Welcome to the Nissan Fiscal Year 2023 First Half Financial Results’ Investors and Analysts Session. This is Julian Krell speaking, Head of Investor Relations. Thank you very much for joining. Our today’s attendees are Mr. Uchida, President and CEO; and Mr. Ma, CFO. Mr. Uchida will start the presentation with the highlights of the first half. We will conclude this call with a Q&A session. I am now handing over to Mr. Uchida. Thank you very much for your time.

Hi. Thank you so much. Let me present the results for the first half of the year. Welcome to Nissan’s first half results for the 6-months period ending September 30, 2023. Nissan’s financial performance for the first half of this fiscal year improved significantly from the prior year. Net revenue increased 30%. Operating profit was up 115% and net income substantially increased. Since fiscal year 2020, we have been working on Nissan NEXT business transformation plan. The results of our continuous efforts are reflected in our business performance in the current fiscal year, which is the fiscal year of the plan. Now, I would like to ask our CFO, Mr. Stephen Ma, to present the results for the second quarter and the first half of the fiscal year. Later, I will talk about the outlook for the rest of the year and the status of our China business and insights into our key steps. Ma-san, please.

Hello, everyone. Let me present the key metrics for the first half of the year. Looking at the volume for the first half, global retail sales increased by 3.3% year-over-year to 1.62 million units. Excluding China, we achieved growth of over 23.4% with Japan, North America, and Europe delivering double-digit growth. In China, the rapidly changing automotive market remains challenging. Our retail sales decreased significantly by 34.3%. Nissan’s global production volume increased by 4.5% as we continued refilling the pipeline to serve customers worldwide. Excluding China, our production increased by 25.1%. Looking specifically at the second quarter, global retail sales increased by 11% year-over-year to 833,000 units. Excluding China, sales grew by 26.5% and production volume increased by 4.7% for the quarter. This slide shows our key financial performance indicators for the first half. On an equity basis, net revenue increased by 30% to JPY 6.06 trillion from JPY 4.66 trillion in the same period of 2022. On the same basis, operating profit for the period increased to JPY 336.7 billion with a solid operating margin of 5.6%. Automotive segment profit improved to JPY 168.8 billion. Net income totaled JPY 296.2 billion. Free cash flow for the automotive business was a positive JPY 193.9 billion. Net cash for the automotive business came in a healthy level of JPY 1.5 trillion, which ensures a financial flexibility, while investing for the company’s sustainable growth and providing the necessary levels to weather headwinds in this uncertain environment. On a proportional basis which includes our China operation, net revenue rose to JPY 6.48 trillion from JPY 5.26 trillion last year. Operating profit was JPY 344.7 billion representing an operating margin of 5.3%. Auto free cash flow was a positive JPY 161.6 billion, and net cash reached JPY 1.81 trillion. As the financial results indicate, we continue to successfully implement the objectives set forth on the Nissan NEXT plan and we are on the right track. Now, I will cover the performance of our key markets. In Japan, retail sales increased by 10.7% to 228,000 units. Thanks to the launch of the new Serena e-POWER in April, total sales of the Serena increased by 62%. The Sakura continues to enjoy a great customer acceptance and sales increased by 37% in the first half. Our total electrification ratio improved by 6 points to 54%, and Nissan remains the number one EV seller for 13 consecutive years. The net revenue per unit improved by 14% from the prior year. Production volume increased 38.7% for the period due to improved supplies. In North America, retail sales and production volume increased by 39.2% and 35%, respectively. This growth was driven by our top selling models, the Rogue and the Sentra in the U.S. In addition, both the Mexican market, INFINITI brands contributed to the overall sales volume growth in North America, each increasing by over 50%. Our net revenue per unit in the U.S. increased by 3% from the prior year. In Europe, retail sales grew by 19.3% and production volume increased by 19.4%. Net revenue per unit improved by 19% year-over-year. Thanks to the strong acceptance of the Ariya, Juke Hybrid, X-Trail e-POWER and Qashqai e-POWER, our electrification ratio increased by 25 points to 37%. I’m happy to share that LEAF was awarded the “Best Car for City Driver” in the UK. In China, sales and production volume continue to be significantly impacted in a difficult market environment. Our retail and production volume declined by 24.4% and 25.2%, respectively. The Sylphy continues to be the top selling model in the ICE segment. On a calendar basis, our retail sales decreased by 28.9% for the July to September period. As I mentioned earlier, China market remains challenging with intense price war and increased competition with frequent model launches, especially for the domestic brands. During this period, Nissan has launched four new models. Though there have been slow-uptake, these models are seeing a gradual acceptance among our customer month-over-month. We will elaborate in detail later. Let’s have a look at the income statement for the 6 months ending September 30, 2023, on an equity basis. Net revenue increased by JPY 1.4 trillion to JPY 6.06 trillion; and operating profit increased by JPY 180.1 billion to JPY 336.7 billion, representing operating margin of 5.6%. Non-operating margin, which includes equity-method companies, totaled to JPY 75.9 billion, and improved by JPY 35.6 billion compared to the previous fiscal year. Extraordinary losses totaled to JPY 36.3 billion. As a result, net income increased to JPY 296.2 billion. This slide shows the variance factors from the first half of last year to this year. Foreign exchange had a positive impact of JPY 13.3 billion. The U.S. dollar remained strong, but was offset by emerging market currencies. Raw material impact was a positive JPY 22.6 billion due to the decreasing prices of most materials. Sales performance had a positive impact of JPY 272.8 billion driven by strong volume and positive pricing, partially offset by normalization of selling expenses in the industry. Monozukuri cost had a negative impact of JPY 42 billion mainly due to inflation and regulatory expenses. Other items had a total negative impact of JPY 86.6 billion. This includes impact from sales finance as net credit losses and used car pricing has become too normalized. As a result, operating profit for the half improved to JPY 336.7 billion. And with that, I will hand over to Uchida-san.

