Suzuki 2011 Annual Report Download - page 27

26 SUZUKI MOTOR CORPORATION
(4) Fluctuations of exchange rates and interest rates
We export motorcycles, automobiles, outboard motors and related parts to various countries in the world from Japan. In
addition, we export those products and parts from the overseas manufacturing plants to multiple other countries. Fluctuations
of exchange rates affect the management results and financial conditions of the Group as well as our competitiveness and the
performance and financial conditions of the Group.
Further, the exchange fluctuations will affect the price setting of the products sold by the Company in foreign currencies as
well as the price of the raw materials purchased. The ratio of the overseas sales has reached two thirds of consolidated sales
for this fiscal year, and transactions in foreign currencies are substantial significant. We take hedging measures such as forward
exchange contracts to reduce the risks of exchange-rates and interest-rates fluctuations, but it is impossible to hedge every risk,
and the yen appreciation against other currencies may adversely affect the performance and financial conditions of the Group.
On the contrary, the yen depreciation may result in opportunity losses.
(5) Government regulations
Various legal regulations are applied to the motorcycle, automobile and outboard motor industries in relation to the emission
level of emission gas, mileage, noises, safety and contaminated material emission level from the manufacturing plants. These
regulations may be revised, in many cases strengthened. Expenses to comply with these regulations may largely affect the per-
formance of the Group.
In addition, many governments determine the imposition of tariffs, price control regulations and exchange control regulations.
The Group is paying expenses to comply with these regulations and will expect to continue bearing them. We may pay more ex-
penses depending on the establishment of new laws or changes of existing laws. Further, unexpected changes or new applica-
tion of tax systems and economic measures of each country may adversely affect the performance and financial conditions of the
Group.
(6) Quality assurance
We place the top priority on the product safety and make efforts to establish the quality assurance system from development
to sales. We purchase insurance for the product liability, but there are risks not covered by insurance. The occurrence of large
expenses for a large-scale recall to ensure safety of the customers may adversely affect the performance and financial conditions
of the Group.
(7) Alliance with other companies
We conduct various alliance activities with other companies for research and development, manufacturing, sales and finance,
but factors that may not be controlled by the Group such as situations inherent to the alliance partners may adversely affect the
performance and financial conditions of the Group.
(8) Legal proceedings
We may become a party to lawsuits and other legal proceedings in the course of our business activities. In the case where
any judgments disadvantageous to us are made in such legal proceedings, they may adversely affect the performance and finan-
cial conditions of the Group.
(9) Influences by natural disasters, wars, terrorism and strikes, etc.
The major manufacturing plants of the Group in Japan conduct manufacturing activities, located mainly in the Tokai region. In
addition, the head office and other facilities of the Company are also concentrated in the Tokai region. Any occurrences of Tokai
earthquake and South East Sea earthquake may largely affect the performance. We have taken various preventive measures
such as quake-resistant measures for buildings and facilities, fire preventive measures, establishment of business recovery plans,
purchases of earthquake insurances to minimize the influences of damage by such disasters.
We conduct businesses around the world and are subject to number of risks relating to our overseas operations and any oc-
currences of unexpected events such as political or social instability and difficulties, natural disasters, diseases, wars, terrorism
and strikes may delay or suspend the purchase of raw materials and parts, manufacturing, sales of products, logistics and provi-
sion of services. The prolonged delay and suspension caused by any of these factors may adversely affect the performance and
financial conditions of the Group.
Further, there are various risks other than those mentioned above, and what have been stated in this document do not repre-
sent all the risks of the Group.
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