehicles                         ¥ 35
Deposits                                                           59,259         Other (property, plant and equipment)                       25
Total                                                        ¥111,740                Total                                                  ¥ 61
                                                                                  Net book value:
Assets and liabilities associated with financial lease                            Machinery, equipment and vehicles                         ¥    5
transactions that were recorded in fiscal 2010 amounted to                        Other (property, plant and equipment)                          3
¥7,560 million, respectively.                                                        Total                                                  ¥    8
                                                                              (2) Future minimum lease payments equivalent:
                                                                                  Due within one year                                       ¥  9
                                                                                  Due after one year                                           7
(Lease transactions)
Financial leases that do not transfer ownership prior to the                         Total                                                  ¥ 17
first year of application of “Accounting Standards for Lease                  (3) Lease revenues and depreciation:
Transactions” were as follows:                                                    Lease revenues                                            ¥ 14
                                                                                  Depreciation                                                 4
(As a lessee)
Pro forma information regarding acquisition cost, accumulated                 The amount equivalent to future minimum lease payments is calculated
depreciation and net book value of leased assets were as                      using the inputted income method because future minimum lease
                                                                              payments and the estimated remaining value account for only a small
follows:
                                                                              proportion of operating receivables.
                                                            Millions of yen
                                                                2010
                                                                              1. Financial lease transactions
(1) Acquisition cost equivalent:
    Machinery, equipment and vehicles                          ¥ 4,854        (As a lessee)
    Other (property, plant and equipment)                        1,914        (1) Lease assets
                                                                              Finance lease transactions that do not transfer ownership
       Total                                                   ¥ 6,769
                                                                              Property, plant and equipment
    Accumulated depreciation equivalent:                                      Primarily, large -scale computing and peripheral equipment,
    Machinery, equipment and vehicles                          ¥ 2,926        and molds
    Other (property, plant and equipment)                        1,325
       Total                                                   ¥ 4,252        (2) Method of depreciating lease assets
                                                                              Straight -line method with a residual value of zero and the
    Net book value equivalent:                                                lease period as the service life
    Machinery, equipment and vehicles                          ¥ 1,928
    Other (property, plant and equipment)                          589        2. Operating lease transactions
       Total                                                   ¥ 2,517
                                                                              (As a lessee)
(2) Future minimum lease payments equivalent:
    Due within one year                                        ¥      854                                                              Millions of yen
    Due after one year                                              1,662                                                                  2010
        Total                                                  ¥ 2,517        Future minimum lease payments:
                                                                                 Due within one year                                      ¥ 326
The amounts equivalent to the acquisition cost of leased assets and future
                                                                                 Due after one year                                        2,291
minimum lease payments are calculated based upon the inputted interest
expense method because future minimum lease payments account for only            Total                                                    ¥2,618
a small proportion of property, plant and equipment.

(3) Lease payments and depreciation equivalent:                ¥     937      (As a lessor)
    Lease payments
                                                                                                                                       Millions of yen
    Depreciation equivalent                                          937
                                                                                                                                           2010
(4) Method of calculating depreciation equivalent amount for                  Future minimum lease income:
    leases:                                                                      Due within one year                                      ¥      76
The depreciation equivalent amount of the leases is calculated using the
straight -line method using the remaining balance divided by the remaining       Due after one year                                             936
years in the lease term.                                                         Total                                                    ¥1,013




                                        DAIHATSU MOTOR CO., LTD. 31           ANNUAL REPORT 2010
                                                                          Notes to Consolidated Financial Statements



