Chairman’s Press Conference, July 2020

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Chairman's Press Conference July 17, 2020

Mr. Till Scheer

1. Opening Remarks: My Plans as the New Chairman

Currently we are facing a challenging time in Japan. On one hand the heavy rainfalls in this month caused heavy damages to the people. I want to express my sincere condolence and hope that the region will be able to recover as fast as possible.

On the other hand the Corona pandemic reached an extent nobody of us would have imagined a couple of months ago. It has caused a lot of tough individual fates in respect of health, but also of business and financial situation. At the same time many people have been continuously making great efforts to help to overcome the situation together, also in our industry.

Having been named JAIA Chairman, let me first express my respect for the great accomplishments of my predecessor, Kintaro Ueno. I would also like to thank you, the representatives of the press, for your continuous support regarding the activities of our organization. I am really honored by having got the occasion to take over the responsibilities of heading JAIA as the thirteenth Chairman.

I would first like to do a review on new imported vehicle sales in the first half of 2020, which reflect the impact of the COVID-19 pandemic, and also discuss the sales outlook for the second half of the year.
Let me then elaborate on our main topics for the latter half of this year, “Electrification” and “Safety-related Activities”.
My last point will be our plan regarding “Motorcycle related Activities”.

Our industry is currently facing issues of unprecedented urgency worldwide.

Under these difficult conditions, at JAIA we will make every effort in order to contribute to the recovery of the economy together with the government and with the industry ASAP. JAIA is also decided to accompany the ongoing paradigm shift of the industry and to support consumers accordingly. The JAIA member companies will establish a new value system for “New Normal” including digitalization and telework to fulfill their social responsibility and to help to overcome this difficult period by cooperating closely with government and related bodies while maintaining the currently required “Social Distance”.

At the same time, facing this unprecedented situation, JAIA will request the government to ensure the continuation of proactive policy measures for the recovery of the domestic auto market on equal base, in order to lessen the impact on our business and the potential risks.

2. New Imported Vehicle Sales in 2020 H1

Sales had been steady until September. From October on we recorded a slowdown due to various negative factors including the consumption tax increase and the impact by the disastrous Typhoon Hagibis. Total annual sales were finally below 300,000 units with 299,439 vehicles, but we achieved yet the fifth highest annual total ever.

From January of this year, effects from the deceleration during the second half of 2019 could be still observed, but a trend of recovery came gradually into view. However, with the outbreak and spread of the coronavirus the negative impact increased. With the declaration of the State of Emergency by the central and by the local governments in late March, the impact on showroom traffic and on sales activities became substantial.

Since April, overall vehicle sales in Japan have plummeted, and sales of foreign-branded, four-wheel vehicles recorded an unprecedented margin of decline, resulting in year-on-year minus during six consecutive months beginning in January.

Total sales in the first half declined by 23.2% compared to last year with 114,380 units. Overall imported vehicle sales, including Japanese-branded vehicles, decreased 21.7% to 137,826 units.

3. Outlook for New Imported Vehicle Sales in 2020 H2

In the current market environment, after the government has lifted the State of Emergency on May 25, showroom traffic is showing signs of a recovery. Putting top priority on the health and safety of customers and sales personnel, ten auto industry organizations, including JAIA, formulated “Anti-Coronavirus Guidelines for Automobile Sales Business” to prevent a further spread of the virus, while recommencing economic activities.

Sales activities are carried out, while thoroughly implementing prevention measures on the basis of these guidelines. Some of these measures such as shorter business hours, entrance restrictions or the request to wear face masks, might be perceived as curtailing convenience, but we would like to kindly ask for the understanding of our customers in this regard.

The JAIA member companies have been working on the utilization of online channels for customer relation management, including sales over the Internet, since long. However, now, where a lifestyle of “New Normal,” is required to overcome the coronavirus, and where personal mobility is getting new appreciation as a safer way of moving, the JAIA members are planning to further accelerate their initiatives.

Even in the first half of this year, under the menace of COVID-19, JAIA members introduced new and limited-edition models to deliver the latest imported vehicles to customers in Japan.

This will be proactively continued in the second half as well. As an initiative to stimulate the market by lessening the burden on consumers, which is an important role of JAIA, we will continue to urge the government to further reduce the tax burden, which is excessive even by international standards, and to revise the tax code to make it simpler and fairer.

At present, we are not making specific predictions for vehicle sales, but through these initiatives, we are expecting a steady recovery in the market.

4. JAIA Main Activity Plan

COVID-19, which I touched on at the beginning, is affecting development at our overseas head office divisions, production, supply chains, certification, and international logistics; it causes delays regarding compliance with related standards, as immigration restrictions are hindering the movement of personnel essential for our business activities, and ultimately affecting the sales frontlines in Japan, that is why our business is directly facing issues of great urgency.

It is difficult to predict the impact of the COVID-19 pandemic until the spread of the virus has subsided. There is the concern that it will further continue to affect the auto industry around the world. In light of this not at all other than ordinary situation, we welcome the emergency measure by the government, to extend the 1% environmental-performance-dependent reduction of the automobile tax, by six months until end of March 2021 instead of until this September.