Thank you, Stephen. Let me talk about the full year outlook. We will maintain for the full year outlook in total global volume of 3.7 million vehicles. This 3.7 million already reflects the revision of China outlook and confirmation of our solid performance in other markets. Based on the solid performance reflected in the first half results, we increased our financial outlook as follows: net revenue from JPY 12.6 trillion to JPY 13 trillion; operating profit of JPY 620 billion, which represents an operating profit margin of 4.8%; net income of JPY 390 billion. To summarize, we have achieved a solid financial result in the first half of the fiscal year 2023. We are firmly committed to the Nissan NEXT transformation plan in order to continue this recovery and deliver sustainable growth. Based on the results and our outlook for the year, we decided to resume the interim dividend at JPY 5 per share. We are maintaining the full year guidance of JPY 15 or more as we announced previously, while balancing financial flexibility, the necessary investments to ensure our sustainable growth and securing solid levels of net cash to weather headwinds in this uncertain economic environment. Nissan aims to improve shareholder returns by further improving the company’s performance and financial foundation. We remain committed to increasing shareholder value. Next is about China’s status update. Addressing the Chinese market continues to be a pressing challenge for us. Nissan has been operating in China for over 20 years and has proudly sold more than 15 million vehicles in this important market. We have many loyal customers in China and recognize the strategic importance of quickly providing them with high value new energy vehicles at attractive prices in addition to internal combustion engine vehicles, which continue to have a certain level of demand in the market. To this end, I explained that we will leverage our local assets across the full value chain to enhance the competitiveness of Nissan products back in July, when I presented the first quarter results. We are in the process of exploring every possible opportunity. Let me share 3 key initiatives that are crucial to make a breakthrough in the market. The first action is to enrich our New Energy Vehicle offer. We will launch four Nissan branded New Energy Vehicles by 2026 to address this growing segment. All four models will be developed by our local R&D center in China. The team which Nissan has been nurturing over the years. The first model, a D-segment EV is targeted to be launched in the second half of calendar year 2024. Three other models will follow including Nissan’s first ever Plug-in Hybrid model. The second initiative is further utilization of the local design and engineering assets. Our joint venture partner plans to launch 6 JV New Energy Vehicles made in China for China by 2026. The first Venucia Plug-in Hybrid was launched in the first half of this year and the battery EV was announced on November 3. We aim to increase the sales volume by offering the various products in the New Energy Vehicle segment. The third one is that we will start export to Nissan vehicles from 2025 as the first step we aim at 100,000-unit level. The four Nissan branded new energy vehicles that I referred to are included in the potential products to be exported. We will announce the details including timing and destinations at the right timing. I intend to implement these actions with speed in order to put our China operation back on the growth track in this challenging market. Let me reiterate that Nissan is leveraging its strength including electrification and vehicle intelligence to empower a journey and society as we progress towards our goal of carbon neutrality. Many initiatives are underway across the world to realize Nissan Ambition 2030 long-term vision. In September, Nissan Design Europe celebrated its 20th anniversary. On the occasion, we announced that all new Nissan models in Europe will be 100% electric by 2030. Moreover, we are involved in a research project called evolveAD that is intended to develop the latest autonomous drive technology capability UK as we hone our technology excellence. At the recent Japan Mobility Show, which ended last week, we have demonstrated the direction of our future mobility through five concept cars. Furthermore, this week we announced our decision to invest up to BRL 2.8 billion in Brazil to produce two new SUVs including all-new Kicks. As you can see, Nissan is taking many concrete steps around the globe. Yesterday, we announced the completion of our agreements framing the foundations of the new chapter of the Alliance. With this, we enter a new era of collaboration. The completion of rebalancing will enhance Nissan’s agility and contribute to new value creation and operational efficiency as we strive for Nissan Ambition 2030 long-term vision and electrification strategy. Our next midterm business plan, which we are now finalizing, will be a bridge to realization of this vision. Though, we intended to announce this in autumn due to the radical changes in the market environment in the recent month, we need to ensure that the plan is comprehensive and credible, hence we will present to you at an appropriate timing. Thank you for your attention.