(Financial Instruments)                                            2. Fair Value of Financial Instruments
Fiscal year ended March 31, 2010                                   Fair values as of March 31, 2010 (the end of the fiscal year
                                                                   under review) and differences between fair values and
(Additional information)                                           consolidated balance sheet amounts are as follows:
From the fiscal year under review, the Company has adopted                                                   Millions of yen
accounting standards entitled “Accounting Standard for                                       Consolidated
Financial Instruments (ASBJ Statement No.10, issued on                                       balance sheet     Fair value      Difference
                                                                                                amount
March 10, 2008)” and “Guidance on Disclosures about Fair
Value of Financial Instruments” (ASBJ Guidance No.19,              (1) Cash on hand and in
issued on March 10, 2008).                                             banks                   ¥ 52,869       ¥ 52,869                 —
                                                                   (2) Deposits                  59,259         59,259                 —
1. Financial Instruments                                           (3) Trade notes and
(1) Policies on Financial Instruments                                  accounts receivable      301,206         294,637        ¥ (6,569)
The Daihatsu Group raises funds through borrowings from            (4) Investments in
banks and other financial institutions for such purposes as            securities                  41,513        38,337           (3,176)
sales financing and the acquisition of property, plant and         (5) Long -term loans
equipment. Temporary surpluses are placed in short -term               receivable                 6,995           6,999                3
deposits with its parent company, Toyota Motor Corporation,            Total assets             461,845         452,102           (9,742)
and banks and other financial institutions. Derivative             (1) Trade notes and
transactions are used to hedge exchange rate fluctuation risks         accounts payable         292,717         292,717                —
on trade liabilities and financial obligations denominated in      (2) Short -term debt         109,644         109,644                —
foreign currencies. The Company does not engage in                 (3) Accrued Income
speculative trading.                                                   taxes                     12,924          12,924               —
                                                                   (4) Long -term debt           71,096          70,130             (965)
(2) Financial Instrument Content and Risk                              Total liabilities        486,383         485,417             (965)
Trade notes and accounts receivable, which are claimable
assets, are subject to customer credit risk. Investments in            Derivative
                                                                       transactions            ¥      (68) ¥           (68)            —
securities, most of which are equity securities held to cement
operations with business partners, are subject to price
fluctuation risk.                                                  Note 1. Method of calculating fair values of financial
       Trade notes and accounts payable, which are trade                   instruments and matters related to investments in
liabilities, are payable within one year.                                  securities and derivative transactions
       Bank loans, which are taken out to fund working capital
and capital investment, are subject to interest rate fluctuation   Assets
risk in line with changes in market and credit conditions.         (1) Cash on hand and in banks and (2) Deposits
       As derivative transactions are used to hedge the risk of        As settlement terms on these items are short, and their fair
future exchange rate fluctuations, the Company engages in              values are nearly equal to their book values, their book
forward exchange contracts to hedge risk in relation to trade          values are taken as their fair values.
liabilities that are denominated in foreign currencies and         (3) Trade notes and accounts receivable
employs currency swaps to hedge risks related to bank loans            Fair value is calculated by grouping these receivables by
that are denominated in foreign currencies.                            period and discounting each to their present value by a
                                                                       rate that takes into account their periods to maturity and
(3) System for Managing Risks Related to Financial Products            credit risk.
With regard to trade liabilities, the Company manages              (4) Investments in securities
transactions for each business partner by payment due date             Quoted prices on securities exchanges are taken as fair value.
and balance. Market prices on investments in securities are            For details on investments in securities, refer to the section
periodically checked and reported to the Board of Directors.           entitled “(Short -term investment securities and investment
     Reports on the Group’s status on bank loans are                   securities).”
submitted to the Board of Directors.                               (5) Long -term loans receivable
     The counterparties to all such transactions are highly            Fair value is calculated by discounting these instruments to
credible banks, therefore the credit risk is extremely low.            their present value, adding a percentage for the credit
These transactions are engaged in based on internal                    spread to the appropriate indicator.
regulations and in -house rules approved recognized by the
Board of Directors, and are reported on a regular basis to the     Liabilities
Board of Directors and other important meetings.                   (1) Trade notes and accounts payable and (2) Short -term debt
                                                                       As settlement terms on these items are short, and their fair
                                                                       values are nearly equal to their book values, their book
                                                                       values are taken as their fair values.
                                                                   (3) Accrued income taxes
                                                                       As settlement terms on these items are short, and their fair
                                                                       values are nearly equal to their book values, their book
                                                                       values are taken as their fair values.
                                                                   (4) Long -term debt
                                                                       The fair value of long -term debt is determined by
                                                                       discounting the total amount of principal and interest by the
                                                                       assumed interest rate on new borrowings of the same type.




                                  DAIHATSU MOTOR CO., LTD. 32      ANNUAL REPORT 2010
                                                                                                Notes to Consolidated Financial Statements



Derivative transactions
  For details on derivative transactions, refer to the section entitled “(Derivative transactions).”

Note 2. As unlisted equity securities (value stated in the consolidated balance sheets of ¥29,373 million) have no quoted market
        value and their fair value is not readily available, they are not included in “(4) Investments in securities.”

Note 3. Expected redemption amounts of financial obligations with maturities and investments in securities after the balance sheet
        date.
                                                                                                                   Millions of yen
                                     Type                                                               More than 1 year     More than 5 years            More than
                                                                                    1 year or less        to 5 years             to 10 years              10 years
Cash on hand and in banks                                                          ¥ 52,869                     —                       —                       —
Trade notes and accounts receivable                                                 219,812               ¥ 80,757            ¥        636                      —
Investments in securities
   Other investments in securities with maturities
    (Japanese government bonds)
Long -term loans receivable                                                              —                     288                     —                       —
                                                                                      2,212                  2,806                  1,664             ¥       312
   Total                                                                           ¥274,894               ¥ 83,851            ¥     2,301             ¥       312



Note 4. Expected repayment amounts of long -term debt falling due after the consolidated balance sheet date.
                                                                                             Millions of yen
               Type                                            More than 1 year   More than 2 years More than 3 years       More than 4 years
                                         1 year or less                                                                                           More than 5 years
                                                                 to 2 years          to 3 years            to 4 years          to 5 years
Long -term debt                          ¥11,497                 ¥15,998             ¥32,125               ¥16,539                ¥ 5,683                 ¥   749
  Total                                  ¥11,497                 ¥15,998             ¥32,125               ¥16,539                ¥ 5,683                 ¥   749




