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September 29, 2006

Fuji Heavy Industries Ltd.

New Business Model in the CVT Joint Venture between FHI and JATCO

Tokyo, September 29, 2006 - Fuji Heavy Industries Ltd. (FHI) and JATCO Ltd have agreed to strategically dissolve the corporate joint venture gFuji AT g established in 2003 to advance their joint venture in CVT (continuously variable transmissions) for mini cars and sub-compact cars*, and shift to a improved business model.

*Sub-compact cars: small cars in the 1.0~1.3 liter class

FHI and JATCO co-developed a new model of CVT on the basis of mutual cooperation through Fuji AT. In the midst of demand for responses to environmental issues, this new CVT model helps improve fuel efficiency of cars in ways such as reducing friction, optimizing oil pressure during acceleration, expanding the transmission range and reducing weight. First employed in the Subaru Stella that was launched in June this year, and afterward in the Suzuki Wagon R, these new CVTs are being adopted for use in a growing number of models.

Developing a product and launching it in the market was the first step. Now that this has been achieved, FHI and JATCO will work together to reduce costs even more and strengthen operations aimed at further increasing sales. To achieve this, the companies will raise the competitive strength of their business to the next level by dissolving the joint-venture structure to streamline management.

With the business structure revisions, FHI will assume manufacture of CVT units and supply of CVT units to companies other than FHI will no longer be handled by Fuji AT, but the role sharing whereby FHI manufactures and JATCO sells the units will continue.

Under this new business model, FHI and JATCO will continue working proactively to develop the business.

(Reference: Profile of Fuji AT as of September 1, 2006)
@Company Name: Fuji AT Ltd
@Business: Development and manufacture of CVT for mini cars and sub-compact cars
@Head Office: Oizumi-machi, Oura-gun, Gunma (within the Gunma Oizumi Plant of FHIfs)
@President: Koichi Ikeda
@Number of Employees: 11

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