Thank you very much. We are now starting the Q&A session. [Operator Instructions] Okay, starting with Citigroup securities, Yoshida-san. Please go ahead. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Yes, do you hear me? Citigroup, Yoshida is speaking. Hello?

Good afternoon. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Okay, thank you so much. The first question is about the quarter two. How do you assess the performance? More than JPY 200 billion is the profit that you generated, which is strong. Is there one of factors that contributed to this strong number? And for the full year projection, you made the upward revision, probably you don’t disclose a breakdown of the contributors. Could you get into the details of the upward revision? What helped you to increase the result? And the retail volume, 3.7 million units remain unchanged. But if you look at the progress rate in the first 6 months, we see weak sales in many regions. Is this due to supply chain issues or because of the intensifying competition? Could you give us the details for each region or each market? In the second half of the year, you have a plan to increase the volume compared to first half. So how credible or how achievable is it? Thank you.

[Interpreted] This is Uchida speaking. The second question, the Q2 profit will be presented by CFO later. But before that, let me talk about retail volume projection. Yes, as you said, in the first half of the year, we were affected by logistics and supply chain issues. So that is why the volume in the regions were slow compared to our expectation. At the same time, semiconductor supply issue is becoming limited now. But in the second half of the year, this supply will come back. And there are many customers who are waiting for a long time for the delivery in many regions. So in the second half of the year, we believe that there is an opportunity to increase largely the volume. So that is what is behind this 3.7 million units of full year projection. By region was what you wanted to know. In Japan, our Serena, X-Trail, there are a lot of customers waiting for the delivery of these cars. So we would like to recover this supply in the second half. In U.S., the logistics from Mexico was largely affected. And partially in the production plants, we are increasing production, especially from Mexico to U.S., we are incorporating this production increase because the compact cars are more in demand. So we are going to supply these compact cars in that supply for the second half of the year. The biggest challenge is China. In China, 800,000 units is what we are retaining as a full year guidance. In October, across the monthly sales plan, for example, Dong Feng-Nissan model is doing better than the monthly plan. And four models were introduced in July in China, and we wanted to recover in the second half of the year. But looking at the results in September – or August and September, we were struggling. But starting from October, we are ramping up gradually. So taking this into consideration, we decided to maintain the full year guidance for the volume. Having said that, there are uncertainties, especially in China. Therefore, within this fiscal year, we would like to monitor the circumstances carefully. And at need, we would like to disclose how we project the volume. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Okay. Thank you.

[Interpreted] Yoshida-san, did that answer your question with regards to the volume? Arifumi Yoshida - Citigroup Inc.: [Interpreted] Yes, thank you.

[Interpreted] Yes, in that sense, you mean that mainly production and supply chain issues were largely affecting your performance. So there’s no issue with the demand and intensifying competition. Other than China, that’s not a concern for you for the second half of the year. Well, in our plan, there are many customers waiting for the delivery, so we will make sure we are supplying them. But Europe, circumstances in Europe is the TIV in Europe is changing now, so we will monitor the situation carefully and follow-up accordingly. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Thank you.

Let me add to that just to clarify. I think you guys also follow what’s happening in Europe market. It’s starting to slow down a little bit. The order backlog [ph] that most OEM is coming down a little bit, but still we have a very healthy order backlog that we are still working through. So far, the demand for a vehicle is still very strong, especially with the very refreshed lineup we have. We had a new Juke a year ago. We had a new X-Trail e-POWER. We had a Qashqai e-POWER. And the new Ariya, or launch very solid four new models, SUV segments right in the heart of the market. So all of the vehicle are very high demand. So we want to produce more so we can sell more. So this, as Uchida mentioned, we don’t have a big worry about the demand for our product. I think it’s just a matter of the market slightly slowing down a little bit, but for us it’s still a very healthy outlook. That’s for the volume [addition further] [ph]. Your question about the Q2, how do I assess Q2 performance? Because as you mentioned, JPY 208 billion. If I can take you to the appendix, I think probably easier to understand. So if you look at Page 29, I think we show the consolidated sales volume. Can you show the Page 29? You guys have the appendix? You should have some. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Yes, I do.