(Securities)
Fiscal year ended March 31, 2010

1. Other securities with market values                                                  2. Other securities sold in this fiscal year
                                               Millions of yen                                                                       Millions of yen
            Type               Consolidated                                                          Category          Proceeds from Total gain on Total loss on
                                                 Acquisition
                               balance sheet                       Difference                                              sales           sales       sales
                                                   cost
                                  amount
                                                                                        Stocks                                    ¥8             ¥4               —
Securities whose
 carrying value exceeds                                                                    Total                                  ¥8             ¥4               —
 their acquisition cost:
   Stocks                         ¥33,180         ¥11,668           ¥21,512
   Bonds                              288             282                 5
   Subtotal                        33,468          11,950            21,517
Securities whose
 carrying value dose
 not exceeds their
 acquisition values:
   Stocks                             118             168                (49)
   Bonds                               —               —                  —
   Subtotal                           118             168                (49)
   Total                          ¥33,587         ¥12,119           ¥21,467
Note: The market values of listed marketable securities are principally
      determined by closing prices on the Tokyo Stock Exchange.




                                         DAIHATSU MOTOR CO., LTD. 33                   ANNUAL REPORT 2010
                                                                                                   Notes to Consolidated Financial Statements



(Derivative transactions)
Fiscal year ended March 31, 2010

1. Derivative Instruments for Which Hedge Accounting is Applied
(Currency)
                                                                                                                 Millions of yen
                                     Type                                          Contract/notional Contract/notional         Fair value              Gain (loss)
                                                                                       amount        amount/over 1 year
Non -market transactions
  Foreign currency forward contracts:
      Buying Yen                                                                           ¥5,806                     —                  ¥(29)                ¥(29)
      Selling U.S. dollars                                                                    372                     —                     0                    0
  Currency swaps:
      Yen receipt, Indonesian rupiah payment                                                   437                    —                   (40)                  (40)
  Total                                                                                    ¥6,616                     —                  ¥(68)                ¥(68)
Notes: Calculation of fair value is based on information provided by the financial institutions.




(Retirement Benefits)
1. Outline of retirement benefit plans                                                   3. Items regarding retirement benefit-related costs
The Company and its consolidated subsidiaries have                                           Fiscal year ended March 31, 2010
corporate pension funds, welfare pension funds plans, tax -                                                                                            Millions of yen
qualified pension plans, termination allowance plans and
                                                                                                                                                           2010
defined contribution plans.
     The Company has transferred some portion of its                                     a. Service costs                                                  ¥15,928
termination allowance systems to the defined contribution                                b. Interest costs                                                   2,084
plans.                                                                                   c. Expected return on pension plan assets                            (781)
                                                                                         d. Amortization of prior service obligations                         (437)
2. Items regarding accrued retirement benefit                                            e. Amortization of actuarial differences                            3,002
   obligations for employees
   As of March 31, 2010                                                                  f. Total retirement benefit -related costs
                                                                                            (a+b+c+d+e)                                                    ¥19,797
                                                               Millions of yen
                                                                   2010                  Notes:
                                                                                         1. Retirement benefit -related costs for consolidated subsidiaries adopting
a. Retirement benefit obligations                               ¥(166,146)                  the simplified method are included in a. service costs.
b. Pension plan assets                                             78,054                2. The service cost of ¥9,992 million for consolidated subsidiaries who
                                                                                            have adopted a multi -employer pension plans is included in “a. Service
c. Accrued retirement benefits for employees                       63,247                   costs” for fiscal 2010. The amount of pension contributions was ¥1,365
d. Pre -paid pension plan expenses                                    364                   million for fiscal 2010.
                                                                                         3. In fiscal 2010, service costs include ¥745 million in pension contributions
e. Balance (a+b+c+d)                                            ¥ (25,209)                  to defined contribution plans.
(Details of balance)
f. Unrecognized actuarial differences                           ¥ (32,108)               4. Assumptions used in accounting for retirement
g. Unrecognized prior service obligations                                                   benefit obligations
   (decrease of obligations)                                        6,899                a. Method of attributing           Straight -line method
h. Balance (f+g)                                                ¥ (25,209)                  benefits to period of
                                                                                            service
Notes:                                                                                   b. Discount rate                   2.0%
1. Certain consolidated subsidiaries have adopted a simplified method for
                                                                                         c. Expected rate of return         2.0%
   calculating retirement benefit obligations.
2. The figures as of March 31, 2010, include retirement benefit obligations                 on pension plan assets
   and pension plan asset amounts based on the balance of the minimum                    d. Amortization period for         15 -18 years
   funding standard for the calculation of pension financing, and the                       prior service obligation        Amortized on a straight -line
   difference of ¥17,697 million is included in accrued retirement benefits                                                 basis over the average estimated
   for employees.                                                                                                           remaining service years of
3. The decrease in retirement benefit obligations resulted from the transfer
                                                                                                                            employees from the time such
   of a portion of the Company’s termination allowance plans to defined
   contribution plans.                                                                                                      liability arises
                                                                                         e. Amortization period for         14 -21 years
                                                                                            actuarial differences           Amortized on a straight -line
                                                                                                                            basis over the average remaining
                                                                                                                            service years of employees from
                                                                                                                            the year after the gain or loss
                                                                                                                            occurs




