Mr. Till Scheer
I wish you all a healthy and successful year 2021.
The Japanese government last year declared its intention to achieve carbon neutrality by 2050, and this year will be a year for JAIA to further promote activities toward this challenge. JAIA members have for some time now been actively introducing electric vehicles and other environmentally friendly cars, and intend to greatly contribute to the government’s goal.
The Tokyo Olympics and Paralympics are scheduled to be held this year as well. At the same time, the situation with COVID-19 is still far from resolved, and many people, we in the auto industry included, are continuing to make every effort to help us all overcome this challenge.
JAIA members are conducting sales activities online, rigorously following the Guidelines to Novel Coronavirus Prevention Measures in the automobile sales industry, and closely coordinating with the government and related bodies to navigate this difficult period. We also continue to request economic support from the government for the recovery of the domestic auto market.
Sales of the vehicles at the beginning of the year gradually improved, though they were still affected by the downturn in the second half of 2019.
However, the outbreak and subsequent spread of COVID-19 had an increasing impact, and when the government declared a state of emergency at the end of March, overall vehicles sales in Japan declined markedly, and sales of foreign-branded, four-wheel vehicles recorded unprecedented declines, the largest coming in May.
Customer visits to dealerships gradually increased from June, and as new and limited-edition models introduced by JAIA members had an effect, new imported vehicle sales steadily recovered.
Looking at October to December, some brands recorded record-high single-month sales, so there was significant improvement; and, as a result, total sales for 2020 declined by 14.5% year on year to 256,096 units. Imported vehicles including those from Japanese automakers also declined, by 8.7% to 317,933 units.
The market environment of last year seeing signs of a recovery in consumer sentiment, and customer visits to dealerships were steadily improving.
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 discounts; 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. We also expect these measures to function as positive factors going forward.
On the other hand, there still remains the gap of more than two times in the tax burdens between registered vehicles and kei-cars, so we are in a situation where a further drastic review must be conducted.
JAIA will continue to urge the government to further reduce the tax burden, which is excessive even by international standards, and to revise the tax systems to make it simpler and fairer.
Additionally, driven on by the government’s declaration of carbon neutrality by 2050, JAIA members will steadily expand their lineup of next-generation cars, including electric vehicles, that offer even better environmental performance and make it possible to reduce CO2 with high efficiency.
We are also planning this year to hold full lineup events for import brands to raise awareness of imported EV and PHEV models, because awareness is still not adequate in the Japanese market.
Further, the popularity of SUVs and crossovers is expected to continue; and last year SUV and crossover sales accounted for around 40% of new foreign brand vehicle sales. JAIA members will put out highly varied lineups of attractive models in this class.
For many years now, JAIA members have actively engaged with customers online, including through online vehicle sales. With more people moving to exurban and rural areas and new lifestyle patterns taking hold—the New Normal—there is renewed appreciation for personal mobility as a safer mode of transport, and we will further accelerate initiatives accordingly.
We hope that the second state of emergency will be lifted as soon as possible, and by carrying out these initiatives, this year will be a year of full-scale recovery, and we expect that the sales volume will return to that before the spread of COVID 19 infection.
To reduce the burden on users, as an important role of JAIA, we will 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.
Moreover, we will continue to actively participate in working groups of the Automobile Fair Trade Council and carry out activities to ensure fair trade.
Last year, after the government’s major policy announcement of carbon neutrality by 2050, in this month, the policy of realizing a green society at Prime Minister’s policy speech was delivered to the Diet, which includes measures having such as electric driven vehicles account for 100% of new vehicle sales by 2035.
Overseas as well, in Europe, there was EU government agreement in December of last year to reduce greenhouse gases by at least 55% compared to 1990 levels by 2030; in the UK, the government has already announced to ban sales of internal combustion engines*¹ by 2030; and in Germany, subsidies have been increased against the backdrop of economic measures for COVID-19, 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 the US, President Biden is planning a program to establish charging stations in 500,000 locations around the country and encourage people to switch from gasoline-powered vehicles to such as electric vehicles. In the US state of California, Governor Newsom is mandating 100% Zero Emission Vehicles*² by 2035. Now is certainly the time for auto industry initiatives.
JAIA members will expand their lineups of EV, PHEV, FCV and other vehicles, and since last fiscal year have conducted activities on a platform established within JAIA to promote the spread of electric vehicles. EV and PHEV sales by foreign automakers totaled 4,063 units in 2019, but increased to 6,612 units in 2020.
In the government’s third supplementary budget as of December of last year, subsidies for the purchase of EV and PHEV vehicles will be increased under certain conditions like the use of renewable energy after approval by the parliament.