Page 29, the consolidated sales volume is basically wholesale volume. And you can see that in Q2 on the right, it grew from 560,000 to 683,000, so about 123,000 units’ increase. That’s the biggest reason why we had such a big, much better profit than last year. You look at the next page, Page 30. You can see the step chart for the Q2 standalone versus last year. Last year we made JPY 91.7 billion, this year JPY 200 billion, so doubling. And you can see that, yes, we had some benefit from the weaker yen. So actually within that 11, about 25 or 26 is U.S. dollar. But we were hurt by many minor currencies like Argentina peso, Turkish lira, Mexican peso, et cetera. That sort of net, the U.S. dollar, possibly impact down to only 11. So net-net, we got some benefit from FX raw material, as you know, prices come down. So we can a little bit benefit of that. It takes a little time to work through our P&L, but we’re starting to see the benefit of roughly JPY 20 billion. And the big part is, as mentioned, with the 120,000-some-unit increase of wholesale, the performance on the sales performance is improving JPY 112 billion. That’s the major reason with the increase volume came the increased profit. And this was more than enough to offset the current inflation regulatory costs that we see in the Monozukuri and in others. So for me, it looks actually we are having very good foundation. As we have said multiple time in the last couple of years, we had good products. We have fixed the foundation of the company, we just waiting for the volume. And I think this is proving it. Once the supply comes and the volume comes, we can get much more profit. And I think this is what we’ve been saying the last couple of years. And I’m happy we can actually demonstrate it now. So that’s how I assess Q2, Yoshida-san. For your second question about the guidance revision from JPY 550 billion to JPY 620 billion, of that JPY 70 billion increase, about JPY 40 billion is FX as we updated the exchange rate of yen to dollar. We updated to JPY 140 to dollar. And also, I assume that the raw material will continue to give good news. So we added JPY 10 billion more for raw material. And then the rest is performance, another JPY 20 billion based on the good moment that we’re seeing in first half. So that makes up a JPY 70 billion improvement in their guidance. You might say that it’s still a little conservative or it could be upside, but right now we put the yen at JPY 140 to the dollar in the second half. Of course, if the yen moves, we might have a little bit upside versus that. Does that answer your question, Yoshida-san? Arifumi Yoshida - Citigroup Inc.: [Interpreted] Yes, thank you. If so, for example, in the first quarter, there were quality costs that was a negative contribution, but in the second quarter, it’s performance which helped increase the profit, there was not one off?

We mentioned in Q1, the recall cost we viewed as timing, that’s just happened. That two or three big campaigns all happened at one time in Q1. Usually, for us, it happened throughout the year and it just happened to be occurring earlier and at the same time. So we do not see as many recall campaign costs happening in the next three quarters, because we think in the pipeline that we are looking at, we don’t see anything major that’s coming right now. Arifumi Yoshida - Citigroup Inc.: [Interpreted] Okay. Thank you so much.

[Interpreted] Okay. Thank you so much.

Moving on to Goldman Sachs, Yuzawa-san, please. Kota Yuzawa - Goldman Sachs: [Interpreted] Yes, thank you. This is Goldman Sachs, Yuzawa. I have two questions. That’s a great result. And in terms of performance, operating profit and cash flow are at a higher level now. Once again, what’s the dividend policy again? This time, you have officially announced and trust the remaining 28.4%. JPY 1 trillion cash will allow you to afford many investment needs and cash out. So what’s our policy on cash change, because of this policy or the changes in the circumstances? And you are putting off the timing of announcement to MTP. But is there any area that you need to brush up further, whether it’s a product or operations? Could you disclose what we have said today? And as you mentioned, the China update. How long will you spend to restore Chinese operation and deliver results? Could you give us a timeline? These are my questions. Thank you.