                                          DAIHATSU MOTOR CO., LTD. 34                    ANNUAL REPORT 2010
                                                                                               Notes to Consolidated Financial Statements



(Tax effect accounting)
1. The main components of deferred tax assets and                                     2. Main components of the significant differences
   liabilities are as follows:                                                           between the statutory tax rate and the effective
                                                             Millions of yen
                                                                                         tax rate after adjustments:
                                                                 2010                                                                       Millions of yen
                                                                                                                                                2010
Deferred tax assets:
   Accrued retirement benefits for employees                   ¥25,552                Statutory tax rate                                        40.5%
   Accrued expenses                                             18,148                (Adjustments)
   Deferred expenses for sales promotion, etc.                                        Equity in earnings of affiliates                           (7.5)
    under the corporate income tax law                             1,732              Difference in effective tax rate for overseas
   Accrued product warranty                                        2,268               subsidiaries                                              (7.0)
   Tax loss carry forward                                            195              Tax credit                                                 (3.4)
   Allowance for doubtful accounts                                   386              Entertainment expenses and others                           2.8
   Other                                                         13,013               Amortization of goodwill                                    2.5
Subtotal                                                         61,296               Valuation allowance                                         1.3
Less valuation allowance                                          (2,370)             Other                                                       3.1
Total deferred tax assets                                        58,926               Effective tax rate after adjustments                      32.3%

Deferred tax liabilities:
   Net unrealized holding gain on securities                       (8,747)
                                                                                      (Investment and Rental Property)
                                                                                      Fiscal year ended March 31, 2010
   Reserve for advanced depreciation of
    property, plant and equipment                                 (5,087)
                                                                                      (Additional information)
   Other                                                          (4,450)
                                                                                      From the fiscal year under review, the Company adopted the
Total deferred tax liabilities                                  (18,286)              “Accounting Standard for Disclosures about Fair Value of
Net deferred tax assets                                        ¥40,640                Investment and Rental Property (ASBJ Statement No. 20,
                                                                                      November 28, 2008) and the “Guidance on Accounting
Note: Net deferred tax assets for the fiscal year under review are included           Standard for Disclosures about Fair Value of Investment and
      in the following consolidated balance sheet line items.
      Current assets–Deferred tax assets                     ¥26,787 million          Rental Property” (Accounting Standards Board of Japan
      Fixed assets–Deferred tax assets                        19,957                  Guidance No. 23, November 28, 2008).
      Current liabilities–Deferred tax liabilities               (665)
      Long -term liabilities–Deferred tax liabilities          (5,439)                As the amount of investment and rental property owned by
                                                                                      the Company is insignificant, this note has been omitted.



(Segment Information)
Information by business segment
Information by business segment has been omitted because the automobile related business accounts for in excess of 90% of total
sales, operating income, and assets of all segments.

Information by geographical area
                                                                                                   Millions of yen
                                                                                            Europe and                       Corporate or
Fiscal year ended March 31, 2010                           Japan               Asia           others              Total       elimination   Consolidation
I. Sales and operating income (loss):
     Sales:
        Sales to outside customers                     ¥1,193,064         ¥ 368,564        ¥    13,098       ¥1,574,727   ¥          —      ¥1,574,727
        Inter area sales and transfer                      83,499            12,646                 —            96,146         (96,146)            —
            Total sales                                 1,276,563           381,211             13,098        1,670,873         (96,146)     1,574,727
        Operating expenses                              1,253,280           363,782             13,108        1,630,171         (96,191)     1,533,979
        Operating income                                   23,283            17,429                (10)          40,702              45         40,747
II. Assets                                                977,459           161,203              8,989        1,147,651         (13,546)     1,134,105
Notes: 1. Country and regional classifications are made on the basis of geographical proximity.
       2. The principal countries and regions represented in the above categories are as follows:
          (1) Asia:             Malaysia, Indonesia
          (2) Europe and other: Germany




                                        DAIHATSU MOTOR CO., LTD. 35                   ANNUAL REPORT 2010
                                                                                               Notes to Consolidated Financial Statements



Overseas sales
                                                                                                                       Millions of yen
Fiscal year ended March 31, 2010                                                                 Asia             Europe             Other                Total
I. Overseas net sales                                                                       ¥ 387,853         ¥    41,230        ¥        16,083      ¥ 445,167
II. Consolidated net sales                                                                                                                             1,574,727
III. Percent of consolidated net sales                                                            24.6%                2.7%                1.0%           28.3%
Notes: 1. Country and regional classifications are made on the basis of geographical proximity.
       2. The principal countries and regions represented in the above categories are as follows:
          (1) Asia:   Malaysia, Indonesia
          (2) Europe: Italy, Germany
          (3) Other: Algeria, Egypt
       3. Overseas sales represent sales outside of Japan by the Company and its consolidated subsidiaries.




