Hino Motors, Ltd. (Hino), Japan’s leading company in the truck and bus business, has decided to establish a sales company “OOO Hino Motors Sales*” (Hino Russia) through a joint investment with MITSUI & CO., LTD. (Mitsui) to enter the Russian market.

With a steep rise in the price of natural resources in recent years, Russia has achieved rapid economic development and enjoyed a significant increase in demand for trucks. Hino is aiming to enter the Russian market with its full range of truck products (heavy-duty trucks, medium-duty trucks, and light-duty trucks).

Initially, Hino plans to start selling medium and light-duty trucks in the eastern regions of Russia (the Far East, Siberia, and Ural Regions). In the latter half of this year, it will add heavy-duty trucks to its marketing plans.

Furthermore, Hino is considering conducting Russia-wide sales activities. Specifically, the company intends to expand its sales network to the western regions of Russia (such as Moscow) in the near future.

Hino is Toyota Group’s commercial vehicle manufacturer. In Japan, Hino has held the NO.1 share of the market for medium and heavy-duty trucks for 35 consecutive years.

* “OOO” stands for a limited liability company in Russia

Profile of Hino Russia

-Company name: OOO Hino Motors Sales
-Location: Moscow (Headquarters); Vladivostok (Branch Office)
-Established: June 2008 (scheduled)
-Capital: Rubles equivalent to about 400 million yen
-Ratio of capital contribution: Hino 65%, Mitsui 35%
-Number of employees: About 30
-Business: Sales of trucks, buses, and repair parts produced by Hino
Source: Hino Motors Ltd.

Honda Motor Co., Ltd. announced that in the fiscal year ended March 31, 2008, it achieved an all-time record for consolidated net sales and other operating revenue (herein referred to as “revenue”) for the eighth consecutive fiscal year which amounted to JPY 12,002.8 billion (+8.3%) due to increased sales revenue in all business areas.

Consolidated operating income, which amounted to JPY 953.1 billion (+11.9%), also increased to achieve an all-time record for the first time in two years, due to increased profit from higher revenues, cost reduction efforts, and the positive effect of currency exchange rates, despite an increase in incentives in North America, the impact of increased raw material costs, and increases in selling, general and administrative (SG&A) expenses and research and development (R&D) expenses.

Honda also achieved all-time record results for income before income taxes which totaled JPY 895.8 billion (+13.0%) , equity in income of affiliates which totaled JPY 118.9 billion (+15.0%), and net income which totaled JPY 600.0 billion (+1.3%).

Honda plans for a year-end cash dividend of JPY 22 per share. Combined with the fiscal first quarter dividend of JPY 20, the fiscal second quarter dividend of JPY 22 and the fiscal third quarter dividend of JPY 22, the total cash dividend to be paid for the entire fiscal year is expected to be JPY 86 per share, which is an increase of JPY 19 compared to the previous fiscal year.
Source: Honda Motor Co. Ltd.

Honda Motor Co., Ltd. (“Honda”) is currently being examined by the Tokyo Regional Taxation Bureau (“Bureau”) on matters related to a transfer pricing^*1 issue.  In the examination, the Bureau claims that the allocation of the total profit Honda and its Chinese joint venture companies earned from their automobile business in China was not an “arms’ length” allocation but rather that too much of this total profit was realized by the Chinese joint venture companies over the five-year period ended March 31, 2006.

Honda considers corporate governance to be one of its highest corporate management priorities. Honda established prices for its transactions with the Chinese joint venture companies that were intended to comply with the local laws and regulations of both Japan and China and result in the appropriate amount of taxes in both Japan and China. Despite Honda’s continuous assertion over the course of the examination that the allocation of profit between Honda and the Chinese joint venture companies was arms’ length, Honda has not, as of March 31, 2008 or today, been able to reach an agreement with the Bureau on this issue.

Honda prepares its consolidated financial statement in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). According to the Financial Accounting Standards Board Interpretation No. 48 (“FIN48”)^*2, if a tax position is not considered to be more-likely-than-not of being sustained upon examination, a liability for the unrecognized tax benefit needs to be recognized.  In accordance with FIN48, Honda has estimated and recognized a liability and tax expense, including the portion related to this transfer pricing issue, in its consolidated financial statements as of March 31, 2008.

The recognition of the liability does not indicate that, as of today, Honda has received the final result of the tax examination. As the examination has not been completed and is ongoing, Honda will be making continuous efforts, by providing factual explanations, to facilitate the Bureau’s understanding of Honda’s assertion.

Honda did not recognize any tax contingent liability related to this tax issue in its stand alone financial statements in accordance with accounting principles generally accepted in Japan and general accounting practices in Japan.

*1 Transfer Pricing
Taxation rules require that a price used for transactions between related entities—a “transfer price”—be the same as would be used in arms’ length transactions between unrelated entities because the resulting amounts of taxable income earned by the related entities will then be the same as would be earned by unrelated parties. When related parties do not use an arms’ length price in their transactions, their taxable income is calculated by applying the price that would be used for arms’ length transactions between unrelated entities. The taxation rules regarding transfer pricing were introduced in Japan in 1986.*2 FIN 48
Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” If a tax position is not considered to be more-likely-than-not of being sustained upon examination, a liability for the unrecognized tax benefit needs to be recognized. Honda adopted FIN48 as of April 1, 2007.

Source: Honda Motor Co. Ltd.

HIROSHIMA, Japan—Mazda North American Operations (MNAO) today revealed the all-new Mazda6 and confirmed that sales will start in late summer 2008.

All-New North American Mazda 6

Specifically developed for North America, the all-new Mazda6 inherits and evolves the sporty styling and superb driving performance of the first generation Mazda6. The North American model features a larger body and greater engine displacement to meet the particular demands of the North American market. Handling and comfort were also optimized for North American road conditions.

“Following the CX-7 and the CX-9, the 2009 North American Mazda6 is the third model that was designed and engineered specifically to meet the needs of our North American customers,” said Daniel T. Morris, Mazda’s senior managing executive officer in charge of marketing and overseas sales. “The midsize sedan segment is extremely competitive and the Mazda6 will be up against some of the best vehicles in the industry.

“The all-new Mazda6 offers plenty of Mazda’s characteristic Zoom-Zoom vitality and we believe it will succeed in the challenging North American market. We will continue to deliver products that reflect our customers’ needs and build Mazda’s brand image in order to achieve the goals set out in our mid-term Mazda Advancement Plan.”

The all-new North American Mazda6 will be powered by Mazda’s newly developed 2.5-liter inline four-cylinder (I4) engine and its 3.7-liter V6 engine. The I4 engine is already available in the European and Japanese Mazda6 models and the V6 promises an exhilarating ride, coming straight from the 2008 North American Truck of the Year, the Mazda CX-9. A six-speed manual and a five-speed automatic transmission with manual-shift mode will be available for the I4 engine. The V6 will be coupled to a six-speed automatic transmission with manual-shift mode. The North American Mazda6 will be available only as a four-door sedan.

The all-new North American Mazda6 will be produced at AutoAlliance International in Flat Rock, Michigan, a joint venture with partner Ford Motor Company, as it has been since the first Mazda6 launched in 2002.

Headquartered in Irvine, Calif., Mazda North American Operations oversees the sales, marketing, parts and customer service support of Mazda vehicles in the United States, Canada and Mexico. Operations in Canada are managed by Mazda Canada, Inc., located in Ontario, Canada, and in Mexico by Mazda Motor de Mexico in Mexico City.

Source: Mazda Motor Corporation