[Interpreted] Yes, thank you. China regional MTP, I will talk about this. In China, if you look at the present status, we see a lot of new cars introduced between June, July and August, 61 new models were launched in the market. In October, as far as what we know 22 models were launched. And pricing, more than what we imagined, there is a price reduction in the market. For example, in JV, the level of Nissan, we are in the middle of the price level. More car makers are reducing the prices. Largely making our discounts to compress the profit is not what we are trying to do. We are striking a balance between profit and presence. That’s what we are doing in China. Therefore, in China, probably towards the end of the calendar year, when based on my experience in China, probably many car makers will do the discounts. That’s my concern. And with so many new models launched, incentives may arise. For example, even if we spend FMI [ph], it wouldn’t make an impact. That is why we are struggling today. Having said that, we have many units in operation. Car park in internal combustion engine, as I said, Sylphy remains number one in the ICE segment. So there are many districts where ICE are in high demand. And that is why we are rebuilding our sales strategy accordingly. So this is how we are trying to maintain the presence as much as possible, so that we can reach to the launch of the four new energy vehicles. That is the most important thing in China. So we are not overly optimistic about China. China, next year, we believe that things will calm down. That’s what we anticipate. But still, we need to monitor the situation carefully. In these circumstances, the unit – if you think about the capacity in China, our utilization rate is very limited. Therefore, we would like to compliment this by doing export, but we need to optimize the fixed costs. Going forward, we need to discuss with partners to reinforce the plan to reduce the fixed costs. So while we maintain the performance today, we would like to take action to grow and increase presence, and introduce the cars that are adapted to the Chinese circumstances and bring China operation back in growth track. And these new cars will come in the latter half of 2024. So we would like to spend time, whether in the 2-year, 3-year span, we would like to bring Chinese operation back on track. So that was about China. At the same time, for the midterm plan. Yes, midterm plan, if the KPIs up to 2026 or the figures, these are can be shown, but we need to look at MTP and beyond, not only MTP period. Now, the market is fragmented. So in each region, we need to specify the strategy. That’s what we need to demonstrate to the market. Otherwise, it wouldn’t be credible. People will not understand how we are going to achieve the goal that we define. I think this is the key element. For example, in North America, how are we going to address the IRA and increase presence at the same time? What will be the battery strategy? What is the electric – as part of electrification strategy in Japan? The question is how to increase the share of electrification. The specific concrete action is what we want to explain, and that’s what we are trying to work out. So the key here is that in Nissan Ambition 2030, we define a vision. And midterm plan is in the middle of this. So midterm plan, as you may know, in the auto business model in 2026 are already defined. So what’s beyond this? In 2030, what should be the performance that we deliver in each market and how to do it specifically? That’s what we want to define clearly in the midterm plan and beyond. Yuzawa-san, did that answer your question? That was about MTP in China. Kota Yuzawa - Goldman Sachs: [Interpreted] Yes, you are looking into a more comprehensive plan. And could you go back to first question that I asked?

So thank you, Yuzawa-san, for recognizing our good performance in Q2. And just to share a little bit extra insight for you, the net income in Q2 is the highest ever on Nissan record for Q2. That’s also, we didn’t want to brag about it, but it’s actually one of the best Q2 we ever had. But your question is about the OP and free cash on dividend policy, if I understood correctly. So as we said before, eventually we want to get back to 30% payout ratio for dividends. But we will do it gradually. Obviously, if our profit is improving so quickly, it’s taking a little more time, because then the payout per share, I mean we are increasing it but I don’t know if I can increase at the same speed as the how fast the profit is increasing, but we will be increasing the dividend per share gradually. And eventually we will get to the 30%. But I cannot commit to the timing right now, because we are also looking at what we’re going to do in the midterm plan and what investment we have to spend money on. And as we just explained, for example in China, we are pulling ahead in many things to meet the market demand and market speed. Similarly, we’re going to be doing other things, adjustments in our strategy to meet the shifting market demand. So there might be a need for investment that we’re going to do for future. So this is one of the reasons why you can see at the end of first half, we decided that we’re going to have a much higher net cash position, because we knew that in second half we will have several already big potential cash out item. One is, as you all know, the Ampere investment. Most likely it happened within the next 6 months. And then the other ones could be if we decide to sell some of the shares back to us, we want to be ready to take it. So this is why, actually we knew rebalancing will happen in November. So we knew after rebalancing, the windows open for them to start selling. So we wanted to be ready for that anytime they want to sell. So, intentionally, we kept a little more cash than normal. Reasonable level of cash, I mean, I think in the past we said we want to keep it on a trillion, plus or minus a little bit is okay on that level. We don’t need to have as much, because we’re not now much better at managing free cash from a quarterly basis and we are much more efficient at managing things. So we don’t need to have a huge net cash position on the auto side to function and operate smoothly. So I believe I answered, I think two or three questions that was embedded in your one question. Yuzawa-san, is that okay? Kota Yuzawa - Goldman Sachs: [Interpreted] Yes, anyhow, we are looking forward to the MTP announcement. Thank you for your elaboration.

[Interpreted] Yuzawa-san, thank you for the question.

The next question will be asked by Kunugimoto-san of Nomura Securities. Please go ahead. Masataka Kunugimoto - Nomura Securities: [Interpreted] Thank you very much. Can you hear me?

[Interpreted] Yes, we can hear you. Masataka Kunugimoto - Nomura Securities: [Interpreted] I have two questions. First of all, the first question is addressed to Mr. Uchida. JPY 600 billion operating income is quite significant with investment into EV and for EV, the profitability will become lower. So there would be intense competition over sales in North America in the next 3 to 4 years. Will there be an opportunity to increase the profits further to the next level? If so, where do you find the opportunities to elevate profits? Can you identify the major factors for potential increase in profits? That’s my first question. Secondly, this will be a granular question. This time, in price revision, JPY 57.6 billion pricing selling expenses, JPY 44.1 billion is the effect in terms of increase in profit. Due to inflation, there could be some regions where cost is rising. But are there specific regions where price increase was done successfully? Those are my two questions. Thank you very much.

