Notice of Disposal of Treasury Stock by Allocation to Third Party

Fuji Heavy Industries Ltd. ("FHI") announces the disposal of Treasury Stock as described below, which has been resolved at the Board of Directors meeting held today, April 10, 2008.

Announcement

1. Purpose of disposal

FHI will transfer its' treasury stock to Toyota Motor Corporation ("Toyota"). The purpose of this is to strengthen the relationship with Toyota.

2. Amount and use of fund

(1) Amount

31.11 billion yen

(2) Specific purpose

The fund secured from this transfer will be utilized for the research and development of the compact rear-wheel-drive sports car jointly developed by FHI and Toyota, which will be targeted to be launched at the end of 2011. More than that, it will be also invested for the new plant to be built at FHI's Gunma Manufacturing Division.

(3) Expected timeframe for payment

Specific timing is to be decided.

(4) Rationale behind use of fund

FHI will invest this fund to the jointly developed compact rear-wheel-drive sports car, and focus on its' core technology and products by the pursuit of "providing a distinctive Subaru experience for drivers and passengers" as advocated in its mid-term management plan. This will be led to both increase of revenue and improvement of profitability in addition to the control of interest bearing debt amount.
This policy will contribute to the improvement of balance sheet and realize the management stability. Consequently, FHI consider it will bolster the return of investment of the existed shareholders thereby this is rational judgment.

3. Financial results and equity finance for FYE 2005 -2007

(1) Consolidated financial results of last three years (million yen)

(2) Number of common stock issued and residual shares (as of March 31, 2008)

(3) Status of disposal of treasury stock

(4) Equity finance last three years
　　No relevant data.

(5) Recent share price
<1>Last three years

<2>Last 6 months

<3>A previous day of resolution

4. Major shareholders and its percentage of outstanding shares

(Notes) <1> Though FHI has 64,254,526 treasury stock (percentage of outstanding shares 8.21%) before transfer (September 30,2007), this is excluded from major shareholders.
<2> Major shareholders and its percentage of outstanding shares after transfer is described based on those as of September 30, 2007.

5. Outlook of the impact to the financial results

This disposal of treasury stock by allocation of third party will be accounted for the balance of capital account, therefore no extraordinary loss will be expected and the impact on the financial results of March 2009 and 2010 will be limited on consolidated and non-consolidated basis

6. Rationale for conditions of disposal

(1) Basis for calculating transfer price
Transfer price (paid in value of Corporate Law) set at 510 yen calculated using as a reference of the three months' average closing price 462 yen of FHI shares on the Tokyo Stock Exchange from December 11, 2007 to March 10, 2008 (adding 10% premium, raised to the nearest 10 yen). This premium was decided considering the current market condition and the fluctuation of price until the transfer date.

(2) Basis for deeming acceptable the disposal quantity and the scale of dilution
The number of shares involved will be 61 million and 7.79% of the outstanding shares. FHI will transfer own stock for the purpose of strengthening the further ties with Toyota so the fund will be invested for the joint developed car with Toyota and the capital expenditure for consignment production. On the other hand, Toyota will provide compact car to FHI and also Daihatsu Motor Co., Ltd. ("Daihatsu") is to supply minivehicles and a compact car both on OEM basis.
By these deepen ties, FHI will enhance enterprise value as Subaru brand by clarifying the selection and consolidation matters. Therefore, the number of shares involved and the scale of dilution is rational and the impact on market will be limited.

7. The reason of for selection of transferee

(1) Outline of transferee (September 30,2007)

(2) Reason of selecting the transferee
Toyota and FHI established its capital ties on October 5, 2005 and business ties on March 13, 2006. Since then, FHI and Toyota build up good relationship such as consignment production in FHI's US plant and OEM production by Daihatsu (Toyota Group Company) of an FHI compact car for European market.
FHI has selected Toyota as a transferee of its treasury stock by allocation to third party because FHI asses Toyota is an appropriate partner to enhance its enterprise value.

(3) Holding policy for transferee
Specific agreement like continuous holdings or deposit is not made regarding the shares transferred from FHI to Toyota.
However, pledge form was exchanged in that during two years since the disposal date, in the case of Toyota will transfer all or part of these shares to somebody else, Toyota will immediately notify FHI whose name, address, the number of shares and so on. Then FHI will report to the Tokyo Stock Exchange and that will be available for public inspection.

End

（Supplemental;） Outline of disposal

(1) Number of shares involved
　　61million shares

(2) Transfer price
　　510 yen per share

(3) Transfer value
　　31.11billion yen

(4) Transfer method
　　Disposal of treasury stock by allocation to third party to Toyota Motor Corporation.
Actual transfer will be done following the preliminary consultation and the approval by Japan's Fair Trade Commission in addition to the other administrative procedure needed by domestic or foreign statute.

(5) Transfer date
　　From May 2, 2008 to May1, 2009

(6) Treasury stock after transfer
　　3,298,395 shares
　　*This number is calculated based on the treasury stock at the end of March 2008 and
dose not include any number which acquired and disposed of fallowing the requests for
purchase and sale of fractional shares.