ISUZU MOTORS LIMITED

Risk that deteriorating economic conditions in key markets such as Japan, Thailand, and the United States, along with growing uncertainty in the global economic environment due to additional tariff measures, may lead to a contraction in demand for commercial vehicles. The Group is expanding sales activities with emerging markets as strategic regions, but demand contraction accompanying an economic downturn could have a significant adverse impact on business performance and financial condition. Although efforts are made to minimize the impact through market diversification, complete avoidance remains difficult.

Risk that wars, changes in government, and protectionist policies (such as tariff measures) aimed at economic security may affect the Group's procurement, production, and sales activities as well as its supply chain. Since February 2026, escalating tensions in the Middle East have reduced the safety and stability of maritime transport around the Strait of Hormuz, raising concerns about impacts on the supply chain. The Group conducts information gathering and invests in responses to regulatory changes in Japan, the United States, ASEAN, China, and Europe, but if this risk materializes, the impact could be severe.

Risk that fluctuations in foreign exchange rates, such as the US dollar and Thai baht, may affect the yen-converted value of sales, expenses, assets, and liabilities, and may also spill over into raw material prices and product pricing. A sharp rise in market interest rates could increase funding costs. The Group seeks to minimize such impact through the promotion of local production and the use of derivative financial instruments, including forward foreign exchange contracts, but significant fluctuations could adversely affect business performance and financial condition.

Risk that prices of raw materials such as steel, non-ferrous metals, resin, and semiconductors, as well as externally sourced products, may rise due to global supply-demand tightness. With increased R&D on xEVs and the expanded market introduction of BEVs, usage of rare metals and similar materials is expected to increase, heightening pressure on procurement and manufacturing costs. If internal efforts such as productivity improvements and pass-through to product prices are insufficient to absorb such cost increases, business performance and financial condition could be significantly and adversely affected.

Risk of being unable to respond promptly and adequately to technological innovation represented by CASE (Connected, Autonomous, Shared, Electric), changes in the commercial vehicle business model, and social demands for ESG investment and achievement of the SDGs. The Group has set forth its evolution into a commercial mobility solutions company and is promoting new business creation such as autonomous driving, connected services, and carbon-neutral solutions, but any delay in response could reduce competitiveness and significantly and adversely affect business performance and financial condition.

Risk arising from an inadequate response to tightening regulations aimed at the transition to a decarbonized society and to the increasing frequency and severity of natural disasters. Based on the "Isuzu Environmental Long-term Vision 2050," the Group has set a goal of achieving zero GHG emissions across the entire product lifecycle by 2050, and is promoting multi-pathway technology development and the introduction of BEVs with competitive TCO; however, failure or delay in innovation, or an insufficient response, could significantly and adversely affect business performance and financial condition.

Risk that events such as natural disasters, labor disputes, system failures, supply-demand tightness, or human rights violations in the supply chain occurring at suppliers or in logistics networks could make it difficult to secure the raw materials, semiconductors, and parts necessary for production. This includes logistics disruptions caused by incidents or accidents at key maritime transport chokepoints. The Group has established a system to regularly assess suppliers' production capacity, credit risk, quality, and compliance status, but if such events occur, they could significantly and adversely affect business performance and financial condition.

Risk that computer virus infections including ransomware, cyberattacks, unauthorized access, and similar incidents could disrupt order receiving, shipping, logistics, production, and sales activities, or lead to information leaks. The Group implements various information security measures, including responding to product cybersecurity regulations (R155 CSMS certification and R156 SUMS certification), but in the event of unforeseen information leaks or system failures, recovery costs, damages, and loss of credibility could significantly and adversely affect business performance and financial condition.

Risk that, despite early detection, sharing, and cross-organizational review of defect information through the Quality Assurance & CS Committee under strict quality control standards, a large-scale recall may occur, actual costs may significantly exceed provisions, or damages not covered by product liability insurance may arise, significantly and adversely affecting business performance and financial condition. The impact on social credibility as a commercial vehicle manufacturer is also significant, and this includes the risk of production suspension due to violations of the Road Transport Vehicle Act.

Risk that, if material violations of laws and regulations in various countries—such as those concerning personal information protection, anti-corruption, antitrust, and financial instruments transactions—are found, regulatory authorities may issue recommendations or impose substantial fines. The Group holds regular meetings of its Compliance Committee, chaired by the Representative Director, President and CEO, and provides compliance education to all employees; however, if the severity of a violation or the speed of the response is inadequate, it could seriously damage social credibility and significantly and adversely affect business performance and financial condition.