[Interpreted] JPY 600 billion. We’re not complacent. In the Nissan NEXT transformation program, we are to establish a robust foundation. So this is the starting point. And we are now entering into the difficult phase. Electrification can go further, and as you have rightly pointed out, the profitability for electrified vehicles is not at a satisfactory level. As we finalize the MTP, how can we optimize cost? This is one item where discussions are conducted internally, intensively. In EV, the Chinese manufacturers as well as Tesla are gaining cost competitiveness more than we had expected, and they are reducing their selling price as well along with such cost competitiveness. So as we try to further electrify in Ambition 2030 X-in-1, a stepped cost reduction or in battery, cobalt-less batteries. We have to do a step further in order to reduce cost or else JPY 600 billion plus profits would be difficult to achieve. There would be various challenges. Having said, so however, due to the elevated quality of sales, we have been able to secure profit in each of the models. So as the foundation, we will maintain the current level. But with higher electrification ratio and as you have rightly pointed out, with the investment burden becoming higher, how can we optimize cost? We have to accelerate all efforts in cost optimization. And at the same time, regarding investment into electrification, under the framework of the alliance, these changes have begun to occur. How can we more cleverly do something with our partners or maybe find other partners to share investment burden? There could be several options which we are discussing at the moment. So including the burden that we will be bearing, we want to establish a foundation that will allow us to deliver sustainable profits. And one key would be the MTP. So what are the important challenges? Cost competitiveness would be one challenge. And in electrification, we need to reduce cost a step further. And Stephen?

I’ll answer the other question. I believe, Kunugimoto-san, you’re looking at Page 33, right? The Q2 selling expense, incentive pricing improvement of $44 billion. And you’re asking why that is so big. If I understand your question correctly. Well, as we mentioned before, we are, last few years, focused very much on quality of sales. We are very much disciplined, despite what happens in the market or what competitors do. And one of the things is we are focusing not just the major markets but also all the minor markets to make sure we are pricing and for the value that we put in the cars. And for many of the cars, we are as newly launched in the market like e-POWER variants of various cars like extra cash or other basis. They are actually very, very well received in some of the markets. South America, Latin America or Southeast Asia et cetera, we are able to put price for that. But that doesn’t explain all of the number. A big portion of that number is in some emerging market where there’s hyperinflationary environment where the FX is going up a lot. Unlike the old ways on Nissan, we sometimes use that advantage to keep the price low and sell more volume. Now, what we have done is if the hyperinflation or currency move a lot, we move the price at the same time. So we will adjust the price immediately. Even if it means we sell a little bit less volume, but we make sure that we are pricing for the FX movement in the local markets. So a lot of that big number you see in here is what I mentioned earlier, negative FX on emerging markets like Turkish Lira, Argentina Peso, et cetera. Those markets, for those negative FX we have on global, immediately we are pricing for it in the market. That’s why this number is so big. Kunugimoto-san, is that okay? Masataka Kunugimoto - Nomura Securities: [Interpreted] Yes, thank you very much.

[Interpreted] Excuse me, this is Uchida speaking. In terms of profit, naturally growth is what we are pursuing. Therefore, compared to the current level in the midterm plan, well, we need investments in electrification and profitability of electrification should be addressed, but we would like to pursue the profit growth. This remains unchanged. Thank you so much. Masataka Kunugimoto - Nomura Securities: [Interpreted] Okay. Thank you.

Moving on to Bank of America’s Nihonyanagi-san. Go ahead with your question. Kei Nihonyanagi - Bank of America Merrill Lynch: [Interpreted] Yes, thank you for your valuable time. I am Nihonyanagi. I have two questions. The first one, this is related to the previous question, Page 33. In U.S., volume and mix, in this volume mix for the mix, in the second quarter there is a big negative factor from the mix. What’s behind this? Could you analyze? Could you elaborate on this? What’s behind this mix? Negative contribution since the past. Model mix has been deteriorating. But in the full year, having said that in full year, we thought that it will be stable or will be on the positive side. But is this due to production confusion and this can be recovered in the second half of the year or the market circumstances changed and do we need to address it, could you elaborate on this the mix effect? That’s my first question. And the second question, well, this is related to my first question, U.S. market. You didn’t talk about U.S. market in details, how do you assess the U.S. market in the second half of the year and next fiscal year? What’s your projection for the U.S. market? Because macro-economy wise things are uncertain. And according to auto data, I find out that Nissan’s monthly performance seemed to be – that incentive seemed to be normalizing that’s one way to look at it so based on what do you see? What’s your assessment in terms of sales incentives? What’s the outlook? That’s my second question. Thank you.

