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JAIA Chairman’s Press Conference Speech, August 2021

2021/08/25



Mr. Till Scheer

1.Opening Remarks

Right now, we are seeing some progress on Japan’s COVID-19 vaccination program thanks to the great efforts of central and local governments, and we sincerely hope the situation will improve as soon as possible and that entering Japan on professional base will soon be possible again.
Many people, we in the auto industry included, are continuing to make major endless efforts to help us all overcome recent Covid-induced difficulties.

We would like to ask the government to continue providing support for a full-fledged recovery in the Japanese automobile market.

2.New Imported Vehicle Sales in the First Half of 2021

Four-wheel vehicles in the first half of 2021 from January to June, which continue on the recovery track first noted in the second half of 2020.

While we are seeing some rebound demand from the sharp decline caused by the spread of COVID-19 in 2020, vehicle sales exceeded the previous year’s level for the four consecutive months from March through June. In June, sales increased by 45.2% year on year, recovering close to 2019 pre-Covid levels. In addition, seven brands reported record-high sales in the first half of the year.

The main factors underpinning this strong performance were the general shift to personal mobility as a safer means of transportation in the wake of the COVID-19 pandemic and a consequent growing demand for second cars, along with each brand’s introduction of new models for their flagship mass-market vehicles as well as limited-edition models.

Sales of SUV models in particular continued strong due to outdoor demand. As a result, the SUV market share held by foreign automakers rose above 40% for the first time and reached a record-high for the first half.

Sales of EV and PHEV vehicles increased rapidly as JAIA member companies expanded their range of electric and other vehicles. Sales of electric vehicles in particular increased steadily in the first half to 3,270 units. That figure is 4.7 times higher than in the previous year.

As a result, overall sales of new foreign-brand vehicles increased by 19.3% year on year to 136,491 units in the first half of 2021. That figure represents the first year-on-year increase for the first half of the year in three years, and the attainment of a record –high 9.0% market share of registered vehicles. Furthermore, total imported vehicles, including vehicles made by Japanese automakers, also rose by 35.5% year on year to 186,818 units.

3.Outlook for New Imported Vehicle Sales in the Second Half of 2021

As we witness signs of improvement in consumer sentiment in Japan as well, we expect that future progress on Japan’s vaccination program and other measures to combat COVID-19 and a lifting of Covid restrictions on movements will also help boost a further recovery in the automobile market.

Against that background, looking at imported vehicle sales in the second half of the year, we would expect that the sales of the new models of the volume segment launched in the first half will further grow. On top of that, further launches and introductions of new models and limited editions are awaiting, including electric vehicles and SUVs.

We are also focusing on whether teleworking-inspired lifestyle changes, such as rural migration and the holding of dual residences in the city and country, will also enhance the demand for vehicles.

Finally, in terms of annual sales, 2021 sales volumes should recover to pre-Covid level, nevertheless, the current Covid 19 situation as well as semiconductor shortage may affect the sales development for the rest of the year.

4.JAIA’s Main Activities

Activities to revitalize the market.

One of JAIA’s important roles is to revitalize the automobile market and reduce any burdens on vehicle users. As such, one of our main activities involves external affairs activities to the government to revise automobile-related taxes.

Regarding fiscal 2021 revisions to the automobile tax systems, as was requested by JAIA, a number of measures were implemented: extension of temporary special measures, including eco-car tax incentives and environmental performance levy, continuation and expansion of subsidies; and measures for clean diesel vehicles to mitigate abrupt changes. These prevented major increases in automobile-related taxes, so I wish to express our appreciation to the government once again. On the other hand, the tax burden for registered vehicles remains more than double that for kei cars, so we need to see a more thorough review of this issue.

JAIA will continue to advocate for further reductions to the automobile-related tax burden, which is excessive even by international standards, and for the simplification and fairness of the tax systems.

The environmental area. In particular, the spread of electric vehicles and the expansion of charging infrastructure.

As you know, last year, the Japanese government announced its major policy outline for achieving carbon neutrality by 2050. That was followed, in January this year, by the announcement of a target to ensure electric vehicles account for 100% of new passenger car sales by 2035. Then, in June, the government announced its green growth strategy and a specific goal to install 150,000 chargers, including 30,000 public quick chargers. Let me say that JAIA greatly appreciates these moves by the Japanese government.