Related Party Information
Fiscal year ended March 31, 2010

1. Related party transaction
                                                                               Owning (or                               Amount of                        Balance at
                Name of                      Paid -in       Principal           owned)      Business     Contents of    transaction                       year end
    Type         related       Address                                                                                                      Account
                                             capital        business          shares with relationship   transaction
                company                                                                                                 Millions of yen                 Millions of yen
                                                                              voting rights
 Parent  Toyota Motor Toyota,    ¥397,049 Automobile    (Owned)                           Provision of                            Accounts
 Company Corporation Aichi       million  manufacturing Directly                                         Sales of
                                                                                          consigned                               receivables
                      Prefecture                                                                         consigned
                                                        51.53%                            vehicles                       ¥333,009 and other                ¥48,717
                                                                                                         cars, and
                                                                                          and OEM                                 current
                                                        Indirectly                                       others
                                                                                          vehicles                                assets
                                                        0.13%
                                                                                                                                  Trade
                                                                                          Concurrent                              accounts
                                                                                          directors, Purchase of
                                                                                          etc.       automotive          ¥137,087 payable and              ¥28,111
                                                                                                                                  accrued
                                                                                                     parts                        expenses,
                                                                                                                                  and other
                                                                                                         Deposits
                                                                                                         for cash          ¥40,828 Deposits                ¥59,259
                                                                                                         management
                                                                                                         system

Notes:
1. Amount of transaction stated above does not include consumption taxes, while Balance at year -end includes consumption taxes.
2. Terms of transactions and decision -making policy of the terms
   (a) The sales prices for consigned cars are determined, in the same way as terms of ordinary transactions, by negotiation based on our proposed price while
       paying due consideration to the market prices.
   (b) The purchase prices of automobile parts are determined, in the same way as terms of ordinary transactions, by negotiation while paying due consideration
       to the given quotes and market prices.
   (c) The interest rate of the deposit to the Cash Management System (CMS) is determined by considering the market interest rate. The amounts of transaction
       recorded are the average balances during the period.

2. Notes regarding the parent company or affiliated companies
(a) Information regarding the parent company Toyota Motor Corporation (Listed on the Tokyo Stock Exchange, Osaka Securities
    Exchange, Nagoya Stock Exchange, Fukuoka Stock Exchange, Sapporo Stock Exchange, New York Stock Exchange and the
    London Stock Exchange)
(b) Overview of financial information of important affiliated companies Nothing to report.



(Per Share Information)
                                                            Millions of yen            Each amount per share is calculated based on following
                                                                                       items:
                                                                2010
Net assets per share                                          ¥804.43                  1. Net assets per share
Net income per share                                            49.66                                                                                 Millions of yen
                                                                                                                                                          2010
Diluted net income per share is not listed in the above since
there was no potential share dilution.                                                 Total net assets                                                ¥396,332
                                                                                       Amount deducted from total net assets                             (53,618)
                                                                                          (Of the above amount, minority interests)                      (53,618)
                                                                                       Total net assets for common stocks                              ¥342,714
                                                                                       Number of issued and outstanding common
                                                                                        stocks at the fiscal year -end (thousand shares)                426,030



                                         DAIHATSU MOTOR CO., LTD. 36                   ANNUAL REPORT 2010
                                                                                                Notes to Consolidated Financial Statements