[Interpreted] Yes, the second question in U.S., we continue to see the TIV which is growing. That’s what when they anticipate, because of interest rate rise, there are some risks. However, we believe that there is an opportunity to increase our presence. Having said that, mix is changing as we have said last time. Affordable cars are where we see a stronger demand for, and affordable cars correspond to Versa or Sentra in our lineup. So the profitability of these cars are worse than the higher end, but there are still strong demand. So Mexico, we are increasing the production in Mexico to address this. So this will translate to supply and better presence. That’s what we pursue. And the basic volume, fundamental volume in the past, fleet in rental especially, we tended to see a lot of challenges, but here again, there are good ways to manage it. So including this U.S. operation, we expect this U.S. operation is where we see an opportunity to increase our presence. And beyond this, IRA and addressing the regulations is becoming an immediate challenge for us. And on this point, as I said, in MTP, just an example, IRA in U.S., ZEV or TS4 [ph], that’s another thing that we need to consider. In this environment, with the regulations are enacted, what kind of strategy should we have to promote electrification with competitiveness. That’s what we are considering and we are building plans to address it. And the first question, Stephen?

So as we just mentioned, the reason in mix is negative, is because the environment in the U.S. market has changed. Given the high inflation and the higher interest rate, the consumers affordability is no longer what it used to be a year or two ago. So they are no longer able to afford a slice of a car, because with the highest interest rate, the monthly payment will be higher if they buy too expensive car. So now to keep the monthly payment the same with the higher interest component, they have to downgrade to a lower segment. So that’s what we are seeing quite a bit. A lot of the customers moving down into the sedans and smaller cars, actually, it’s not bad for Nissan, because they are very strong in Altima, Sentra, Versa, Kicks. So, as Uchida mentioned, many of these cars, Sentra and Versa, we are producing in Mexico and we are maxed out in terms of production level. So we are trying as much as we can to produce as many as we can. Our inventories on these models are very, very low. So we are trying to meet the demand of the U.S. consumers right now. But this is purely a mechanical calculation, because the market is shifting to more affordable cars. Of course, at the same time, we are still trying to make sure we keep the volume in the higher end, SUVs and premiums. This is why I highlighted in the presentation that INFINITI brand grew 50% year-over-year. We are still making sure that we are keeping the volume high on those vehicles and, therefore, keep the customer engaged at the higher segment. For those customers who can afford it, we are still making sure that we have good sales in the area. So that’s how to explain the mix. And for the second half and next year, as Uchida has mentioned, I will not elaborate on that, but I do want to highlight something about auto data and any external data you have on incentive. Those external sources, sometimes when they collect information from incentive, about incentive about OEM, they do a sample test and they do extrapolation and estimation of the number of incentive we have. It’s very different actually than what we have internally. That’s what we actually spend. And just for you to know, I repeat what we said last quarter. Most of our incentive, in case it’s like 80% or 90% of our incentive is spent on self-finance. We do not spend – we spend very little now on cash incentive for customers. We want to help given the higher interest rate. We use our incentive to provide more affordable interest rate products, loans and leases for our customers. So we do that, so we buy down all the interest rate for them so that they can have affordable. The way by doing that we keep the customer in our self-finance capital business, and we can engage with customers for a longer time. So it’s actually better, a much more healthy way of spending incentive. Is that okay? Do you have another question? Is that clear? Kei Nihonyanagi - Bank of America Merrill Lynch: [Interpreted] Sure. Yes, that was very clear. Thank you.

[Interpreted] Okay, thank you so much.

Moving on to UBS Securities, Takahashi-san. Go ahead. Kohei Takahashi - UBS Securities: [Interpreted] Yes, UBS Securities. My name is Kohei Takahashi. Do you hear me?

[Interpreted] Yes, we do. Go ahead. Kohei Takahashi - UBS Securities: [Interpreted] Okay. Talking about the short-term, China, between July and September in third quarter, what are the results? Retail volume and production volume are given to us, but how about the profit? Listening to you, it seems like prices are increasing and the competition is intensifying and the new car impact will come later, so it seems like the profit will largely deteriorate. So could you elaborate on the guidance of the profit? And at the same time, other car makers are putting expenses on the restructuring or they are reckoning the retained earnings that will deteriorate, but according to your plan, you didn’t make any revision. Is this because you are revising your MTP, so that is why, for example, you haven’t incorporated restructuring fee or in the second half of the year, the contribution profit for China will not deteriorate largely. Is that the message of third quarter and what’s the second half that we should expect?

