JAIA Chairman Press Meeting (July 22, 2015)

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Chairman's Press Conference July 23, 2015

JAIA Chairman Press Meeting (July 22, 2015)
Following is a speech by JAIA Chairman at a press meeting held on July 22 (Wed), 2015.

Mr. Shigeru Shoji

The 50th anniversary events

This year marks the 50th anniversary of JAIA since its foundation in 1965. From February this year, we have had a series of commemorative events in gratitude for the support of the customers, the media and all the other persons concerned, and the events included the exhibition of great cars that colored the 50-year history of imported vehicles, titled “Great Cars Japan Encountered”, the Photo and Essay Contest, posting of interviews with top executive of member importers in an exclusive section of the website, and the celebration in May. Thanks to all of you, these were successfully conducted, and we together looked back the 50-year history of imported cars and looked forward toward the 100th anniversary. I would like to take this opportunity to thank you again.

Results of 2015 1H

In the last couple of years, sales of imported vehicles, particularly those of foreign brands, have grown steadily in line with the recovery of the overall market, posting about 280,000 units in 2013 and about 290,000 units in 2014. This year, although the cumulative total to March was lower than a year earlier, the segment shifted to a recovery in April onward, and the result of the first half of 2015 was slightly higher (0.5%) than the previous year at about 145,000 units. Even when the Japanese-brand imports were included, the figure for total imported vehicles stood at about 167,000 units, which is comparable to that of a year ago (year-on-year decrease of 1.0 percent).

While the criteria to be eligible for the Eco-car Tax Incentives were strengthened in April this year and fewer domestic and imported models are now eligible for maximum incentives, initiatives of our member companies, including more model variations, latest features and sales promotions, produced fruit, and the results of foreign-brand imports for the latest month of June was above the level of two years ago.

Outlook on 2015 2H

The ongoing market trend is expected to continue in the second half and the sales of foreign-brand imports for the entire year of 2015 of 300,000 units will likely come into view.

On the other hand, however, there are concerns. Japan faces a long-range problem of declining birthrate and aging of society. It is a major challenge for the auto industry including imported cars since it suggests a trend of a shrinking market for motor vehicles as a whole. Amid such changing market conditions, the sector is required to meet the ever-increasing needs for safety and the environment, accurately addressing diversifying expectations of customers, and of offering attractive products and services.

Furthermore, it is clear from the experience of the past that changes in taxation have huge impacts on the market. Last year, the market experienced a major downturn after the Consumption Tax hike to 8 percent. While it has been decided that the Tax will be hiked again to 10 percent in April 2017, customers are very sensitive to taxes. Since so many taxes are levied on motor vehicles in addition to the Consumption Tax, it is, needless to say, a critical issue to reduce the excessive burdens of buying and keeping cars.

From such perspective, we are concerned that the current system of auto-related taxes does not treat all segments in the same way, impeding fair competition. JAIA is convinced that taxes on motor vehicles as a whole including Kei-cars should be applied on the basis of objective criteria without discrimination between segments and we will maintain our position that any tax incentives should be based on fair and reasonable criteria that do not favor any particular size of vehicle, drive train, or engine displacement.

Activities and challenges

1) Taxation revision request

JAIA has, in cooperation with other automotive associations, called for the “streamlining and reductions” of the taxes relating to automobiles, and in specific, we have strongly requested the abolition of the Automobile Acquisition Tax, which constitutes double taxation with the Consumption Tax, and the same for Tonnage Tax, which lost its rationale after its inclusion in the general revenue. Although the Taxation Revision Outline of the end of 2014 clearly stated the “abolition of the Acquisition Tax as of the Consumption Tax at 10 percent”, unfortunately, it has been decided to continue levying the Tonnage Tax, and the issue remains to be solved. Furthermore, the Tonnage Tax, which is supposed to be part of the general revenue now, may practically become a specific-purpose “tax revenue for the road infrastructure maintenance and upgrading” again, causing a great concern.

Therefore, JAIA will continue calling for the assured abolition of the Acquisition Tax as of the Consumption Tax at 10 percent, and a drastic review of the Tonnage Tax including its elimination. So long as Tonnage Tax remains in place, it should be applied to all classes of vehicles on the same basis i.e. related directly to the weight of the vehicle regardless of its displacement/size.

In addition, the “Taxation Revision Outline” included a proposal for new levies depending on the environmental performance to the Automobile Tax, applicable as of the acquisition of a vehicle. Since it is in essence a replacement of the Acquisition Tax to secure tax revenues, it is simply not acceptable.

Furthermore, JAIA strongly demands that the so-called Eco-car Tax Incentives should be based on fair and reasonable criteria that take into account every power train ranging from next-generation vehicles to internal combustion vehicles and well-balanced improvements to environmental performances with an eye on the future development of motorization, and will continue its request activities to avoid the establishment of any scheme that is disadvantageous to imports.

2) Efforts for technology/environment issues

(1) International harmonization of regulations based on Radio Act

First, for the international harmonization of regulations pursuant to the Radio Act, immediate problems have been solved.