Regarding the timing of the binding application of new emission standards after explaining the current situation for the imported vehicle brands to the involved ministries we submitted an emergency request, for which we could achieve their understanding. For other urgent issues related to the effects of COVID-19 as well, JAIA will work closely and coordinate with the authorities in charge in order to be able to continuously meet the expectations of the consumers in Japan as well as possible.

My next point is our activities around the promotion of electrified vehicles.
With the recently often occurring flood catastrophes across Japan and increasing debates about the causality, measures against further global warming are becoming top priority issues. Amid this, regulations are being strengthened in countries around the world to reduce carbon dioxide emissions from automobiles.

The government has set an initial target of electric vehicles, plug-in hybrids, and fuel cell vehicles accounting for 20–30% of new vehicles sales by fiscal year 2030, and to fulfill the recently formulated fuel economy standard for fiscal year 2030, further promotion of EV sales will be indispensable.

So far the main members of JAIA have individually conducted activities to promote electrified vehicles, but these activities will be now promoted also by JAIA as a whole in order to increase the awareness of imported electrified vehicles. As part of our more proactive promotion of electrified vehicles, we will listen carefully to the needs of the market, and actively pursue discussion with government and related bodies to have tax incentives extended, subsidies continued and improved, and the charging infrastructure enhanced for the benefit of the customer.

Let me come to my 3rd point, safety-related activities by JAIA.
Since last year, there have been a number of tragic accidents with elderly drivers involved. As part of the counter-measures, the government has made advanced emergency braking systems (AEBS) with pedestrian detection mandatory and has introduced a safety support car subsidy for owners 65 years old and above as an urgency measure.

JAIA appreciates the prompt reaction by the government and would like to take this opportunity to express our gratitude for implementing a program fair also for imported vehicles.

After the bill to amend the Road Traffic Act has been passed in June, we will continue the dialogue with the authorities in charge on the limited licensing system that will go into effect in 2022 as a further safety measure, and share safety-relevant concepts and specific functions by import car makers from a long-term standpoint, in order to actively cooperate with the government to increase efficiency of systems preventing and mitigating accidents.

Development of autonomous driving technology is continuously making progress, and at this point of time, it has advanced to Level 2 in the form of driving assistance systems to support the drivers to increase safety.

In Japan, Europe, U.S.A. and other countries where the auto industry is working to achieve the ultimate target of zero accidents, the number of fatal accidents has been steadily decreasing. JAIA will continue actively autonomous driving-related activities to further improve safety.

This fiscal year, Japan will enter the first state of “Level 3” on expressways, and “Level 4” will start in limited areas. Development of autonomous driving technology is steadily progressing not only in Japan, but to same degree among overseas manufactures as well.

In order to broadly promote various foreign and domestic autonomous driving technologies in Japan and to build an appealing market, JAIA considers the international harmonization of autonomous driving-related regulations as extremely important.

Currently, in this regard, we are cooperating with the European Automobile Manufacturers’ Association, the American Automotive Policy Council and other bodies to have the autonomous driving-related regulations being established by the World Forum for Harmonization of Vehicle Regulations (UN WP29) applied in Japan, and we will continuously monitor the further related developments.

Regulations around autonomous driving are just one important example. In order to be able to continuously introduce appealing imported vehicles in Japan, at JAIA we are committed to continue our activities related to the harmonization of international regulations with the ultimate goal to realize an overall mutual approval for the whole vehicle (IWVTA).

5. Activities related to imported motorcycles

Motorcycle activities by JAIA are comprised on the two pillars of activities for market revitalization and activities for promoting international harmonization of safety and environmental technology standards.

Regarding the first pillar, activities for market activation, we had planned to hold the 6th JAIA Motorcycle Test Ride for media members in April of this year and made preparations, but after carefully considering, if our top priority to ensure the health and safety of the participating representatives from the press, of the exhibitors and the venue staff, we finally decided to cancel the event.

These test rides allow to experience the latest models from our members, that is why we are planning to organize them again in the future. Thank you for your understanding and in advance for your cooperation.

Further, in partnership with other groups, JAIA has requested to improve conditions regarding the use of motorcycles through meetings of project teams and review committees for motorcycle-related projects by the government or by political parties.

As a result of external affairs activities for an independent category of expressway tolls and more appropriate tolls based on this, the “Motorcycle Touring Plan” was carried out for three consecutive years from fiscal 2017. JAIA will continue the ongoing external affairs activities.

Regarding the second pillar, international harmonization of safety and environmental technology standards, at the meeting of UN WP29 in November of last year, UN Regulation No. 53, the standard for installation of lighting and light-signaling devices on motorcycles, which had been prepared during many years, was adopted. JAIA hopes it will be incorporated into Japan’s regulations.

JAIA will continue to enhance the activities to realize further international harmonization of standards.

6. Conclusion

I would like to reconfirm the JAIA commitment to cooperate with the Japanese government and the various auto industry bodies in order to meet the expectations of consumers better and to reduce their financial burden to provide appealing products with outstanding environmental and safety performance, and to create new business formats and a ‘New Normal” to overcome this difficult period.