Yeah, so Takahashi, let me address those points. Yeah, the volume as you can see in Q3 we show on Page 11 is come down in July to September period and I think, yes, we’ve done as much as possible internally to already do streamlining, reducing fixed cars and trying to reorganize ourselves as much as possible internally to get through this very intensive price war. Just for your reference, last year calendar 2022, I believe China market, the average transaction price dropped by more than 9%. And this year already as of October, we already dropped like 9.5% almost 10%. So in a matter of 2 years, transaction price dropped almost 20%. I don’t think any OEM make 20% profit margin anywhere in the world. So, I don’t think I need to say much other than saying that, yes, profitability for China is challenged. I cannot give you the number right now, we will show in the Q3, but it’s very challenging. And, right now, as all of the international brands are doing in China, we are trying to shift and transform, and find a new way to compete in China in thrive. So this is why we accelerated the new energy vehicle, as which has shown, four new Nissan brand and six German [ph] brand. So total 10 new energy vehicle will come to China within the next – starting next year and within the next 2 years, basically. That will come very rapid fashion. So we are quickly reorganizing ourselves to make sure that we are able to compete in the China market. So yes, you’re right. I mean, I don’t think we can expect much proper contribution from China in the short-term. That’s reality. I think many of the OEM has the same reality now. For your other question about restructuring H2. Yes, if you do look at the H2 profit that we have, and then especially below operating profit and net income, yes, we did put some contingency just in case we need to do some cleanup and some costs related to cleanup. We did put something in there and we do not yet know if we need to use all of it, but we did to consider some of that in second half. Okay, Takahashi-san. Kohei Takahashi - UBS Securities: Yes, understood. In the third quarter, I will look into your numbers. Thank you.

Thank you very much.

It’s about time to close. So the next question will be the final question. Daiwa Securities, Hakomori-san. Please go ahead. Eiji Hakomori - Daiwa Securities Group: Hakomori of Daiwa Securities. Thank you for talking with us once again. Two simple questions. First of all, Nissan NEXT global production capacity 5.4 million, it’s been reduced. China’s utility ratio is low. I understand that, but depending on production site like Mexico, there are areas where utility ratio is high. There’s a great variance. So, 5.4 million, how will you be planning for the future and 100,000 units to be exported from China? Where are the candidate destinations? That’s my first question. Secondly, S&P credit rating downgraded. And you said that one of your priorities is to upgrade once again, but Renault has Nissan shares and Ampere. There’s capital requirements as well. So, it’s been 6 months since the downgrade. Have you changed your capital policy? Those are my two questions.

[Interpreted] The second question will be responded to by Stephen. But how do we optimize production capacity? Currently, we’re at 3.7 million under Nissan NEXT, we had a higher goal. So we’re far away, and we are seeking efficiency like assembly line layout. There are such plans. But the biggest factor would be China, and 1.7 million is the capacity in China. But how many units we’re producing at the moment. So, partly, that will be solved through export, but is that going to be impacting other production sites? These are four models developed in China, so we consider this as new opportunity, and in other production sites, there are areas where there hasn’t been any choking points in Nissan’s supply. So, we are currently studying the possibility of exporting from China to respond. Optimization of capacity and fixed costs in China, those are under discussion with our partners, and I think we have to come up with concrete plan. That’s where we are at the moment. And regarding other regions than China, depending on the situation differs, but utility ratio should be at around 85%. So, I think it’s possible to optimize, and that will be written down in the midterm plan. That’s where we are.

Just to complement on Uchida’s point. This is the beauty of Uchida’s saying about exporting from China. As you noted, in some plants globally, Mexico and in Japan Kyushu, we are max production. And they are producing some of the vehicles are in high demand. And some of those cars can also be produced in other areas of globally. So if we can supplement some of it by China production and export, it actually helps us globally to actually achieve the higher volume. So that’s the nice part about that. And to your second question about S&P downgrade that we did before, as we mentioned before, we keep repeating or emphasizing we have strong performance, we have strong balance sheet. And as you can see now, very high Q2 profitability and very high net cash. So you can imagine, I will be having very, very good conversation with S&P tomorrow to try to convince them to reverse their opinion. But, I think, we are doing as much as we can to demonstrate to them that we are very, very strong, and we are getting better every quarter-on-quarter. In terms of policy, I think what we’re doing right now is pretty good. Rakesh, I don’t know if you want to add anything to it, but there’s not much we can do. It’s okay. So I think right now, we are on the right track with all the right principle and the strategy. So as we mentioned many, many times, we just need the volume and the good performance of our management and the vehicle products will shine through all of it. Okay? Hakomori-san, is that okay? Eiji Hakomori - Daiwa Securities Group: [Interpreted] Yeah, thank you so much.

Thank you very much. We will now close the session. Thank you very much for your participation today. The Nissan Investor Relations team remains at your disposal for any follow-up questions. Bye-bye.