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Management Policies and Medium-term Management Goals

References to future events in this text are based on the Clarion Group’s predictions as of the end of this consolidated fiscal year.

Basic Management Policies

The basic philosophy of the Clarion group’s activities is “to improve society by seeking to develop the relationship between sound, information, and human interaction, and by creating products that meet those needs.”

Clarion is dramatically shifting its business away from being an in-vehicle device manufacturer, towards becoming a Solution Provider for In-Vehicle Information Systems. Setting our sights on the medium to long term, we are working to build a firm foundation for future growth by “accelerating business portfolio transformation,” “expanding business in the global market,” and "promoting business restructuring.”

Targeted Management Indicators

The Clarion Group emphasizes consolidated operations in order to enhance corporate value, and accordingly, promotes greater consolidated earnings power and consolidated cash flow management, targeting an adjusted consolidated operating profit margin in excess of 5%.

* In order to give a more appropriate representation of the true state of operations, from March 2017 onwards the value of net sales, cost of goods sold and also distribution costs and general and administrative expenses are subtracted from revenues to give an "adjusted operating income" as a profit indicator.

Issues to Be Addressed

In the automotive parts industry, we are competing not only with mega-suppliers, mainly from the US and Europe, but also with new players from the IT industry, making for a harsh competitive environment.

In this market environment we are promoting the three strategies given in the medium-term management plan to ensure continued growth and improved corporate value.

Accelerating Business Portfolio Transformation

The advent of global, high-volume, high-speed network communication is upon us, bringing the potential for significant developments in vehicle connectivity.

To remain competitive in this changing environment, we will further improve corporate value by transforming our business portfolio to base our revenue on products and services such as the Safety & Information Systems business, and Solutions business.

Expanding Business in Global Markets

We have already planned for expansion in growth markets such as North America and China. Now we are further strengthening our provision of products and services that anticipate the requirements of regions and customers. In Japan too, we expect growth in our Safety & Information Systems business and Solutions business which target “safety and security.” We will provide added value based on regional characteristics.

Promoting Business Restructuring

As part of our business restructuring, some of our development functions will be moved from Japan to China and other regions. This will promote efficient and rational supply chains for optimal regional production, and global bases for all types of business.

Amidst the considerable changes we face in our business environment, we will continue to fulfill our corporate social responsibilities as part of the Hitachi Group and aim to achieve growth as a company with the values required by society.

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