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JAIA Chairman Press Meeting (July 2012)

2012/07/25


Following is a speech by JAIA Chairman at a press meeting held on July 25 (Wed), 2012.

Mr. Nicholas Speeks

1.Greeting and Economic Conditions

I was appointed as the 8th chairman of JAIA at the 47th general assembly held on May 25th. Created in 1965 as a grouping of private importers of mainly foreign automotive brands, JAIA has evolved to include nearly all major European and US brands represented in Japan mainly through wholly owned subsidiaries as well as some Japanese manufacturers. We continue to conduct our activities together with our members and their affiliated partners, such as to contribute significantly to Japan’s economy as a committed member of the local community.
I am very honoured to act as the chairman of this long-established organization and I look forward to your continuing interest and support.
As the chairman of JAIA, I am determined to make the best efforts possible to contribute to the sound development of the imported car market, to mobility issues in Japan, one of the world’s leading countries in automotive and traffic technology and to the on-going development of the market for vehicles and motorcycles.
To that end, JAIA will lobby to ensure that, together with the pertinent bodies of the government, Japanese motorists can have the choice of a wide range of vehicles and motorcycles marketed by our members, which are developed based on cultures and histories but not necessarily demands, which differ from those of Japan.
Now, looking at Japan’s economy, a strong recovery from the triple disasters last year is underway, which is obviously seen also in the economic indices announced by the government. In particular, the Japanese automakers have showed over the last 12 months, their ability to quickly restore their production processes and their role as the key contributor to Japan’s fortunes. As a member of the same sector, I would like to sincerely express my respect for their courage, resilience and leadership.
There are still many people and families who are forced to live in evacuation shelters, who deserve our sympathy and remembrance, and to whom I would like to extend our condolences but the disaster also displayed the remarkable qualities of the Japanese to a world in need of Japan’s contribution to economic and political developments.
Today, I would like to reflect on the results of imported vehicles in the first half of 2012, followed by a future outlook and activities of JAIA in the 2nd half of this year.

2.2012 1H Results

The market in Japan for passenger cars, including Kei cars, has risen YTD June by some 56%, a reflection of the rebound from last year’s production and supply difficulties and the government’s support for eco-friendly vehicles. In the same period, the share of the market taken by Kei cars has risen to around 34%.
For the first half of 2012, the total number of imported 4-wheelers registered was about 150,000 units, which is roughly 14% higher than a year ago but looking at the figure for non-Japanese brands only, it was about 118,000 units, up 24% from the same period last year. This is a good result if still only half of total market growth resulting in a subsequent drop in market share but this reflects the fact that importers suffered a lower level of difficulty in supply in the first half of last year.
The sale of non-Japanese brands exceeding the 100,000 mark in the first half was last seen four years ago in 2008 at about 106,000 vehicles. So, in terms of numbers, the market has recovered to the levels before the Lehman crisis.
Of these, models eligible for eco-car tax incentives accounted for more than half, at roughly 56%, clearly indicating the efforts of overseas manufacturers in developing and launching vehicles that meet the criteria for Japanese governmental incentives after three years since the start of the program.

Also, about 60% qualified for the current eco-car subsidy.

3.Outlook of 2012 2H

For the whole year of 2011, the number of non-Japanese brand imports registered surpassed the 200,000 mark for the first time in four years and that trend, as I already indicated, has continued into this year. As a result, as mentioned earlier, the first half saw a year-on-year growth of about 24%.
Into the second half of the year, we shall make our best efforts so that the ongoing trend of growth can be maintained and further expanded.
Therefore, for a projection for the entire year, sales of foreign brand imports will likely exceed 230,000 units. On the other hand, however, there are concerns about the backlash from the end of the eco-car subsidy, the budget of which will likely run out soon, and no over-optimism can be allowed since the market remains of the size of 2010 and general belief is that it will continue to decline in the years ahead. In that sense, constant market stimulation measures based mainly on taxation revisions are called for.

4.Consumption Tax Hike and Auto-related Taxes

Following the passage in the lower house last month, the Consumption Tax hike is near at hand in actual situations. We at the auto industry see it as an issue with huge impacts, and actually at the time of the last tax hike in April 1997, it had major effects on auto sales.
As you are aware, in this country, the Acquisition Tax is levied on purchase of motor vehicles, creating double taxation with the Consumption Tax. On top of that, the Automobile Tax and Tonnage Tax are collected in the ownership stage, resulting in significant tax burdens on car users and thereby acting as a further deterrence to vehicle purchase.
JAIA has always called for streamlining and reductions of taxes on automobiles especially now since any hike in the Consumption Tax while maintaining the ongoing complex and excessive taxes on autos is both unfair and discriminatory toward the car-owning public.
We have recently submitted to the ministries concerned our Written Request for Taxation Revision, which included these points. We will also participate in hearings by METI and other ministries to make statements directly to the government, in addition to vigorously approaching other parties concerned at such occasions as the Automobile Taxation Forum in collaboration with other industry organizations.
We hope that our voice added to that of JAMA and JADA will produce a “fair deal” for the driving public in Japan.