2. Net income per share                                                                on June 4, 2010). This revision includes an additional
                                                              Millions of yen
                                                                                       assessment on net sales for the year of 686.2 billion
                                                                                       Indonesian rupiahs (¥6,999 million at the abovementioned
                                                                  2010
                                                                                       exchange rate) and an assessment of 376.0 billion rupiah
Net Income                                                     ¥ 21,162                (¥3,836 million at the abovementioned exchange rate) on
Amount not attributable to common stocks                             —                 royalty transactions with affiliated companies and a provisional
    (Of the above amount, bonuses for directors                                        tax refund of 105.7 billion Indonesian rupiahs (¥1,078 million
     and corporate auditors appropriated from                                          at the abovementioned exchange rate). The Indonesian tax
     retained earnings)                                              —                 authorities, by comparing a sample profit ratio and the profit
Net income for common stocks                                   ¥ 21,162                ratio of Astra Daihatsu, claim that Astra Daihatsu has
Average number of issued and outstanding                                               understated its sales, and says that it will disallow the entire
 common stocks during the fiscal year -end                                             royalty exemption. The Company considers this decision
 (thousand shares)                                              426,072                extremely irrational and has said that neither it nor its
                                                                                       consolidated subsidiary could accept this revised disposition.
                                                                                       Consequently, the Company has filed for cancellation of this
                                                                                       disposition. As it is difficult at present to forecast the
                                                                                       conclusion of this matter, the Company and its consolidated
(Important Subsequent Events)                                                          subsidiary are unable to forecast its impact on their finances.
On June 4, 2010, the Company’s consolidated subsidiary in                              Furthermore, the Company is calculating its tax liabilities
Indonesia, P.T. Astra Daihatsu Motor, received from the                                following March 31, 2010, in the same manner as in the past.
Indonesian tax authorities revised statement of sales and the                          At present, the Company has received no instruction from the
values of inter -company royalty transactions to affiliated                            authorities to do otherwise.
companies during the fiscal year ended March 31, 2009, of
approximately 956.5 billion Indonesian rupiahs (equivalent to
approximately ¥9,757 million at the exchange rate prevailing



Consolidated Supplementary Schedule
Schedule of Borrowings
                                                                                                Millions of yen              %
                                       Category                                        As of March 31, As of March 31, Average interest         Repayment period
                                                                                            2009              2010          rate
Short -term borrowings                                                                     ¥115,053         ¥ 98,147                 0.78                     —
Current portion of long -term debts                                                          38,793           11,497                 1.37                     —
Current portion of lease repayment obligations                                                4,411           11,175                 7.98                     —
Long -term debt (excluding current portion) (Note 2)                                         45,458           71,096                 1.33      April 25, 2011, to
                                                                                                                                               January 31, 2021
Lease obligations (excluding current portion)                                                 4,386              2,571               4.71                     —
Funds raised through the liquiditization of interest -bearing debt
 among consolidated companies                                                                15,575           11,755                 0.81                     —
Subtotal                                                                                   ¥214,880         ¥206,244                   —                      —
Notes: 1. “Average interest rate” refers to the weighted average interest rate on all the balance of total borrowings at the end of the fiscal year.
       2. Long -term debt and lease obligations (including current portion) coming due within five years of the balance sheet date are as follows.

                                                              Millions of yen
                              More than 1 year     More than 2 years More than 3 years       More than 4 years
                                to 2 years            to 3 years            to 4 years          to 5 years
Long -term debt                 ¥15,998               ¥32,125              ¥16,539               ¥ 5,683
Lease obligations                 2,027                   365                  102                    42


Other
Consolidated net sales by quarter
                                                                              First quarter      Second quarter       Third quarter        Fourth quarter
                                                                        (April 1, 2009, to June (July 1, 2009, to  (October 1, 2009, to (January 1, 2010, to
                                                                                30, 2009)      September 30, 2009) December 31, 2009)     March 31, 2010)
Net sales (Millions of yen)                                                     ¥355,704            ¥363,204                ¥391,090               ¥464,727
Income before income taxes (Millions of yen)                                       6,083               5,810                  14,215                 15,677
Net income (Millions of yen)                                                       3,554               3,251                   8,058                  6,299
Net income per share (Yen)                                                          8.34                7.63                   18.91                  14.78




                                         DAIHATSU MOTOR CO., LTD. 37                   ANNUAL REPORT 2010
 Investor Information


