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During the fiscal year ended March 31, 2009, although the global automobile market enjoyed steady growth in the first half, it suffered a substantial drop off in demand during the second half as a result of falling business confidence arising from the financial crisis.

Automobile sales in Japan totaled 4,701,000 vehicles, down 11.6% from the preceding year, while total sales of new mini vehicles slipped 4.4%, to 1,809,000 vehicles.

Overseas, European markets slumped, and even the ongoing rapid development curve of the Asian markets showed signs of leveling off.

Despite this harsh operating environment for the automobile industry, the compact car market, led by mini vehicles, was relatively robust. An important factor behind this performance was the trend toward downsizing to low-cost, low-fuel-consumption mini vehicles and compact cars as a result of gasoline price hikes during the first half and heightened user aspirations toward savings because of the financial crisis from the second half.

Despite the fall in domestic demand from the latter half of the fiscal year, Daihatsu's new Tanto and Move Conte models scored a great market success, exceeding sales targets by more than 50%, and the Company placed three cars in the top ten of Japan's passenger car sales ranking for fiscal 2009. Daihatsu’s total sales of mini vehicles in Japan stood at 619,000 for the year, up 1.1%. This represents the third consecutive year that Daihatsu has gained the top mini vehicle market share in terms of domestic sales, at 34.2%-the highest figure to date. Total domestic unit sales, including all registered cars, stood at 627,000 for the year, gaining us the third position among automobile manufacturers.

We maintained solid sales of Daihatsu vehicles overseas, led by Southeast Asia. P.T. Astra Daihatsu Motor (ADM), a joint venture in Indonesia, posted strong sales for Xenia and Terios. During the year, for the first time the Daihatsu brand climbed from number four to number two in Indonesia, taking a market share of 14.2%. Further, our manufacturing and sales subsidiary in Malaysia, Perodua, markets the Myvi, which is recognized as a national car by the government, and the fuel-efficient Viva, which is maintaining steady sales. Perodua has claimed the number one market share in the Malaysian market for three consecutive years.

Notwithstanding these successes, exports fell sharply, notably to Europe, as a result of the global downturn in the economy and worsening exchange rates.

As a result of the above, domestic unit sales increased 2.9% compared with the previous fiscal year, to 587,000 units. Overseas unit sales decreased 4.4% year-on-year, to 358,000 units. Consignment production and OEM supply rose 7.5%, to 421,000, aided by new model introductions by Toyota and Fuji Heavy Industries Ltd. Accordingly, our total unit sales rose 2.2% year-on-year, to 1,365,000 units.

Unit sales of consigned engines advanced 8.4% during the year, to 470,000.

During the year, the Daihatsu Group's consolidated net sales fell ¥71.2 billion, or 4.2%, to ¥1,631.3 billion. However, exchange rates and rising steel prices had a major impact on performance, reducing operating income ¥27.0 billion, or 41.4%, to ¥38.1 billion. Net income also fell, slipping ¥12.8 billion, or 36.8%, to ¥22.0 billion, sealing a year of declining sales and profits for the Company. In light of these business results, although we paid an interim cash dividend of ¥7.00 per share, the year-end dividend paid was ¥5.00. Accordingly, cash dividends for the full year stood at ¥12.00.

To mark the centennial of our founding, in March 2007 we inaugurated a new Daihatsu Group slogan, "Innovation for Tomorrow" to spearhead our companywide measures for management reform. Current major thrusts of this campaign include the Simple, Slim, Compact (SSC) concept, which we are promoting to revamp our manufacturing divisions.

Daihatsu Kyushu's Oita (Nakatsu) No. 2 Plant, which went on line in December 2007, is a state-of-the-art facility that leverages the pre-existing expertise of No. 1 Plant in high-quality, low-cost mini vehicle production, while pursuing further upgrades to efficiency through the principles of SSC. The building floor space and construction costs have been kept to around half those of the existing plant, despite the fact that at full production, output will be approximately equal.