On this issue, since the bandwidth of the 76GHz-band radars used in ACC and AEB equipped in advanced safety vehicles was 500MHz in Japan, as opposed to 1GHz as internationally accepted, JAIA had requested MIC to revise the provisions concerned of the Radio Act for international harmonization in the past two years.

JAIA participated in the discussions at the working group under the council concerned, and as such activities produced results, the announcement concerned was revised as of June 26 to address JAIA’s request. Eventually, it is now allowed to import models equipped with high-performance features for more sophisticated obstacles detection, which should further improve performances in terms of traffic safety. Again, I would like to thank for the understanding and support of MIC and other parties involved. Meanwhile, similar situations that the existing laws and regulations or the lack of appropriate rules might impede the smooth introduction of new technologies for autonomous driving might happen in the future. JAIA will continue calling for appropriate actions for reasonable solution from a global perspective as appropriate on the basis of this achievement.

(2) Motor vehicle noise regulations

For four-wheelers, the running noise test procedures and proximity exhaust noise regulations currently applied are Japan-unique. For that reason, even a vehicle that complies with the UN regulations and for which an approval has been given must go through the tests pursuant to the Japan-specific regulations again, which is imposing huge burdens on the member companies.

Concerning the motor vehicle noise regulations, over the past 15 years, Japan, the EU and its member states, and the industries concerned have continued to discuss proposed revisions to the regulations that utilize new test procedures that reflect the actual conditions. JAIA had been requesting that the Japan-specific regulations should be internationally harmonized. Finally, at a UN meeting held in June this year, these proposed revisions were unanimously approved and will be adopted in 2016.

Going forward, these revisions will significantly reduce the burdens on the member companies. I would like to pay my respects for the persons concerned at MOE, MLIT and other organizations for their efforts over the years.

(3) International Whole Vehicle Type Approval (IWVTA) system

Thanks to the initiatives of MLIT, the UN/ECE WP29 is now working on the IWVTA (International Whole Vehicle Type Approval), which is an international scheme of vehicle certification to be created by March2016. When the system is fully established, certification work in Japan will eventually not be required for a vehicle approved under IWVTA, and JAIA highly appreciates it with great expectations. However, as of the start of the scheme in 2016, unfortunately, some country-specific regulations, which require some time to be harmonized, will remain effective.

JAIA wishes to see that MLIT and other parties concerned will accelerate the pace of international harmonization of the remaining regulations in close cooperation with other countries involved.

(4) Adoption of WLTP (Worldwide harmonized Light vehicles Test Procedures) for the next emissions regulations and fuel efficiency standards

Concerning the development of WLTP, which are globally unified fuel efficiency and emission test procedures for passenger cars and the like, work is done in Geneva and Phase 1 has already been completed, while recommendation has been made in Japan to adopt WLTP for the next emissions regulations. In addition, discussions have just been started on the use of fuel efficiency test results pursuant to WLTP.

Having requested such adoption of the globally-harmonized test procedures, JAIA should welcome the decision; however, concerning the timing of such adoption, it will be a key to make sure that the procedures will be switched at an appropriate timing in light of the preparation status of the overseas manufacturers and importers. On this point, JAIA will continue submitting requests to the ministries concerned.

3) Motorcycle services

First, we are strengthening the activities leading to the stimulation of the motorcycle market of Japan.

In April this year, the long-sought joint test ride for the media was held in Oiso for the very first time. Many reporters attended the event, including motorcycle magazines and general newspapers, and we were able to widely promote among the users appeals of imported motorcycles through coverage in publications, the internet, television and the like. We take it as a significant achievement.

As we intend to broadly communicate the wide-ranging attractions of imported two-wheelers by holding joint exhibitions and trial rides, we would like to ask for your understanding and support.

Secondly, we are facilitating the activities for the international harmonization of regulations and more efficient procedures to obtain certification for motorcycles as well.

Concerning the activities for international harmonization of laws and regulations for motorcycles, Japan’s noise regulations are set to be fully harmonized as the announcement concerned will be revised to adopt the proximity noise regulations based on reference values in February next year. In addition, lamp regulations were also unified with the UN Regulations in June except some items (DRL), and as such, JAIA’s activities are steadily producing results. Furthermore, for PHP (“Preferential Handling Procedures for Imported Vehicles”) as well, four companies have already obtained approvals using the scheme and such vehicles now account for more than half of the total registrations, significantly contributing to greater efficiency of the procedures to obtain certification.

Participation in Tokyo Motor Show as Co-organizer

Since 2011, JAIA has participated in the Tokyo Motor Show as a co-organizer and we will again do the same for the 44th Tokyo Motor Show 2015 to be held this fall (October 29 to November 8).

Ever since I became JAIA Chairman, I have been getting myself involved in preparations, in cooperation with the organizer, JAMA, to make TMS a great international motor show. In particular, aiming at participation by more imported brands, we have made approaches of various kinds and achieved some positive results.

As many overseas manufacturers will exhibit at the Tokyo Motor Show 2015, please look forward to it, and we would like to ask for your assistance in communicating the latest information to the whole world.