MITSUBISHI MOTORS CORPORATION

Geopolitical tensions since the US-Israel attack on Iran have manifested effects on both sales and costs in the Middle East region. This is also spreading to demand trends in ASEAN and other regions through rising energy prices and increased logistics costs, raising concerns that a prolonged and intensified situation could lead to supply chain disruption, raw material price surges, and a global economic slowdown. The Group is preparing and implementing mitigation measures through its Economic Security Cross-Functional Team, but the impact may expand further.

The Group procures raw materials and parts globally, including rare metals such as palladium and rhodium, and there is a risk of supply disruption or price surges due to supply-demand fluctuations, political changes, tightening of import/export regulations, natural disasters, and other factors. In addition, laws and regulations requiring responses to human rights risks in supply chains are being rapidly established in various countries, and failure to respond in a timely manner could result in business impacts such as import bans, fines, and damage to the brand. The Group is working to strengthen its response to supply chain risks, but the possibility of such risks materializing in the future cannot be ruled out.

If large-scale recalls or corrective measures occur due to product defects or malfunctions, this could result in substantial costs, damage to the brand image, and a decline in sales. There is also a risk that large-scale compensation claims could result in losses not covered by product liability insurance. The Group strives to quickly identify the causes of malfunctions based on market information and to verify potential risks, but it is difficult to completely eliminate this risk.

In addition to environmental regulations concerning exhaust gas, fuel economy, chemical substances, and recycling, the Group is subject to a wide range of laws and regulations including consumer protection, labor, import/export trade, antitrust, and anti-bribery laws, and there is a risk of becoming subject to administrative investigations, penalties, or litigation in the event of violations. Each responsible department has implemented measures to prevent violations and established a system for prompt response to compliance issues, but the possibility of legal violations occurring in the future cannot be entirely eliminated. If a legal violation materializes, there are concerns about reputational decline and a significant impact on business performance.

Amid the increasing sophistication and complexity of cyberattacks, there is a risk that unauthorized access, computer virus infections, and inadequate internal management could lead to leakage of confidential and personal information, suspension of critical business systems, or adverse effects on the electronic control functions of products. If such incidents occur, they could lead to a decline in sales due to reduced brand image, legal claims, liability for damages, obligations to pay fines, and operational disruptions such as production stoppages. The Group implements safety management measures for hardware and software and provides information security education to employees, but it is difficult to completely eliminate this risk.

There is a risk that the premises underlying the Group's sales strategy, product launches, and sales regions could change in a short period of time due to the global expansion of competitors, including Chinese manufacturers, intensifying sales competition, and changes in customer needs. In May 2026, the Group announced its "New Medium- to Long-Term Vision" and intends to pursue a hybrid strategy of brand-based growth strategy and structural transformation to strengthen profitability, but if these measures cannot be implemented in a timely and sufficient manner, there is a possibility of impact on business performance. If the Group is unable to implement sales measures that are competitive relative to other companies, there are concerns about a decline in per-unit revenue and loss of sales share.

The Group is required to timely introduce new technologies and new products in response to carbon neutrality initiatives and diverse regional requirements, but if it is unable to sufficiently capture customer needs, or if development or delivery is delayed due to internal or external factors, this could lead to a decline in sales share and a decrease in net sales and profitability. There is also a risk that costs could surge due to tightening of fuel economy and CO₂ emission regulations, strengthening of ZEV regulations, and expanded adoption of carbon pricing. The Group is promoting electrification and energy-saving activities based on its "Environmental Plan Package," but responding to regulatory tightening beyond expectations remains a challenge.

With overseas sales accounting for approximately 80% of total sales, the Group holds foreign currency-denominated receivables in US dollars, euros, Australian dollars, and other currencies, and also holds foreign currency-denominated liabilities, primarily in Thai baht, due to global export production at its Thai subsidiary, meaning that significant exchange rate fluctuations directly affect yen-based profit and loss. The Group is pursuing medium- to long-term measures to reduce foreign exchange impact, such as exports of Indonesia-produced vehicles and expanding local sales of Thailand-produced vehicles, but if sharp exchange rate fluctuations occur, there is a possibility of impact on business performance. Given the structure of holding both foreign currency-denominated assets and liabilities, high sensitivity to sudden fluctuations in specific currencies remains a challenge.

The Group raises funds through borrowings from financial institutions and issuance of commercial paper, and maintains liquidity through measures such as setting a ¥272.0 billion commitment line and securing fund-raising facilities at overseas subsidiaries, but there is a risk that an economic or financial crisis, or a downgrade in credit rating, could make it difficult to raise funds on appropriate terms. The Group strives to maintain good relationships with its main bank and other financial institutions, but a sharp deterioration in the external environment could cause disruption to cash flow.

As the Group has development, manufacturing, and sales sites in Japan and around the world, there is a risk that operations of the Group or its business partners could be disrupted by large-scale natural disasters such as earthquakes, typhoons, heavy rains, and floods, fire accidents, or the outbreak of infectious diseases. The BCM Committee has formulated a business continuity plan and verifies its effectiveness through regular drills, but if a disaster or infectious disease outbreak occurs on a scale exceeding expectations, delays or suspensions in parts procurement, production, sales, and logistics could have a significant impact on business performance. The increasing frequency and severity of natural disasters due to climate change is a factor that further heightens this risk.