If we look at the measures being taken in other countries, in Germany, subsidies for vehicle purchases have been increased against the backdrop of economic measures to counteract the impact of the spread of COVID-19. Charging infrastructure and the range of electric vehicles on offer also have been expanded. As a result, in Germany, EVs increased 3.1 times year-on-year and PHEVs 4.4 times year-on-year in the new passenger cars registration in 2020. In addition, EV and PHEV sales as a proportion of Germany’s total new vehicle sales rose to above 20% in the first half of 2021.

We expect the Japanese government to continue to support the promotion of electric vehicles, by, for example, continuing or further expanding subsidies for electric vehicles and charging infrastructure.

Last year, JAIA established a task force as a shared platform to promote EV and PHEV, and has been engaging in relevant activities. Part of those activities involved conducting a user survey last year, which clearly highlighted various issues. First, imported electric vehicles were not fully recognized. Second, when it comes to buying a car, users are sometimes hesitant to purchase electric vehicles due to either a lack of charging infrastructure or concerns about the charging. And third, user profiles revealed that certain types of people were more open to buying EVs and that the range of EVs on offer needed to be expanded.

Following these survey results, on June 10, JAIA held an exhibition event to raise public awareness based on the concept of “Start now to prepare for 2035. Work to create a carbon neutral era,” with JAIA members displaying a full lineup of imported EV and PHEV, including vehicles that had not been released in Japan.

Many journalists from 35 media organizations attended the event, and we received video messages from Japan’s Ministry of Economy, Trade and Industry, Ministry of Land Infrastructure, Transport and Tourism, and Ministry of the Environment, all praising the timely nature of the event.

If you want to promote electric vehicles, it is vital to expand charging infrastructure, as indicated in the government’s green growth strategy. To give you an example, imported vehicles make up approximately 25% of the registered vehicles in Tokyo’s 23 wards and around 50% in Minato ward. JAIA sees the enhancement of public charging infrastructure in urban areas and the expansion of charging facilities in apartment complexes as urgent issues. Dealerships are accelerating their moves to install charging facilities in response to electrification trends. The government has offered subsidy support to these dealers, but those subsidies come with conditions, such as a dealership is not eligible for subsidy support if a quick charger is available within 15 km. We expect those conditions to be abolished.

So, let me say once again. It is extremely important to expand the quantity, and quality, of charging infrastructure to match the expansion of new electric vehicles sales and stock of those vehicles. There are many ways to do this, but JAIA is paying particular attention to demonstration experiments for roadside quick chargers currently being carried out in Yokohama and private companies that are offering charging facility installation services in apartment complexes.

While the market for electric vehicles is expected to expand as Japan’s carbon neutral strategy is steadily implemented, we will likely witness fierce competition in terms of price, performance, and services including charging. Furthermore, we believe the formulation of appropriate life cycle assessments, from production, through use, disposal, and recycling in a harmonized manner with major markets, will become increasingly important over the medium- to long-term.

JAIA will continue to support our members to enhance their commercial viability and expand their product lineup, while also working to further improve the visibility of imported vehicles and grasp user needs.

Activities related to safety and international harmonization of regulations.

It is extremely important that Japanese standards and certification systems are in harmony with those in the world so we can provide imported vehicles that meet Japanese standards without subjecting the Japanese consumers to additional unnecessary costs. JAIA has been requiring the Ministry of Land, Infrastructure, Transport and Tourism to harmonize Japanese standards with United Nations international regulations, such as UNR and GTR. Furthermore, regarding the certification system for confirming standards compliance, we have also been asking the Ministry to utilize the Reciprocal Recognition of Approval system based on the UN’s 1958 Agreement for certifying as many motor vehicle devices as possible.

These JAIA activities culminated in the decision to start operating the International Whole Vehicle Type Approval (IWVTA) certification system for the whole vehicle from April 2019. Some additional target devices still need to be included to make the IWVTA system more complete. However, the new UN-R154 relating to the most important issues, namely emissions, fuel / electricity efficiency, was proposed for inclusion in the IWVTA list of candidates at the UN’s Working Party 29 Meeting in June 2021. This is a major step forward for creating a complete IWVTA, and JAIA has great expectations about this move.

