Message on Sustainability from the CEO

Develop innovation leaders and realize our vision
of “delivering happiness to all”

Representative Director, President and CEO
Atsushi Osaki

Achieve world-leading monozukuri and “value creation”

Amidst this once-in-a-century transformation in the automotive industry, taking on the mantle of leadership is a profound responsibility.
Over the years at SUBARU, we have been working on various reforms to evolve the Subaru Difference in pursuit of delivering happiness to all. Although our corporate culture reforms and quality enhancement efforts have no end goal, I feel that they have become a cornerstone of SUBARU.
In an era marked with uncertainty and rapid and unpredictable change, we find ourselves not only competing with our traditional industry peers but also facing the need to surpass and outcompete companies from unrelated sectors who bring entirely new perspectives on value.
In light of this, we are stepping upon our concept, “Evolution of the Subaru Difference,” aiming to accelerate it and set our sights on achieving world-leading monozukuri (“manufacturing”) and “value creation”. In terms of monozukuri, we will pursue “monozukuri innovation” by “Becoming One Subaru” through the integration of manufacturing, development, and the supply chain, enabling high-density manufacturing, cutting development lead times, the number of parts, and the production process in half. In terms of “value creation”, we will further evolve “Enjoyment and Peace of Mind” as the value that SUBARU provides in products at the heart of our customers, retailers, local communities, and SUBARU itself. The determination of new management is to take on the challenges of “monozukuri innovation” and “value creation” and see them through within five years by 2028.

Aligning initiatives in the same direction in an unstable environment

In FYE March 2023, the global economy showed signs of recovering from the ongoing COVID-19 pandemic, yet it remained volatile due to a range of environmental changes, including the prolonged Russia-Ukraine conflict and escalating energy costs.
Even in the midst of such circumstances, we have been steadily progressing with three priority initiatives from our Mid-Term Management Vision, STEP, namely “Corporate Culture Reforms,” “Quality Enhancement,” and “Evolution of the SUBARU Difference.” In our efforts related to CSR, we have been accelerating activities within the framework of the SUBARU Global Sustainability Policy established in April 2020, focusing on the Six Priority Areas for CSR. Recognizing respect for the rights and characteristics of individuals as an important issue, we have concurrently formulated a Human Rights Policy. Based on this policy, from FYE March 2021 to FYE March 2022, we carried out human rights due diligence in the domains of human resources and procurement to identify business-related human rights risks and formulate measures to address them. In FYE March 2023, we transitioned into a phase of ensuring the implementation of our response measures, not only within SUBARU but also collaborating with our business partners to address various challenges.
A strength of SUBARU lies in our ability to align our efforts to drive the Company forward. To ensure that everyone is aligned and performing at their best, we concentrate on transparently addressing current issues and challenges while nurturing a collective understanding of the direction we should pursue. Capitalizing on this strength, we will advance our efforts in CSR and respect for human rights not only within the SUBARU Group but also in collaboration with our business partners throughout the supply chain.

Accelerate activities in the Six Priority Areas for CSR

Within the Six Priority Areas for CSR, our endeavors in the domains of Peace of Mind, Diversity, and Environment have gained significant momentum.

In terms of Peace of Mind, we are continuing to implement activities through three distinct approaches, positioning them as integral to SUBARU's foundation, in alignment with our quality enhancement initiative—one of the paramount themes within our STEP strategy. The first approach involves “the thorough implementation of a quality-first mindset and reinforcement of organizational efforts and structure”. We have been holding an event called the Quality Caravan not only in Japan but also in North American production subsidiaries, where we share actual cases of defects that have occurred and prevention measures. This initiative aims to promote an awareness of quality throughout the SUBARU Group. The second approach involves “execution quality enhancement” to prevent defects in mass-produced products reaching the public. In August 2022, we began operations at a new final vehicle inspection facility to conduct more rigorous assessments. This facility enables us to ensure compliance with various national regulations and evaluate quality based on customers’ usage criteria. The facility has been designed with input from our employees engaged in inspections, with systems and structure aimed at reducing workload, providing peace of mind in the workplace. The third approach focuses on “innate quality enhancement”, starting upstream in new vehicle development, and involving our business partners from the initial research phase. By working on consistent quality assurance from the upstream stages of development to production and logistics, we have seen a steady reduction in the number of recalls and vehicles affected, as well as overall quality-related costs. In 2023, we released the Crosstrek, incorporating the three aforementioned quality enhancements. Quality enhancement is one of the cornerstones of the SUBARU brand, and we are dedicated to maintaining our efforts going forward.
In addition, we are striving to strengthen technology supporting Enjoyment and Peace of Mind, with the aim of achieving zero fatal traffic accidents in 2030*. In addition to the existing EyeSight and SUBARU Global Platform, we introduced EyeSight X to the market in 2020. In 2022, we enhanced the capabilities of EyeSight by incorporating a Wide-Angle Mono Camera for the North American market's Outback and the Japanese market's Crosstrek and Impreza. This adoption strengthened our preventive safety performance. We will continue to promote efforts vigorously towards achieving zero fatal traffic accidents by enhancing our advanced driver assistance systems, thus minimizing accidents caused by SUBARU vehicles. We are also incorporating technologies such as the Advanced Automatic Collision Notification (AACN) system to reduce accidents involving vehicles from other companies.

