Yamaha Motor's New Three-Year Medium-Term Management Plan NEXT 50

Yamaha Motor Co., Ltd. (the Company) has formulated a new medium-term management plan, "NEXT 50-Phase II," running from January 2005 through December 2007, to succeed the previous medium-term management plan, "NEXT 50," which ended in December 2004. The new plan specifies management issues, business strategies, and numerical targets for the period.

NEXT 50-Phase II is designed to solidify the Company's profitable business foundation, expedite ongoing reforms, and ultimately bring further growth and profitability. By implementing the new plan, Yamaha Motor aims to attain 1,450 billion yen in consolidated net sales, 120 billion yen in consolidated recurring profit, and 50 billion yen in interest-bearing debt (zero in real terms) by the end of the three year period.

In NEXT 50, the Company aimed to create a stronger corporate structure capable of withstanding exchange rate fluctuations. In the effort, the Company focused on key management issues of attaining growth, improving profitability and enhancing the financial structure, based on a companywide profit-oriented approach.
In particular, the Company achieved substantial growth in its overseas motorcycle, ATV (all-terrain vehicle), outboard motor and IM (intelligent machinery) businesses during the period. Accordingly, the Company's forecast consolidated business results for the fiscal year ended December 31, 2004 (calculated as an aggregate of the performance for the nine-month period from April 1 through December 31, 2004 with fourth quarter results from the previous fiscal year, from January 1 through March 31, 2004) are as follows: 1,140.3 billion yen in net sales; 87.5 billion yen in recurring profit; 7.6% recurring profit ratio; 16.3% ROE; 38.4% equity ratio; and 107 billion yen in interest-bearing debt. Thus, the Company will exceed all the original numerical targets specified in NEXT 50.
These favorable business results have enhanced the Company's financial structure significantly, improving its ratings.

In the new medium-term management plan, Yamaha Motor has set forth the following basic policy, management issues, numerical targets, policy of returning profits to shareholders, and basic strategy.

1. Basic policy

The Company will build on the profitable structure it has established, by implementing a business strategy designed to balance value, profitability, and growth, and make Yamaha the market's exclusive brand.

2. Management issues

3. Numerical targets (consolidated basis)

Premised on an exchange rate of 105 yen against the U.S. dollar and 128 yen against the euro, the Company has set the following numerical targets for the consolidated business results for the fiscal year ending December 31, 2007.

4. Policy of returning profits to shareholders

5. Basic Strategy

The new medium-term management plan features a basic strategy built on the creation of value which differentiates Yamaha from other brands in the market. As it develops this exclusive value, Yamaha Motor will continue its profit-oriented approach to establishing a stable corporate foundation, while moving aggressively to maximize opportunities for business growth. Thus, the Company aims at attaining both further growth and profitability.

Specifically, the Company will promote brand and marketing strategies designed to create value that differentiates Yamaha, in addition to enhancing that value based on its proprietary technologies. Through these activities, the Company aims to create and expand value to the customer.

In terms of continuing its profit-oriented approach, the Company plans to expand profits for the motorcycle, outboard motor and ATV businesses in Europe and the U.S., and the IM business. It also intends to continue cost reduction by promoting the system-supplier system, among other measures, and to implement high-value-added marketing.

In maximizing opportunities for business growth, Yamaha Motor will expand the motorcycle business in the ASEAN region, where further increases in demand are expected. The Company will also strive to restructure the business foundation in Brazil, India and China, while developing the Russian market. Furthermore, the Company will take on the challenge of entering new business domains, including biotechnology and electric vehicles.

Regarding plant and equipment investment, the Company plans to focus on value, growth and profitable business operations. The plan calls for 210 billion yen in investments over the new medium-term, about a 60% increase from the previous medium-term.

In order to ensure sustainable growth, Yamaha Motor will also work to fulfill its corporate social responsibilities, enhance corporate governance and vitalize its personnel and organizations. Thus, the Company is determined to meet the expectations of stakeholders, delivering both value and a value system that can really touch people's hearts.

