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JAIA Chairman Press Meeting (July 23, 2014)

2014/07/24


JAIA Chairman Press Meeting (July 23, 2014)
Following is a speech by JAIA Chairman at a press meeting held on July 23 (Wed), 2014.

Mr. Shigeru Shoji

At the 49th General Assembly of JAIA held on May 23, I was appointed as the tenth Chairman of the Association, and I am very honored to assume the weighty responsibility of Chairman of this long-established organization.

Results of 2014 1H

Last year’s sales of foreign-brand vehicles of about 280,000 units was a level last recorded 17 years ago. That trend continued into this year and the result for the first quarter to March was remarkably high, up by about 30 percent from a year ago, partly due to the last-minute increase in demand before the tax hike.

However, after the hike of the Consumption Tax in April, as was expected and turning over the trend to March, the market nosedived in April onward and the result for the second quarter was down by about 16 percent comparing to the previous year, obviously indicating the so-called reactionary decline.

As a consequence, sales of foreign brand vehicles in the first half of 2014 were up 8.0 percent from a year earlier to about 144,000 units and the same of total imported vehicles including Japanese brands were down 1.1 percent to about 169,000 units.

Although the market continued to decline from April, we need not to be disappointed about the half year period, since the result for the foreign brands was a record high level for a first half period.

Further, in terms of the results by price range, it is noteworthy that those models priced at \10 million or more are selling steadily even after the Consumption Tax hike, suggesting underlying strength of consumer confidence.

Outlook for 2014 2H

The last-minute increase and reactionary decrease in demand due to the Consumption Tax hike, which, in other words, tell us how customers are sensitive about taxes. From that standpoint, needless to say, substantial reductions in the excessive tax burdens of buying and keeping a car is an urgent issue.

The effects of the reactionary decline from the tax increase will likely lessen gradually into the second half of the year. In addition, with some brands planning to launch new models of their key products, we are hoping to see the market recovering to the levels of a year earlier. Thanks partially to the Tokyo Motor Show, the result for the second half of last year was about 147,000 units. If the same level of sales as in last year is maintained, the figure for the whole year may reach 290,000 units. However, since this is a year of no TMS, that should be taken as an upper threshold, and we are looking forward to further recoveries in the months to come.

However, in the mid- to long-range, Japan is set to face the problems of the declining birthrate and aging of society, and a rapid fall in population, which will be major issues for the auto industry.
Meanwhile, as preferences of customers diversify more than ever, it is a must for us to offer products that can address their requests. For automakers, it is required to provide the products with which customers can recognize the values and services tailored each and every one of them, while meeting the needs for safety and the environment.

From that perspective, JAIA is concerned that fair competition have been hampered by the preferential treatments given to certain segments in terms of taxation. We are convinced that motor vehicles as a whole including Kei-cars should be treated without discrimination. By this, we are not objecting to the government granting support for eco-friendly vehicles. We think it reasonable that such incentives should be based on fair criteria without placing unbalanced emphases on any specific body size, drive train or engine displacement.

In order to establish conditions for fair competition, JAIA will continue calling on the government to reduce tax burden on users and streamline taxation system on automobiles.

JAIA activities and issues

(1) Taxation revision request

In collaboration with other automotive associations, JAIA has been calling for “streamlining and reductions” of the auto-related taxes, strongly requesting abolition of the Automobile Acquisition Tax and the Tonnage Tax. However, while the latest Taxation Revision Outline of the government specifies “the abolition of the Acquisition Tax as of the Consumption Tax hike to 10 percent”, the Tonnage Tax will, unfortunately, continue to be applied, which is an issue to be resolved. Furthermore, we are seriously concerned about the current situation in which the Tonnage Tax, which has lost the ground for levying due to the inclusion in general revenue, may practically become again tax revenue for specific purpose of “maintaining and upgrading road infrastructure”.

Therefore, JAIA will strongly request the assured abolition of the Acquisition Tax as of the Consumption Tax is 10%. We also strongly request a drastic review of the Tonnage Tax including its abolition.

The Taxation Revision Outline describes the proposed “environmental tax brackets” of the Automobile Tax levied upon purchase of vehicles. This is, essentially, mere replacement of the Acquisition Tax to secure tax revenues, which is totally unacceptable.

In addition, for the so-called Eco-car Tax Incentives, which has been applied as a special tax measure, looking at the past records, the incentives obviously served as a “factor that has positive or distorting impact on a formation of market”. We will be carrying out our external affairs activities to strongly call for upgrading Eco-Car Tax incentives based on fair and reasonable criteria which will stimulate further improvement in environmental performance of both Next Generation Vehicles and Internal Combustion Engine Vehicles, making them well-balanced that take into account every kind of power train, while looking at the sustainable development of motor vehicle market in the future.

(2) Activities for technological and environmental issues

Next topic is about the priority issues for JAIA in the technological and environmental areas.
There are four key items:
(1) International whole vehicle type approval (IWVTA)
(2) Motor vehicle noise regulations
(3) Regulations pursuant to High Pressure Gas Safety Act
(4) International harmonization of regulations pursuant to Radio Act

(1) Based on initiative of MLIT, the WP29 has approved the roadmap for creation of the international whole vehicle type approval (IWVTA) and the new scheme is slated to start in March 2016, to which JAIA has great expectations.
However, as several steps will be required to complete the entire IWVTA system, only the first step will be commenced as of March 2016 and a number of unique national regulations will remain applicable for some time.

JAIA wishes to see quick establishment and adoption of IWVTA as originally intended, under which exceptions based on Japan-unique requirements will be minimized, if not eliminated, and for the vehicles manufactured in the US/EU and certified under IWVTA, work to obtain certification in Japan will not be needed.
For that end, we are ready to cooperate in the development of the workings and calls on MLIT and other parties concerned to vigorously perform the work in close coordination with the other countries concerned.

