Request for New Vehicle Purchase Support Measures

March 12, 2009
To:Director, Automobile Division
Manufacturing Industries Bureau
Ministry of Economy, Trade and Industry
Hans Tempel
Chairman
Japan Automobile Importers Association
 
Request for New Vehicle Purchase Support Measures
 
We would like to first express our gratitude for your ongoing support for the imported car sector.
 
As you are well aware, the motor vehicle market in Japan has been given a massive blow of unprecedented magnitude by the abrupt change in economic conditions since last fall.
 
The effect is particularly pronounced in the imported car segment in which products are offered in relatively-high price ranges, and the market is showing no signs of an end to downturn even in the new year. With sales results up to February only reaching 65 percent of the level a year earlier, import car businesses are facing exceptionally critical market conditions.
 
In the meantime, the Automobile Acquisition Tax and Tonnage Tax incentives which had been incorporated in the FY2009 Taxation Reform are, unfortunately, applicable only to a handful of import models, and they will most likely not have much effect from a viewpoint of economic stimulus.
 
The auto industry is facing crisis on a global scale, and market recovery in Japan will be important also from an international perspective.
 
For these reasons, we, the imported vehicle industry, would like to request for the implementation of economic support measures for new vehicle purchases that can stimulate buying motivation of consumers more widely and directly.
 
Finally, although this request constitutes quick-acting medicine type measures, we have to further pursue longer term policies addressing dealer issues and the fundamental attitude toward automobiles in the Japanese market and society.
 
Thank you very much in advance for your understanding and assistance.
 

Description of the Request

To provide economic aid of an amount equivalent to five percent of the vehicle’s suggested retail price on purchase of a new vehicle to replace an old one that has been used for nine years or longer
 

Subject Vehicles

Private passenger cars (registered vehicles)
 

Period

One year from implementation
 

Payment Method

The applicable amount is deducted from the total payment by a customer upon purchase of a new vehicle by the auto dealer, who will send documents to the authority certifying that the purchase meets the support conditions along with an invoice for receiving money.
 

Background and Reason

To facilitate economic recovery, market stimulation is urgently needed in addition to financial aids to corporations as well as tax incentives for low carbon society. Given the primary purpose being effective stimulus, the imposition of various conditions on applicable vehicles may diminish the intended effect and may also impair equity among manufacturers on an international basis.
 
As a synergy effect of promoting replacement of old vehicles, fuel efficiency of passenger cars has improved by 27 percent on average in the past decade, and such measure will accord with the goal of the attainment of a low-carbon society while proving effective as an environmental measure. (Reference 1)
 
In the EU nations, measures to promote vehicle replacement have been implemented since 1990s, and additional policies are widely introduced or under study. (Reference 2)
 
In Japan as well, some municipalities and others are successfully offering supports to consumers for purchases of vehicles which are closely related to local communities. However, there is an argument that the measures intended for assisting purchase of particular brands may be inconsistent with the WTO rules. (Reference 3)