KYB and Yamaha Motor to Establish a Joint Venture

JAPAN – January 29, 2013 – (Motor Sports Newswire) – KYB Corporation and Yamaha Motor Co., Ltd., have decided to form a jointly owned business as follows:

Purpose of the Joint Venture

By combining the resources and know-how of KYB, a manufacturer of hydraulic shock absorbers, and Yamaha Motor, a manufacturer of motorcycles, the two companies plan to establish a global supply capability for motorcycle hydraulic shock absorbers and other products. The goal is to sell products with the best performance and quality in the world at competitive prices. Plans call for selling these products to motorcycle manufacturers worldwide, including Yamaha Motor.

Outline of the Joint Venture

Company name: KYB Motorcycle Suspension Co., Ltd.
Formation method: The motorcycle operations of the automotive components business of KYB will be divested on July 1, 2013 (tentative) to form a new company, and then part of the shares of this company will be sold to Yamaha Motor.
Representative: Nobumichi Hanawa (Currently General Manager, Motorcycle Engineering Dept., Automotive Components Operations KYB Corporation)
Location: Head Office: Dota, Kani-shi, Gifu, Japan Iwata Development Office: 2500 Shingai, Iwata, Shizuoka, Japan
Start of operations: July 1, 2013 (tentative)
Principal business: Development, manufacture, and sale of hydraulic shock absorbers and other products (such as suspensions) for motorcycles and other vehicles and development and manufacturing assistance to other companies
Paid-in capital: ¥400 million ($4.4 million UDS)
Ownership: KYB 66.6%
Yamaha Motor 33.4%

Outline of KYB

Trade name: Kayaba Industry Co., Ltd
Representative: Masao Usui, President and Representative Director
Location: 4-1, Hamamatsu-cho 2-chome, Minato-ku, Tokyo, Japan
Date of establishment: November 25, 1948
Principal business: Manufacture and sales of hydraulic shock absorbers, hydraulic equipment, etc.
Net sales: ¥337.1 billion ($3.7 billion USD) (fiscal 2011, consolidated)
Number of employees: 12,012 (As of March 31, 2012, consolidated)

Outline of Yamaha Motor

Trade name: Yamaha Motor Co., Ltd.
Representative: Hiroyuki Yanagi, President, Chief Executive Officer and Representative Director
Location: 2500 Shingai, Iwata, Shizuoka, Japan
Date of establishment: July 1, 1955
Principal business: Manufacture and sales of motorcycles, transportation equipment, etc.
Net sales: ¥1,276.2 billion ($14 billion USD) (fiscal 2011, consolidated)
Number of employees: 54,677 (As of December 31, 2011, consolidated)

Other Information

Overseas cooperation between KYB and Yamaha

As part of its global collaborative business operations, KYB established a company in India in December 2012 for the manufacture and sale of hydraulic shock absorbers for motorcycles. In 2014, this company plans to start supplying hydraulic shock absorbers for motorcycles to the Chennai Factory of India Yamaha Motor Pvt. Ltd. KYB’s goal is to use its company in India to manufacture and sell products that are cost competitive and rank among the best in the world. In July 2013, KYB plans to have its company in India issue stock for sale to Yamaha Motor. This sale will make the subsidiary a joint venture that will be 66.6% owned by KYB and 33.4% owned by Yamaha Motor.

Company name: KYB Motorcycle Suspension India Pvt. Ltd.
Date of establishment: December 11, 2012
Representative: Hideo Inaguma
Location: Chennai, Tamil Nadu, India
Paid-in capital: 600 million Indian Rupees (Approx. ¥1 billion)
Ownership: KYB 100%
Production volume: 285,000 in 2014, 1,600,000 in 2018 (planned)

Reference “Procurement strategies in the new medium-term management plan”

Yamaha Motor Co., Ltd. (the “Company”) announced its new medium-term management plan on December 18, 2012, which will work towards expanding the Company’s business scale and improving its profitability, all with the aim to increase its corporate value through sustained growth.

The establishment of the Company’s recent joint venture with KYB Co., Ltd is a realization of the procurement strategy at the heart of the new medium-term management plan. This initiative aims to further strengthen product competitiveness as well as improve profitability by combining the strengths of each company.

The plan targets 90 billion yen of cost reductions in 2015 and concentrates 65% of total procurement by value on platform (PF) components in an effort to increase the benefits of larger-scale production. In addition, the Company announced that it will further promote collaboration with suppliers referred to as “global partners” in areas such as theoretical-value-based production and Zensuu Ryouhin Process Activities*

Suspension components produced through this joint venture will be the Company’s largest platform components in terms of procurement value, and among the most important components that contribute to the nature of the products. This initiative which allows for the development and production of main components at the joint venture company will not only increase product competitiveness and reduce costs, but will also contribute to improvement in innovation, technology, and brand image.

Concurrently, the Company will participate by means of a strategic investment in KYB’s new suspension manufacturing plant to be located in the Vendor Park adjacent to the new motorcycle assembly plant scheduled for construction in Chennai, India, in order to further improve product competitiveness in the Indian market while taking up the challenge of achieving the most cost-competitive manufacturing in the world.

*Zensuu Ryouhin Activities: Activities pertaining to the Zensuu Ryouhin Process, a process that allows for the logical designing and sustenance of consistently high-quality products.