    Directors, Corporate Auditors and                                        Corporate Data (As of April 1, 2010)
    Executive Officers (As of June 29, 2010)                             Company Name                            Daihatsu Motor Co., Ltd.
Chairman                                                                 Founded                                 March 1. 1907
   Kousuke Shiramizu                                                     Paid-in Capital                         ¥28,404 million
Vice Chairman
                                                                         Number of Employees                     13,452
   Katsuhiko Okumura
President
   Koichi Ina                                                                Shares of Common Stock (As of March 31, 2010)
Executive Vice Presidents
   Katsuyuki Kamio      Product Marketing Group,                         Authorized:                              1,600,000,000 shares
                        Sales & Marketing Group
                                                                         Issued:                                     427,122,966 shares
   Masanori Mitsui      R&D Group, Headquarters of Production
                        Group, Quality Generalization Group,
                        Quality Group, Purchasing Group                  Number of Shareholders:                                       16,115
                                                                         (Of the total number of the shareholders, there were 1,551 shareholders with less than
Directors (Senior Managing Executive Officers)                           one trading unit accounting for 1,223 thousand shares.)
   Masahiro Takahashi   Administration Group
   Takashi Nomoto       Indonesia & Malaysia Operations Group,           Shareholders Register Manager
                        President, P.T. Astra Daihatsu Motor
                                                                         Mitsubishi UFJ Trust and Banking Corporation
   Kenji Baba           Sales & Marketing Group
   Naoto Kitagawa       Product Marketing Group                          Services Corporation
Statutory Corporate Auditor                                              Mitsubishi UFJ Trust and Banking Corporation
   Kunihiko Morita                                                       Osaka Corporate Agency Division
Corporate Auditors                                                       3 -6 -3 Fushimimachi Chuo -ku, Osaka 541 -8502, Japan
   Kosuke Ikebuchi*
   Takashi Matsuura*
   Kenji Yamamoto*                                                           Major Shareholders and Ownership
Senior Executive Officers                                                                         Name                               Share holding ratio (%)
   Hiroshi Okano        Purchasing Group
   Katsuhiro Ikoma      Quality Group                                    Toyota Motor Corporation                                              51.19
   Takamasa Kurinami    Sales & Marketing Group                          Japan Trustee Services Bank, Ltd.                                       2.64
   Masahiro Fukutsuka   R&D Group                                        (Trust account)
Executive Officers                                                       The Master Trust Bank of Japan, Ltd.                                    2.36
   Sunao Matsubayashi R&D Group (Compact Cars                            (Trust account)
                        Development for Overseas)
   Hitoshi Horii        Sales & Marketing Group                          Japan Trustee Services Bank, Ltd.                                       2.19
                        (Domestic Sales, BR** Special                    (Trust account 9)
                        Purpose Vehicle Project Dept.)                   The Bank of Tokyo -Mitsubishi UFJ, Ltd.                                 1.13
   Noriyoshi Matsushita Vice President, Akashi -Kikai
                        Industry Co., Ltd                                Ohgi Shokai Co., Ltd.                                                   1.10
   Shigenobu Uchikawa Administration Group (Tokyo Office,                Mitsui Sumitomo Insurance Co., Ltd.                                     0.96
                        Public Relations, Government &
                        Industrial Affairs Division)                     Nissay Dowa General Insurance Co., Ltd.                                 0.85
   Masahiko Kawatsu     Product Marketing Group (Styling)
                                                                         Nippon Life Insurance Company                                           0.71
   Makoto Irie          Administration Group (Personnel
                        & General Affairs Division)                      Sumitomo Mitsui Banking Corporation                                     0.69
   Osamu Tada           Administration Group (Corporate
                        Planning Division), BR Promotion Div.
   Shigeharu Toda       Sales & Marketing Group (Overseas Sales
                        & Marketing Division), Indonesia & Malaysia          Stock Price Trends (From April 1, 2009, to March 31, 2010)
                        Operations Group (Headquarters Office)           (Yen)
   Yoshifumi Kishimoto  Headquarters of Production Group (Head           1,200
                        Ikeda Plant, Kyoto Plant, Shiga Ryuo
                        Plant, Global Production Support Center)         1,100
   Shinsuke Hori        R&D Group (K -Car*** Development)
   Hiroshi Kajikawa     Vice President, Aoi Machine                      1,000
                        Industry Co., Ltd.
   Makoto Mizutani      Headquarters of Production Group (Production       900
                        Control Division, Global Production Planning
                        Division, Logistics Division)
                                                                           800
   Keiichi Shirakawa    Headquarters of Production Group
                        (Power Train Production Engineering
                        Division, Vehicle Production Engineering           700
                        Division, Machinery Engineering Division)                2009                                         2010
                                                                                 Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.
   Hajime Nishimura     Indonesia & Malaysia Operations Group
                        (Senior Director, P.T. Astra Daihatsu Motor)                 Figures are average closing prices, simple averages of closing prices on
                                                                                     trading days of the Tokyo Stock Exchange. Amounts of less than one yen
   Miki Ibaraki         R&D Group (Power Train Development)                          are rounded.
                        Environmental Affairs Division,
                        Management Department for Toyota
* Outside corporate auditors under the Corporate Law of Japan
** Business Reform
*** Mini vehicles


                                           DAIHATSU MOTOR CO., LTD. 38   ANNUAL REPORT 2010
                                                                                                                                       Investor Information




    Major Domestic and Overseas Affiliated Companies (As of June 30, 2010)
                                                               Capital or
                Name                   Registered address     investment                                  Major products and lines of businesses
                                                            (millions of yen)