In August 2008, the Kurume Engine Plant began producing mini-vehicle engines, and during the second half of 2009, Daihatsu subsidiary Akashi-Kikai Industry Co., Ltd. started operations at its continuously variable transmission (CVT) plant in Asakura City, Kyushu. Through such initiatives, each plant in the Group is striving to raise efficiency, and by concentrating mini-vehicle-related manufacturing in the Kyushu region, we are opening up possibilities to drive down logistics costs and shorten lead times.

In the future, we shall continue to implement innovations to achieve even higher efficiency and lower costs in the manufacturing of vehicles at other production sites in Japan and overseas. These measures are by no means restricted to our manufacturing divisions; sales and administrative divisions are striving to raise operational efficiency and curtail expenses from an SSC perspective. Through these innovations, we will hone our global competitiveness and bolster our corporate structure to facilitate ever-stable profitability for our compact car business.

Applying the principles of the Simple, Slim, Compact concept will propel forward our business structure reforms. However, we are also prioritizing management resource allocation to research and development activities, which are integrally linked to enhancing future competitiveness. Key focal areas include R&D to further nurture the allure of compact cars, with their benefits of low fuel consumption, energy savings and low prices.

As a member of the Toyota Group, Daihatsu has access to an array of benefits, including consignment production and joint development mutually utilizing technologies and expertise. Increasingly, the Company is supplying OEM vehicles products to other Group-member companies as part of a trend toward stronger cooperative business relationships. Our joint venture in Indonesia, ADM, manufactures vehicles that encompass both the Daihatsu and Toyota brands - a strategy that has led to a sound sales record for the company. Moreover, we plan to begin supplying Fuji Heavy Industries Ltd., in which Toyota is an investor, with mini vehicles on an OEM basis from the latter half of 2009. This step will restrict development costs for new vehicles and capital investment in manufacturing, while fortifying the Group's compact car lineup.

We will continue to benefit from such resources as the Toyota Group's advanced technologies and credibility in the global marketplace. At the same time, the Company, with its proven record as a high-performance, top-quality automaker of compact, fuel-efficient, inexpensive vehicles, will deploy its own technological and development capacities to contribute to reinforcing the Group's compact car business.

Needless to say, we consider the environmental aspects of our vehicles a prime R&D theme. Fuel-efficient and low-emission eco-cars are available in a host of varieties, including hybrid vehicles and electric cars.

Daihatsu is forging ahead with research to realize the eco-car of the future, while striving to improve fuel efficiency by refining such conventional technologies as highly effective gasoline engines and compact and lightweight CVTs.

Environmental activities extend beyond reducing the CO₂ emissions of a vehicle during use. Lifecycle assessment (LCA) is indispensable to reducing environmental impact over the total life of a vehicle, from the material stage through the manufacturing stages and through to the use, maintenance and disposal stages.

In addition to fuel efficiency, we aim to enhance environmental performance through effective resource use. Extending beyond the vehicle itself, these initiatives include improving the energy utilization ratio of our plants and boosting the utilization ratio of raw materials by minimizing waste from the manufacturing process. Through this approach, we take an LCA approach toward reducing environmental impact across our entire business spectrum.

The business forecast is rendered completely unpredictable by the current unprecedented global recession. As yet, recovery for the automobile industry is not yet apparent, with worsening personal consumption and corporate profits fuelling the ongoing slump in demand. Positive factors, such as falling steel prices, are evident, but are inadequate to throw positive spin on expectations.

Countermeasures that may serve to pull us through this recession include the Japanese government's April 2009 preferential tax treatment to stimulate replacement demand for environmentally responsive vehicles and the introduction of scrap incentives to support the purchase of new vehicles. We hold high expectations that these initiatives will provide the much-needed impetus to pull compact car sales from their slump. In addition, in the Southeast Asian markets, policy rate reductions in Indonesia, an upturn in the Malaysian export-oriented manufacturing industry and other breakthroughs are expected to generate a recovery in the ongoing downtrend in demand.

As the Company carefully monitors these markets, it will implement aggressive sales-expansion measures. Simultaneously, we shall continue to pursue fuelefficiency technologies and implement business structure reforms and cost-cutting initiatives. We are doing our utmost to ensure profits and stable dividend payments for the next fiscal year. More than ever, we would like to express our gratitude to shareholders and other stakeholders for their understanding and support.

July 2009