1. Motorcycle Business

In order to make the motorcycle business the leading force for boosting corporate sales and profits, Yamaha Motor will focus on Asian operations during the new medium-term, aggressively investing to expand production capacity, while introducing new models, and establishing a local parts company to raise the in-house production ratio in the region. Meanwhile, in Europe and the United States, the Company will invest in launching new models and streamlining business operations. Regarding overall motorcycle operations, the Company will invest in strengthening its product development system and environmental technologies.
Specifically, the Company plans to increase the number of new model launches by about 25% during the new medium-term. Production capacity in the ASEAN region will increase by 1.6 million units, to 3 million. Moreover, Yamaha Motor will promote brand and marketing strategies to support sales centering in Europe, Asia and the United States. Thus, the Company will effectively combine the production and strategic marketing aspects of the business to further expand sales and profits.

2. Outboard Motor Business

In the outboard motor business, Yamaha Motor will strive to maintain its world-leading position and high-profitability structure. To this end, the Company will promote the development and expand the lineup of environmentally friendly 4-stroke large outboard motors. In addition, it will continue to strengthen its collaboration with boat builders. To maintain and increase market share in developing countries, the Company will introduce 4-stroke models and enhance service activities that pinpoint and fulfill local market needs.
In a bid to further expand the business, the Company will also focus on the related rigging business, including sales of parts and accessories used for mounting outboard motors on boats.

3. ATV (All-Terrain Vehicle)Business

In the ATV business, Yamaha Motor aims to boost profitability in a maturing market, while seeking further growth by developing a new market segment. The Company will focus on products in the sport and utility categories in North America. In Europe and other regions, it will concentrate on expanding sales.
Meanwhile, the all-new side-by-side vehicle the Company introduced last year has been well received in the market, and the Company intends to further expand sales and profit in this new product segment.

4. IM (Intelligent Machinery) Business

In the IM business segment, Yamaha Motor aims to maintain current high profitability and further expand the scope of the business. To this end, the Company will strengthen its lineup of best-in-class medium-speed surface mounters, while developing high-speed modular models to exploit the demand for the faster mounters.
The Company will also solidify its solutions support for customers' productivity improvement. It will work to enhance product appeal while reducing costs for existing models. In addition, the Company will establish a Technical Center to support enhanced sales and service activities. Through these efforts, Yamaha Motor expects to increase sales to 50 billion yen in 2007.

5. New Businesses

1)	Biotechnology Business Yamaha Motor successfully developed an effective, high-concentration mass culture of a diatom - Chaetoceros calcitrans - in 2002, in a joint research project with Nisshin OlliO, Ltd. Chaetoceros calcitrans is known as an aqua-culture supplement - a rare feed for marine life. This product has been marketed on a test basis since 2003. In 2005, Yamaha Motor will complete construction of a research center in Fukuroi City, Shizuoka, where it will maximize its cultivation know-how in the research and development of functional materials useful in the areas of agriculture, forestry, food, cosmetics, and health and medical science. In 2006, the Company will construct a plant for mass production of the functional materials. Through these efforts, Yamaha Motor will grow the new business to annual sales of 30 billion yen in 10 years.
2)	EV (Electric Vehicle) Business As a leader in the motorcycle industry, Yamaha Motor continues the development of three electric vehicle technologies: pure electric vehicles, hybrid vehicles, and fuel-cell vehicles. In the new medium-term, the Company will expedite and expand its efforts for early commercialization. To this end, the Company test-released a self-propelled bicycle incorporating power-assist technology in China. In conjunction with this test marketing, the Company is studying the feasibility of developing the business in the seaboard cities, where sales of new motorcycles have been prohibited by legal restrictions on issuing license plates for the vehicles. In the field of pure electric vehicles, the Company plans to introduce second-generation models, which will offer extended cruising distance and improved performance at lower cost. Meanwhile, the Company will also expedite its research and development efforts to commercialize hybrid and fuel cell vehicles during the new medium-term.

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