When it comes to automobile safety technologies, the advanced emergency braking system (AEBS) has fixed requirements for vehicles and pedestrians that are determined by safety regulations. The range of imported vehicles offering safety-conscious features is increasing, such as bicycle- or intersection-responsive AEBS. Other safety devices that help a vehicle maintain its lane and prevent lane departure, or high-functioning headlights that prevent glare from oncoming traffic are also increasing.

In addition, the autonomous driving technologies being developed are making steady progress toward the auto industry’s ultimate goal of zero accidents. In order to promote the widespread development of autonomous driving technology and build an attractive market, it is very important to ensure the international harmonization of autonomous driving-related laws and regulations. For example, Level 2 advanced driver assistance systems (ADAS), event data recorders (EDR), Level 3 or above automated lane-keeping systems (ALKS) and data storage systems for automated driving (DSSAD), where we expect to see accelerated commercialization. To encourage this, it is important to achieve international harmonization of standards from the safety logic building stage for advanced safety systems, such as autonomous driving.

In order to ensure the safety of autonomous and other advanced vehicles, it is important to ensure the safety of in-vehicle systems, such as cyber security (CS), software updating (SU), and the way in which they are used. To respond efficiently these requirements, we need to take steps from a global perspective by, for example, utilizing the CS/SU management systems of overseas OEMs in Japan.

In addition to promoting these initiatives, JAIA members also want to launch autonomous driving and connected vehicles onto the market in a timely manner going forward.

Promotion of automobile fair trade and our efforts in the area of after-sales service.

Regarding automobile fair trade, JAIA will continue to actively participate in working groups of Japan’s Automobile Fair Trade Council, to ensure JAIA members are well informed about automobile fair competition protocols, and to promote activities designed to ensure fair trade.

In the area of after-sales service, JAIA members will comply with the laws of Japan and work to appropriately respond to various outstanding issues. These issues include the electronic vehicle inspection program that utilizes on-board diagnostics (OBD) signals and is scheduled to be introduced in Japan as a means of adapting advanced electronic control devices. Other issues relate to Japan’s newly revised specific maintenance system, and the problem of securing mechanics and other service personnel who are capable of appropriately maintaining the required electronic and electrical equipment.

5.Activities for Imported Motorcycles

The number of newly registered imported small motorcycles increased by 17.1% to 11, 476 units in the first half of 2021 (January to June 2021) compared to the 9,797 units registered in the same period last year. That represents the second consecutive year-on-year rise in first-half registered imported motorcycles, and the first time the figure has topped 10,000 units in four years.

I think a number of factors are at play here. First, motorcycles offer an alternative of transportation that enables the rider to avoid the 3C’s associated with COVID-19, namely closed spaces, crowds, and close contact. Second, consumers are drawn to imported motorcycles that exude both a strong sense of particular interests to enjoy without 3C’s and unique product features.

The first of JAIA’s two pillars of motorcycle activities focuses on market revitalization. One of those activities involves the holding of imported motorcycle test ride events for the media, something that we were able to achieve in April, with Covid precautionary measures, for the first time in two years.

In addition to this, JAIA has been involved in various external affairs activities in concert with other organizations to improve the environment for motorcycle users. Thanks to those efforts, we have seen some progress on expressway tolls. While motorcycle users have to apply in advance, the campaign for using the expressway for a fixed rate fee of 50% that for a regular passenger vehicle will start next year.

On our second activity pillar, promoting the international harmonization of regulations, JAIA’s motorcycles division seeks to realize further international harmonization of safety and environmental regulations, with the UNR41-05 uniform provision for motorcycle noise being adopted at the United Nations meeting. We will continue to work proactively in this area.

6.Conclusion

In conclusion, I can assure you that each JAIA member will continue to provide attractive products with excellent environmental and safety performance. At the same time JAIA will continue to work with the Japanese government and automobile-related organizations to reduce burdens on users, and to help realize a carbon-neutral society.