Major consolidated subsidiaries
                                                                                Manufacture of ATRAI WAGON, HIJET CARGO, HIJET TRUCK, Mira, PLEO**,
Daihatsu Motor Kyushu Co., Ltd. Nakatsu, Oita                        6,000
                                                                                Mira Cocoa, MOVE Conte, TANTO EXE, LUCRA**, Be -go, Rush**
Aoi Machine Industry Co., Ltd.         Konan, Shiga                    300      Manufacture of processed body parts and parts for agricultural equipment
                                                                                Manufacture of engines, drivetrain components, parts for agricultural
Akashi -Kikai Industry Co., Ltd.       Kako, Hyogo                     300
                                                                                equipment, and hydraulic and diesel devices
Daihatsu Metal Co., Ltd.        Kawanishi, Hyogo                     205        Processed cast parts
Daihatsu Credit Co., Ltd.       Chuo, Tokyo                          300        Consumer finance, debt guarantees, and leasing
                                Ikeda, Osaka
Daihatsu Transportation Co., Ltd.                                       30      Vehicle transport handler, cargo and transport, and vehicle transportation
Daihastu Tokyo Sales Co., Ltd.  Chuo, Tokyo                          490        Retail sale of automobiles and automobile parts
                                Tönisvorst,                        EURO
Daihatsu Deutschland GmbH                                                       Wholesale of automobiles and automobile parts
                                Germany                        4.2 million
                                Shah Alam,                            RM
Perodua Manufacturing Sdn. Bhd.                                                 Manufacture of VIVA, Myvi, AVANZA*
                                Malaysia                     140.0 million
                                Jakarta,                               RP       Manufacture of XENIA, TERIOS, Grand Max, Luxio, AVANZA*, Rush**,
P.T. Astra Daihatsu Motor
                                Indonesia                   894.37 billion      Townace**/Liteace** and sale of automobiles and automobile parts

Major affiliates accounted for by the equity method
                                                                                Manufacture and sale of marine engines, land engines, gas turbines,
                                                                                cogeneration systems, and other related parts.
Daihatsu Diesel Mfg. Co., Ltd.         Osaka, Osaka                  2,434
                                                                                Manufacture and sale of diesel engines, gas turbine engines, construction
                                                                                equipment, auto door devices, and aluminum wheels.
                                                                                Manufacture of automobile parts, parts for construction equipment and parts
Metalart Corporation                   Kusatsu, Shiga                2,143
                                                                                for agricultural equipment
                                       Osaka Sayama,                            Manufacture and sale of precision gears, axles for car chassis front and rear,
Asano Gear Co., Ltd.                                                   324
                                       Osaka                                    gear boxes, transmissions, and machine tools
* Consigned vehicles ** OEM vehicles




    Major Domestic Offices/Sales and Service Network
Head Office                                                 Major Domestic Plants (As of June 30, 2010)
1 -1, Daihatsu -cho, Ikeda,                                        Name           Plant location     Established                        Products
Osaka 563 -8651, Japan                                                                             May 1939
Phone: +81 -72 -751 -8811                                                                                           Press parts, machine processed parts
                                                                                  Ikeda,           (Plant No. 1)
http://www.daihatsu.co.jp (Japanese)                        Head (Ikeda) Plant
                                                                                  Osaka            May 1961         ESSE, TERIOS KID, Copen, BOON, COO,
http://www.daihatsu.com (English)                                                                  (Plant No. 2)    PASSO*, bB*, DEX**
                                                                                                   April 1974
                                                                                                                    Engines, transmissions, light alloy castings, etc.
Tokyo Office                                                                      Gamo,            (Plant No. 1)
                                                            Shiga (Ryuo) Plant
19 -15, Shinbashi, 6 -chome, Minato -ku,                                          Shiga            January 1989
                                                                                                                    MOVE, TANTO
Tokyo 105 -0004, Japan                                                                             (Plant No. 2)
                                                                                  Otokuni,                          BOON Luminus, PASSO SETTE**, Probox*,
                                                            Kyoto Plant                            April 1973
Sales and Service Network                                                         Kyoto                             SUCCEED*, Porte*
Domestic Distributors: 62 companies                         Daihatsu Motor                 November 2004            ATRAI WAGON, Dias Wagon**, HIJET CARGO,
Overseas Distributors:                                      Kyushu Co., Ltd.
                                                                                  Nakatsu, (Plant No. 1)            HIJET TRUCK, Mira, PLEO**, Mira Cocoa,
Approx. 130 companies                                       Oita (Nakatsu)
                                                                                  Oita     November 2007            MOVE Conte, TANTO EXE, LUCRA**, Be -go,
                                                            No. 1 and
(As of June 29, 2010)                                       No. 2 Plant                    (Plant No. 2)            Rush**
                                                            Daihatsu Motor
                                                                                  Kurume,
                                                            Kyushu Co., Ltd.                       August 2008      Engines, transmissions, etc.
                                                                                  Fukuoka
                                                            Kurume Plant
                                                            * Consigned vehicles ** OEM vehicles



    Overseas Offices
Beijing Office                                                                       Representative Office in Europe
Room. 3801, Jing Guang Centre, Hujialou,                                             Hermesstraat 8C, 1930, Zaventem,
Chaoyang District, Beijing,                                                          Belgium
100020, P.R. CHINA                                                                   Phone: +32 -(0)2 -725 -0973
Phone: +86 -10 -6597 -4178                                                           Facsimile: +32 -(0)2 -721 -3174
Facsimile: +86 -10 -6597 -4180




                                         DAIHATSU MOTOR CO., LTD. 39                    ANNUAL REPORT 2010

				
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