5.Structural Issue

For the years to come, Japan will continue facing the issues of a declining birthrate and the subsequent aging of society and rapid decline in overall population. It is something that any industry, including the auto industry, should be concerned about.
Additionally customer preferences are diversifying more than ever and businesses are increasingly expected to offer products that can address individualization as a key for their success. For vehicle manufacturers, this means vehicles that address consumer needs in terms of safety, environmental impact and perceived value and services around the vehicle that cater to the individual situation of the customer.
JAIA is convinced that, in this situation, a fair competitive environment for the whole vehicle market should not be undermined by the allocation of tax and other advantages to any single market segment or customer group and that all motor vehicles , including Kei cars, should be handled in a non-discriminatory way. That the government continues to provide support for environmentally friendly vehicles is not disputed, indeed it is to be encouraged, but such incentives should not be biased toward a particular size, drive train technology or engine displacement.
JAIA hopes that the government will take advantage of the introduction of the Consumption Tax to revise the overall tax system for automobiles so that competition on a level footing is ensured.

6.Efforts for Technological and Environmental Issues

JAIA attaches priority to four technological issues: (1) First is the Worldwide harmonized Light vehicles Test Procedure, known as WLTP; (2) Second the High Pressure Gas Safety Act; (3) Third the International Whole Vehicle Type Approval or IWVTA; and, (4) Fourth the lithium-ion battery issue and EV infrastructure.

(1) Worldwide harmonized Light vehicles Test Procedure (WLTP)
World-wide, manufacturers are introducing next-generation vehicles which offer superior environmental performance and better fuel efficiency. As importers, it is important for us that regulatory standards and the development of the infrastructure do not impede the introduction of these new technologies.
Fuel efficiency and emission standards have a huge impact on our product planning and technological development. The 2020 fuel efficiency standards have recently been determined at a joint study group of three ministries, which reached an agreement to discuss the adoption of the World-wide harmonized Light vehicles Test Procedure (WLTP).
JAIA welcomes the cabinet’s recent decision, based on the recommendation of the Government Revitalization Unit, that Japan should consider quickly the adoption of WLTP and the unification of emissions regulations. We call for the quickest and smoothest shift possible.

(2) High Pressure Gas Safety Act
There have been cases in which new technologies to address environmental issues that have been developed and already marketed overseas by non-Japanese manufacturers cannot be introduced only in Japan. Of particular concern are the restrictions under the High Pressure Gas Safety Act on:
A) A new refrigerant for mobile air conditioning (MAC) that can effectively protect the ozone layer and prevent global warming;
B) FCV hydrogen tanks;
C) Hydrogen airbag inflators (September 2012); and
D) LPG and CNG fuel tanks.
Presently, these technologies and systems are not allowed in Japan due to the High Pressure Gas Safety Act, which, I think, is unfortunate for those customers seeking eco-friendly products.
JAIA will continue to urge the government to take the necessary steps to allow their earliest possible adoption.

(3) International Whole Vehicle Type Approval (IWVTA)
Under the initiative of the Ministry of Land, Infrastructure and Transport, or MLIT, last November, the World Forum for Harmonization of Vehicle Regulations, known as the WP29, approved a roadmap for the creation of an International Whole Vehicle Type Approval, or IWVTA (by March 2016).
JAIA welcomes and supports this initiative. JAIA hopes that Japan will work closely with its partners in WP29 for the early establishment and introduction of IWVTA with the least number of exceptions for unique national requirements.

(4) Lithium-ion Battery
Many next-generation vehicles will most likely be equipped with batteries that are not used in conventional internal combustion vehicles. JAIA urges the government to work with its partners to promote globally-unified standards or specifications concerning battery capacity, charger performance, charging infrastructure and safety during transport and disposal.
In addition, as the use of lithium-ion batteries expands, recycling will become an issue. However, since such batteries have been installed only in a handful of models, it is impractical for car importers, and some Japanese carmakers, to develop a mechanism of recycling on their own. JAIA will work with other interested parties to ensure that lithium-ion batteries can be recycled in an environmentally responsible and cost effective manner.

7.Motorcycle Services

JAIA’s motorcycle activities, which commenced in July 2010, have entered the third year of service. The Motorcycle Committee, established at the same timing, has been acting as a core, working on such immediate tasks as the stimulation of the small motorcycle segment, which has been on the decline since around 2000.
Specifically, we are seeking a review of the highway tolls and improvements to the motorcycle licence system, in cooperation with the Motorcycle Committee of the Japan Automobile Manufacturers Association, or JAMA.
At the same time, in response to the tightening of motorcycle emissions and noise regulations, we are proposing the formulation of regulations based on the international standards harmonization, while focusing on discussions of a system for efficient and flexible handling of certification procedures with support from MLIT.

8.Participation in TMS as Co-organizer

Last year, JAIA participated in the Tokyo Motor Show 2011 as a co-organizer, and an agreement has just been reached with JAMA to be a co-organizer again for the next and subsequent shows.
As to the roles of JAIA during the occasion, the chairman will act as the vice chairman of TMS, attending the opening ceremony and other official events. Also, the JAIA secretariat will participate in preparatory meetings, gaining opportunities to present views of imported cars for the organization of the show.
We are hoping that, by securing participation of as many member importers as possible, we can be of service to the success of TMS and stimulation of the vehicle market in Japan.

9.Closing

In closing, JAIA is determined to continue working with JAMA, the Japan Automobile Dealers Association (JADA) and other industry groups, as well as with METI, MLIT and other government bodies to maintain Japan as a significant and viable automotive market.