For example, the maximum subsidy for electric vehicles will be 800,000 yen, twice the previous level of 400,000 yen. I would first like to express our gratitude to the government for incorporating our requests into the budget. JAIA will continue this fiscal year to expand its EV and PHEV promotion activities in cooperation with the government and related bodies.
But, to achieve carbon neutrality in the long term, alongside the efforts of companies, including our members, it will be essential for the government to dramatically increase renewable energy supply and expand the charging infrastructure, in addition to providing the continued promotional policies to purchase of EV, PHEV, etc.
We look forward to seeing these initiatives by the Japanese government.
JAIA believes that expanding public charging facilities and establishing chargers at condominium complexes are extremely important to the spread of EV and PHEV vehicles. For your reference, imported vehicles make up approximately 25% of the registered vehicles in Tokyo’s 23 wards and around 50% in Minato ward. JAIA expects the appropriate distribution of charging infrastructure and the inadequacy of charging facilities in central urban areas in particular as urgent issues.
Fiscal 2030 fuel economy standards decided two years ago were created on the assumption that a considerable number of such as electric vehicles would be deployed, and we first plan to achieve the standards as a medium-term benchmark. To promote the widespread use of EV and PHEV for this reason as well, JAIA members will work to further enhance their commercial viability. JAIA also plans to continue its engagement with the government with regard to various revisions in the standards for the purpose of promoting EV and PHEV vehicles.
The autonomous driving technologies being developed are making steady progress toward the auto industry’s ultimate goal of zero accidents.
Regarding autonomous driving and connection technologies, new UN regulations went into effect on January 22 on autonomous driving equipment, cyber security, and software updating, and the stage of practical application has finally arrived. JAIA members will promote to launch autonomous driving and connected vehicles onto the market in a timely manner going forward.
Autonomous driving-related laws and regulations are an important example, and to smoothly introduce attractive imported vehicles in Japan, JAIA will work with the European Automobile Manufacturers’ Association, American Automotive Policy Council and other bodies to eliminate the unique Japanese standards that still remain, continue to conduct activities related to harmonization of international standards and certifications, and work to realize the complete international whole vehicle type approval system (IWVTA) for entire vehicles, which is the ultimate goal.
In the area of after-sales service as well, JAIA members will comply with the laws of Japan and work to appropriately accommodate the electronic vehicle inspection program and other measures for advanced safety equipment, whose introduction was decided by revisions to the Road Transport Vehicle Act two years ago.
At the same time, recently, there continue to be tragic accidents involving senior drivers, and as a part of its measures to address this, the government last year mandated vehicle-to-pedestrian AEBS and introduced a safety support car subsidy program for people aged 65 and over. JAIA thinks it is deeply significant that the government recently decided to extend the subsidy program, and members intend to continue to expand their lineups of applicable vehicles and contribute to safety measures for senior drivers.
Additionally, with regard to measures to address accidents involving senior drivers, the government is likewise considering the format of a driver license system with restrictions, which is set to be implemented in 2022. JAIA has actively cooperated in these efforts to create a system that more effectively prevents and mitigates accidents by introducing the safety concepts of imported vehicles as well as the specific functions of their safe driving support technologies. We will continue working to reduce accidents through ongoing dialogue with related authorities.
JAIA’s motorcycle activities are conducted on the twin pillars of activities for market revitalization and activities for promoting international harmonization of safety and environmental technology standards.
With regard to activities for market revitalization we plan to hold an imported motorcycle test ride event for the media. In addition to this, at motorcycle-related review committees of the government and political parties, we advocated for three measures to improve the environment for motorcycle users in coordination with other organizations: lowering expressway tolls, rationalizing the licensing system, and establishing and enhancing motorcycle parking areas.
On the first measure, lowering expressway tolls, the Motorcycle Touring Plan was started in fiscal 2017, and was conducted in fiscal 2020 as well, though it was partially impacted by the corona crisis. JAIA will continue its external affairs activities on this issue in concert with other organizations.
On the second pillar, promoting international harmonization of safety and environmental technology standards, at the UN’s Working Party 29 meeting in November 2019, UN Regulation No. 53, the standard for installation of lighting and light-signaling devices on motorcycles, was adopted, and this was incorporated into Japan’s regulations as well in September of last year. Use of daytime running lamps (DRL) has also become possible, as JAIA’s activities are steadily producing results.
JAIA will continue to redouble its efforts on these issues going forward with a view to international harmonization of standards for motorcycles.
I would like to reiterate JAIA’s commitment to continuing to cooperate with the Japanese government and automobile-related organizations and reduce the burden on users, provide attractive products with exceptional environmental and safety performance, and create new forms of business and a new normal in order to navigate through these difficult times.