(2) Currently for Japan’s noise regulations, Japan’s unique running noise test procedures and stationary noise regulations are applied for four-wheelers.
For that reason, even when a vehicle complies with the UN regulations and is granted with its approval, it must go through testing in accordance with Japan’s regulations, which is causing huge burdens on our member importers.

Recently, discussions are held to harmonize Japan’s won noise regulations with those of the UN, but so far, no conclusion has been reached for complete harmonization.
JAIA will continue to cooperate for full harmonization of Japanese regulations with those of the UN, while asking MOE and other parties concerned for their understanding and support.

(3) In recent years, cases were found in which those new environment-friendly technologies developed by overseas manufacturers and already certified/marketed in overseas markets are not practically allowed to be imported to Japan only, due to the regulations pursuant to the High Pressure Gas Safety Act.
Examples in recent years include the vehicles equipped with hydrogen airbags and the MAC refrigerant filling/recovery units; however, thanks to the cooperation of the ministries concerned, revisions to the schemes that allow their import and/or maintenance work will be implemented in due course. We would like to show our appreciation for the ministries concerned.

However, relating to the High Pressure Gas Safety Act, there remain major issues for deregulation of the “hydrogen tanks for fuel-cell vehicles”, “natural gas vehicle fuel tanks” and the like.
While making earnest efforts to explain to the ministries concerned that there is no safety issue, we are asking for quick approval and introductions in Japan of those vehicles with equipments made of reliable materials which are certified in overseas will be realized, so that those imported vehicles can contribute to the protection of the environment in Japan.

(4) For the 76GHz-band radars that are used in adoptive cruise control and automatic emergency brake systems, developments are under way recently for more precise detection of obstacles by raising resolution to further reduce the number of traffic accidents. In order to introduce these systems to Japan, needless to say, it is a minimum requirement to comply with the Radio Act.
However, while available bandwidth is 1GHz not only in the US and the EU, but also in most of other key countries of the world, it is limited to 500MHz in Japan. For that reason, it is presently not possible to introduce those advanced systems in Japan, and in order to launch them in the Japanese market, the Radio Act and other regulations concerned must be revised to allow bandwidth of 1GHz.

We have been requesting extension to 1GHz since 2013 in order to provide vehicles that can contribute more to safety and will continue calling on the government to take steps for early attainment through participation in council meetings, etc.

(3) Motorcycle services

Welcoming two-wheeler importers as members, JAIA has been offering services for imported motorcycles since 2010. Its key activities have been carried out in the following three areas:
(1) International harmonization of standards;
(2) Streamlined certification system called Preferential Handling Procedure, or PHP; and
(3) Stimulation of the market.

For the international harmonization of standards, steps forward concerning standard harmonization for lamps and steering equipment are recognized, but for noise, Japan’s unique stationary noise regulations remain applicable, and going forward, JAIA will be strongly calling on the ministries concerned to adopt reference value regulations in accordance with the UN regulations.
Also, Japan’s third emissions regulations currently under study will likely be Japan-unique regulations, albeit some sections are equivalent with the EU4 regulations.
JAIA intends to submit requests in order to allow to be introduced, into the Japanese market, those vehicles meeting the emissions regulations of the EU or the US without going through additional tests.

For PHP certification, four member companies have already obtained approvals, while other members either have already made or are preparing to make applications. Efforts will be continued and upgraded to further establish and streamline the system for expanded utilization of PHP.

For the market stimulation activities, priorities are placed on:
(1) Reduced burdens to riders of obtaining license and review of license categories from a global perspective; and,
(2) Upgrading and expanding parking spaces in cities.

Also, joining in with the activities of the Bike Love Forum (BLF), which was commenced by joint-initiatives of motorcycle-related organizations and the governments and aims at achieving a domestic motorcycle market of 1 million units by 2020, JAIA is collaborating with the other organizations concerned in seeking development of conditions for revitalization of motorcycle market.

Participation in Tokyo Motor Show as co-organizer

JAIA has been participating as a co-organizer since the 42nd Tokyo Motor Show 2011.

As to JAIA’s roles, the Chairman serves as a vice chairman of TMS, attending the opening ceremony and other official events. Also, the representatives of member companies and the Secretariat attend various preparatory meetings, gaining opportunities to present positions of imported vehicles preparing and organizing TMS. The Secretariat is providing the relevant information for the member companies and their OEMs to be able to consider possibility of their participation.

Now, preparations for the 44th Tokyo Motor Show 2015 to be held next year are under way, and JAIA is determined to be more actively involved than ever and do its best to make TMS a wonderful event.

Goals as the Chairman

As the Chairman of this Association, I will focus on two points. First is our efforts for the Tokyo Motor Show 2015. Ever since the economic crisis, the scale of participation by overseas brands is shrinking, but in collaboration with JAMA, I am determined to spare no effort to make TMS a globally-attracting event. The site of the show, Tokyo Big Site will be used also as the press center for the 2020 Tokyo Olympics, and an expansion in the future is also expected. I would like to make contributions for the creation of an appealing site.
Second is to support the active moves of imported cars in the Japanese market amid such brand-new changes as alteration of consumers’ interest in imported vehicles and introductions of advanced technologies. As shown by Volkswagen Golf winning the Japan Car of the Year award for the first time as an imported model last year, there has been major change in the interest of consumers in imported cars, which used to be called garish and received special treatment.
In addition, with the recent market share of Kei-cars sales exceeding 40 percent and that of new generation vehicles equipped with new power trains such as HEV and clean diesels increasing, the Japanese market has entered an era of change, which could be described as movements at the earth’s crust. I will do my best to create a situation in which imported cars will enjoy growing consumers’interest in this time of sea change.