JAIA Chairman Press Meeting (July 2008)

Following is a summary of the comments made by JAIA Chairman at a press meeting held on July 24 (Thu), 2008.
 

Summary

 Hans Tempel
             Chairman

[Roles of JAIA]

The most important role of JAIA is to perform lobbying activities, approaching public offices including the government to promote revisions to laws and/or schemes, promoting the interest of the member importers. JAIA will enhance the capability to achieve as an effort of the entire industry since it is more powerful and efficient as a single company.
 
We hope to contribute to automobile sales by cooperating with Japan Automobile Manufacturers Association (JAMA) and Japan Automobile Dealers Association (JADA).
 
Through our business, we can “offer a broad range of imported cars equipped with improved safety features and innovative environmental performance”, hoping that “our products with the appeal stemming from the globally-renowned brands” will stimulate Japan’s car market and contribute to its economic growth.

[Domestic Market]

New vehicle registrations in the domestic market in the first half were down year-on-year for three years in a row at about 1.77 million units, less than 60 percent of the peak year 1990.
 
Kei car market experienced a year-on-year drop for two consecutive years, though the sales stand at the forth highest record level.

[Import Car Market: First Half Trend]

The first half result for non-Japanese brand passenger cars was down 8.9 percent from a year earlier to slightly less than 105,000 vehicles - a single digit decline, but negative growth for the second year running. Combined with Japanese automakers’ passenger cars and commercial vehicles, the total import market decreased 7.2 percent to little less than 120,000 units.
 
Overall, the first half of 2008 saw mixed results with brands with steady results due to new model introduction, marketing initiatives, special-edition models and other factors (strong brands), while others remained rather sluggish due to the relatively high levels of sales a year ago (weak brands).
 
Comparing results of last year and 2000, total passenger car sales excluding Kei cars declined about 16 percent, while non-Japanese brands dropped only six percent. The negative figure is lower than the overall market; nevertheless, it is a decrease and the situation is not welcome. In the meantime, sales of high-end products priced at four million yen or more have increased about 18 percent. The trend toward a bipolar market seems to be more prominent.

[Import Car Market: Second half Projections]

Figures for import car market are difficult to project given the knife-edge market conditions. “Harsh situation” will most likely continue due to the diminishing domestic demand caused by various factors (rising gasoline prices, declining birthrate and aging population, and changing consumption structure).
 
Going forward, JAIA members are planning to introduce new models and launch various sales initiatives, but do not expect substantial growth altering the overall market trend. We are aiming at securing the same level of last year’s result.
 
Sales of high-end models tend to link with stock prices such as Nikkei Stock Average.

[Currency Exchange Issue]

Euro is increasingly appreciating in the last five years, far above the level of currency fluctuations that can be absorbed by company efforts.
 
Yet, importers are trying to hold the rate of price hike to minimum, despite a very tough situation in terms of profitability.

[JAIA Activities including Taxation]

(1) Tax System Promoting Replacement

To increase demand in the sluggish domestic auto market, offering vehicles with superior environmental and safety performances will stimulate the market and become the most effective means to facilitate car replacements.
 
A specific measure would be the “introduction of tax incentives on replacement of vehicles used for more than ten years”, which JAIA has been calling for in a joint statement with EBC and through individual approaches to concerned parties since last year.
 
Preferential tax cuts on new vehicle purchases for replacement are implemented in many countries including Europe, bringing sizeable successes.

(2) CO2-base Taxation

In recent months, taxation on automobiles is moving towards CO2 emission-base, an appropriate approach from the environmental protection viewpoint. However, careful considerations are necessary during discussions to ensure fairness.
 
JAIA takes a fuel-neutral stance for fuel efficient products, and technology-neutral in terms of environmental performance when approaching the government.
 
Our lobbying activities will continue to ensure introduction of new innovative technologies in the Japanese market without hindrance as much as possible.

(3) Reducing Tax Burdens

Tax burdens on autos are several times heavier than Europe and the US. On top, Acquisition Tax is charged on new car purchases, in addition to the Consumption Tax.
 
Auto-related taxes in Japan are complex (with nine different taxes) and excessive contrasted with Europe and the US. International harmonization should be sought from the car users’ perspective.
 
Automobile tax structure should be streamlined to one kind of tax for “acquisition”, “ownership” and “driving” each.

(4) Zoning Regulations

Imported cars should be a near-at-hand choice to stimulate the market. JAIA seeks understanding to review zoning regulations.
 
Dealer showrooms should have adjacent service facilities for customer convenience. However, due to increasingly stringent zoning regulations, when a new dealer outlet is to be established, service facility is built at a separate location or the complete outlet has to be built in locations of no appeal to customers.
 
Domestic brands may not face the same problem since they have been operating when regulations were not so strict. This presents a problem for imported cars which have relatively shorter history in Japan.
 
Zoning regulations should be reviewed to prevent customers from losing interest in cars, rather showrooms should generate interest in cars.

(5) Contributing to Japan’s Economy as Japanese Companies

Currently, JAIA member importers are mostly owned by non-Japanese automakers, but we are not an association of non-Japanese businesses; we are a group of Japanese companies.
 
Including dealers, the total number of people working in the import car industry is more than 25,000, and the total investments in the last five years exceed 70 billion yen.
 
We are convinced that we can “offer a broad range of imported cars equipped with improved safety features and innovative environmental performance”, hoping that “our products with the appeal stemming from the globally-renowned brands” will stimulate Japan’s car market.