Fuji Heavy Industries Ltd. (FHI) has initiated a variety of different activities aimed at protecting the environment. The Company's environmental protection activities for the 21st century are as follows.


1. Environmental Protection Activities Based on Product and Technological Development

(1) The Development and Introduction of An Advanced Direct Injection Engine

The Company plans to introduce an in-cylinder (gasoline) direct injection engine to the market in 2001. In such an engine, the gasoline is injected directly into the engine's cylinders.

FHI's direct injection engine is a 4-cylinder Horizontally-Opposed Engine with a 2.5-liter displacement. The development of this direct injection engine is a first for the Company, and the combination of the direct injection engine with the Horizontally-Opposed Engine will be a first for the world. FHI intends to install the engine in Subaru's domestic Forester. The Company will continue to develop the engine, gradually introducing versions with different displacements.


(2) The Development and Introduction of a Hybrid Car

In 2001, the Company plans to introduce a hybrid car in Japan that combines an engine with an electric motor.

FHI will install such a hybrid system in its Pleo minicarthe first time a hybrid system has been used in a minicar. With a 660cc in-line 4-cylinder engine and an electric motor, the hybrid car will employ a parallel system that will enable the car to be driven primarily on its engine as well as on stored electricity.

This is not the first hybrid car FHI has developed. Examples of such vehicles were exhibited at the 1995 and 1997 Tokyo Motor Show. However, the new hybrid car will enable a fuel economy that is approximately 50% more efficient than previous systems by utilizing to the full the lightweight and compact features of minicars and FHI's unique intelligent continuously variable transmission (i-CVT). The Company believes that these characteristics will make its new hybrid car the ideal town car for the turn of the century.


2. Environmental Protection Activities in Plant Management

(1) Achieving Zero Emission

By March 2002, FHI intends to reduce the volume of waste materials that are produced by its principal manufacturing divisions and disposed off-site to zero level. This target has been named Zero Emission.

Two manufacturing divisions are implementing initiatives to reduce off-site disposed waste emissions to zero level. One is the Automobile Division's Gunma Manufacturing Division, which has four plants, and the other is the Aerospace Division's Utsonomiya Manufacturing Division, which has three plants.

In fiscal 1998, the Gunma Manufacturing Division produced approximately 1,700 tons of waste materials that were disposed off-site while the Utsonomiya Manufacturing Division produced approximately 1,900 tons. At present, FHI is carrying out thorough investigations to establish practical procedures that will enable the Company to achieve Zero Emission by the end of fiscal 2001.


3. Recycling Activities

(1) The Creation of a Nationwide System for the Collection of Waste Bumpers

By the end of fiscal 2000, FHI will have created a nationwide system for the collection of waste bumpers.

The Company has already established such a system in the Kanto and Kansai regions and now plans to enlarge the system to incorporate Yamanashi, Nagano, and Niigata prefectures as well as the Chubu Region and Hokkaido, in fiscal 1999. In fiscal 2000, the waste bumper collection system will be completed with the addition of remaining regions.

FHI's waste bumper collection system basically works in the following way. First, the bumpers are collected at bases set up by Subaru dealers. Next, the bumpers are picked up by Akabo minitrucks from the nationwide Akabo transport group, which uses the Sambar, Subaru's domestic commercial mini vehicle. The Subaru Physical Distribution Company--an affiliate of FHI--manages and operates the system. In addition, FHI provides for the collection of waste bumpers from outside body repair shops. Special bumper collection pallets are set up at all collection bases and the deposited bumpers are picked up by the Akabo minitrucks. The system enables efficient operation in balance with the scale of the collection system, the optimization of the collection-to-storage ratio, and the collection of more waste bumpers.

Through the establishment of a nationwide waste bumper collection system, FHI will be able to collect approximately 4,700 waste bumpers per month. This will substantially bolster the Company's drive to increase the recycling of its resources.

In January 1993, FHI launched a waste bumper collection system in Tokyo and Kanagawa. The system was expanded in October 1997 to include the entire Kanto Region. In November 1998, the Kansai Region was included in the system. By the end of December 1998, approximately 61,000 waste bumpers had been collected. The waste bumpers are currently being used in the manufacture of 16 different exterior and interior vehicle parts for Subaru cars.