Zero fatal road accidents among occupants of SUBARU vehicles and people involved in collisions with SUBARU vehicles, including pedestrians and cyclists.

At the SUBARU Group, we see Diversity, one of the Six Priority Areas for CSR, as a characteristic both of people and products, and we believe that respecting diversity in our employees also leads to diversity in our products. Within the scope of employee diversity, we have been striving to create a comfortable workplace environment, place the right individuals in the right positions, and nurture talent, to facilitate the success of our diverse human resources.
In human resource development, we are actively creating mechanisms and environments that facilitate the growth of the individual and providing a wide range of learning opportunities with the aim of fostering autonomous career development. In our efforts to empower women, we are working toward attaining the target we set of more than doubling the 2021 number of female managers by 2025. Initiatives include conducting various training programs for female employees aspiring to become managers and organizing dialogue sessions with female executives. In terms of product diversity, we launched our first battery-electric vehicle (BEV), the Solterra, in 2022. This vehicle not only embraces electrification but also embodies the distinctive Subaru Difference with its high overall safety performance.

For the Environment, we regard the protection of SUBARU’s fields of business—the global environment comprising the earth, the sky, and nature—as a crucial theme. In April 2023, we expressed our support for the Task Force on Climate-related Financial Disclosures (TCFD), and to contribute to realizing a decarbonized society, we established a long-term vision along with medium-term goals as their milestones, and we are actively working towards achieving them. To accelerate this, we are directing the Company's focus towards BEVs and channeling our management resources into this endeavor.
With regard to our electrification plan, we have significantly revised our goal, aiming to increase the EV sales ratio to 50% by 2030, exclusively through BEVs. This means selling 600,000 BEVs out of a total global sales volume of 1.2 million units. Additionally, by the end of 2028, we will introduce a total of eight BEV models, expanding our product lineup.
In terms of production infrastructure to support EV sales, in May 2023, we announced an increase in BEV production capacity at our plants in Japan, doubling it from 200,000 units to 400,000 units.
In addition, we are extending our production plans for next-generation e-BOXER vehicles and BEVs featuring the Toyota Hybrid System. These vehicles, originally slated for production in Japan, will now also be manufactured in the United States. As a result, our global factory production capacity will reach a level of 1.2 million units. During the transitional phase toward electrification, we are closely monitoring environmental regulations and market trends in the automotive industry. We plan to stay nimble and responsive by utilizing the reorganization of the production structure at our Japanese and U.S. plants. Our approach is grounded in the principles of flexibility and scalability, allowing us to navigate through uncertain and challenging times until a clearer direction emerges.

Develop innovation leaders to earn the appreciation of customers and local communities

Creating the Subaru Difference requires individuals with diverse values, and we believe that our human resources form the foundation of everything we do. To not only survive but also surpass others in this era of uncertainty and rapid and unpredictable change, it is important to actively nurture innovation leaders and create opportunities for them to thrive. This is something I deeply embraced during my time as a full-time officer in the labor union. We will focus on nurturing innovation leaders and creating a culture where talent with diverse values work together in different settings, fostering mutual respect and tolerance. This will enhance SUBARU's competitiveness, contributing to vehicle diversity and enhanced monozukuri.
SUBARU’s manufacturing has always been centered on the lives of our customers. In particular, our sales subsidiary in the United States has achieved remarkable success with the “Love Promise” initiative, which has developed into a program that forms strong connections among individuals through automobiles, uniting customers, retailers, the local community, and SUBARU. This initiative reflects SUBARU's dedication to contributing value to society and the future. By maintaining and expanding these efforts, we aim to achieve our goal of delivering happiness to all. We will continue to work tirelessly towards being an organization cherished and admired by all.

Representative Director, President and CEO
Atsushi Osaki