Following is a summary of the comments made by JAIA Chairman at a press meeting held on July 22 (Wed), 2009.
　

Summary

　Hans Tempel
　　　　　　　　　　　　　Chairman

[Economic condition]

As seen in the economic indicators of the government and Bank of Japan, exports, production and corporate income are showing signs of recovery, and there has been an official announcement that Japan’s economy has bottomed out.
However, with employment and private consumption continuing to be in a harsh situation, no bright light is shed on the real economy.
　

[Trend in auto market in Japan]

Looking at the domestic market for automobiles, in the first half of this year, overall demand dropped by 26.4 percent from a year earlier to approximately 1.3 million vehicles for the fourth consecutive year of decline. This is due to the actual economy still in a severe condition, accelerating the effect of a declining birthrate and aging population, and the consequent change in consumption structure including young people losing interest in cars.
The figure represents the second record low since the start of the statistics in 1968, indicating the market is in a very “serious situation”.
　
Yet, thanks to the eco-friendly car tax cuts which started in April and the new vehicle purchase subsidies, applications for which were accepted from June, the overall sector of registered passenger cars in June recovered from double-digit year-on-year decline for the first time in nine months. It is too early for an optimistic market outlook; however, we are beginning to see signs of an end of decline in the market.
　

[Imported car market: 1H result]

Turning to the imported cars, the first half sales of non-Japanese brand vehicles were down 26.6 percent from a year ago to about 78,000 units for the third consecutive year of negative growth. Including models of Japanese brands, the overall import market dropped 27.3 percent from the first half of 2008 to about 87,000 vehicles, again for the third consecutive year of decline. It is the lowest level in the last 17 years (since 1992).
　
As mentioned earlier, signs of bottoming out are seen for domestic models thanks to those stimulus measures. Unfortunately, however, benefits of such programs are limited for imports the way they are set only a few models qualify.
　
Meanwhile, taking those initiatives as an opportunity in which consumers will be increasingly looking at cars, some importers are implementing sales-promoting initiatives of their own, including new car purchase support programs. Their efforts are steadily generating positive effects, but at the expense of the financial result of importers and manufacturers.
　
As such, while certain imported models are seeing signs of favorable turns, in Japan the overall state of the business for dealers and importers of non Japanese automobile manufacturers is still very severe with little hope for a fast return to a prosperous business for them and their foreign.
　

[Imported car market: 2H outlook]

With regard to the forecast on the imported car market in the second half, we are not able to present any specific number, given the market condition remaining severe due to a delay in recovery of consumer spending, although the government has declared bottoming out of the economy.
Hereafter, along with the recovery of the overall market in Japan, and thanks to the effects of new model launches and marketing initiatives of various kinds by individual importers, the rate of decline is expected to shrink steadily. However, since their benefits are limited for imported cars, the government’s actions to stimulate the auto market are not expected to generate results that can change the overall trend. Hence, in the end, it would be difficult to recover to the level of sales as in the year before and it is most likely will continue until 2010.
　

[Views on government’s stimulus packages for autos]

The additional stimulus packages of this fiscal year included the “new vehicle purchase subsidies” as a direct economic support by the government for the ailing auto industry, which should be highly appreciated, albeit it is a global trend. However, requirements for the latest eco-friendly tax cuts and new vehicle subsidies are not satisfactory to us.
Needless to say, we are not arguing about the need to comply with regulations of the government, regardless of the line of business or the country in which we operate. However, the conditions provided are open to question.
　

(1)Fuel efficiency standards

For example, fuel efficiency of passenger cars on average has improved more than 20 percent in the past decade. In other words, by simply replacing old vehicles with new cars of today, emissions performance, as well as fuel economy, will improve substantially. So, in light of the progress of automotive technologies during that period and assuming considerable improvements in environmental performance, I believe the government should avoid any step that would limit qualified vehicles only to domestic models.
　

(2)Fixed-amount subsidies

Further, with respect to the fixed-amount subsidies of 250,000 yen offered as scraping incentives, a fixed rate, instead of a fixed amount, would be fair to all vehicles and users, which should be more effective in terms of economic stimulus as well.
　
For certain import models, residual appraisal values could be more than 250,000 yen even if the vehicle is more than 13 years old, in which case, the fixed-amount subsidies would not be effective.
Generally, imported cars have longer product life and account for larger shares of the vehicle in use for more than 13 years. While it is a proof of quality, durability and value of imported cars, more replacements of these relatively highly-priced imports should bring about more economic effects.
For this reason, fixed rate is better than fixed amount and is expected to produce results more widely.
　

(3)Technology-neutral

I understand that the latest actions based on environmental technologies and fuel efficiency aim at promoting environmentally- friendly cars. However, promoting measures should be granted for environmental performance, not certain technologies; or in other words, they should be technology-neutral.
　
Toward the goal of achieving low-carbon society, carmakers are making broad-ranging efforts, including electric vehicle, hybrid vehicle and diesel vehicle.
In order to get closer to the ultimate goal of low-carbon society, vehicle manufacturers and importers can offer environmental performance. I believe, as of this point in time, it is important to choose technologies most suited for attaining good environmental performance without slanting toward certain technologies.
　

(4)International harmonization of standards and certification

I am grateful for the government of Japan in making contribution to the great progress of international harmonization of standards and certification by participating in WP29, an international forum for the area, since 1998. However, in order to attain the goals of developing low-carbon society and/or cutting the number of fatal traffic accidents in half, international harmonization is further called for.
In order to promote cars equipped with such leading-edge technologies as fuel-cell and ITS, I hope to see harmonization of standards in these advanced areas and unification of whole vehicle certification schemes. Attempts to globally harmonize standards on fuel efficiency and environmental performance, as well as the system of vehicle certification, are necessary not only for the imported car sector, but also for growth of the auto industry in Japan as a whole.
　
Japan is the world’s leading auto-producing nation so that its government should act more actively in globalizing such standards.
　

[Requests for FY2010]

Looking back the past one year since I assumed the position of JAIA chairman in May last year, I see it as a very difficult year for imported cars.
As for my goals on our future activities, we will continue vigorously asking the government of Japan to take initiatives for stimulating the market.
　
On that matter, we recently made two proposals to the government.
　

(1)Test cycle

First, we requested international harmonization of the test cycles for measuring exhaust emissions and fuel efficiency.
　
Imported models do not qualify for the ongoing tax incentives as eco-friendly cars largely because of the different test cycles adopted in Japan and the US or EU, not because they emit more and are less fuel-efficient. We asked the government of Japan to take initiative in establishing emissions and fuel efficiency measuring methods using a globally-unified scale.
　

(2)Auto-related taxes

Second, we called on the government to achieve a wider market recovery by further reviewing auto-related taxes.
　
Since the drastic review of the taxation on automobiles is planned in two years from now, we asked the government to bring forward the implementation, including abolition of the automobile acquisition tax and tonnage tax. As you are aware, auto-related taxes in Japan are more complicated and excessive than those in the EU and US, and international harmonization from the viewpoint of auto users is called for.