JAIA Chairman’s Press Conference Speech, January 2022

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Chairman's Press Conference January 28, 2022

pic_about_Christian Wiedmann  
    Mr. Christian Wiedmann

1. Opening Remarks

The automotive industry at present is entering a period of major change symbolized by the word, “CASE”, electrification in particular. Moreover, these changes are being accelerated by the transition to carbon neutrality, and we will strengthen our concentrated efforts and the alignment with other industries concerned for tackling them. With being conscious of the heavy responsibility of serving as the Chairman of this Association, I commit all of my efforts towards the Associations common goals through leading JAIA as one team.

To begin, as everyone is aware, the COVID-19 pandemic continued to cause major disruptions to people’s lives and economic activity again last year. This global pandemic is halfway to subsiding, but the emergence of new variants remains a major concern.

It is our sincere hope that the situation is resolved as quickly as possible, and also that entry into Japan for business purposes is restored as it was before as soon as possible.

There are many, many people, including those of us in the auto industry, making tireless efforts to help us all overcome these difficult times. We would ask for the continuing support of the Japanese government as well.

2. New Imported Vehicle Sales in 2021

Sales of the vehicles in the first half of 2021 were in a recovery trend. Regarding the factors involved, while part of the increase was a rebound from the decline the previous year caused by the spread of COVID-19, it was also the result of people wanting to own their own cars as a safer means of transportation during the pandemic, second car demand in connection with this, and also new, major volume-sales models and limited-edition models launched on the market by member companies. As a result, sales increased year-on-year for six consecutive months from March to August.

Beginning in September, sales were negative compared to the same month of the previous year due to the impact of declining automobile production caused by the global semiconductor shortage and slowing in parts supply caused by the pandemic. Even though orders were steady, the vehicles could not be supplied, so this had a major impact on the number of new vehicles that were registered.

At the same time, benefiting from demand for outdoor-related products and the like, SUV models continued to sell well last year. Share of the SUV of foreign brand vehicles exceeded 40% for the first time for the full year, the record high level ever. JAIA member companies expanded their lineups of electric vehicles, and sales of EVs and PHEVs increased sharply. EVs in particular increased by about 2.7 times over the previous year to 8,610 units for the full year, as sales volume steadily increased.

As a result, in 2021, for the full year, sales increased by 1.4% year on year to 259,752 units. Imported vehicles including those from Japanese automakers also increased, by 8.4% year on year to 344,552 units.

3. Outlook for New Imported Vehicle Sales in 2022

The impact of the semiconductor shortage that has continued since last year has the potential to continue to affect sales in 2022. While it depends on the level of this impact, a steady recovery in sales is expected.

Further, as vaccinations and other infection prevention measures progress and excursions and movement are normalized, it will contribute to improvement in consumer sentiment in Japan as well, and we hope that this will likewise have a positive effect on the further recovery of the automobile market.

Against this backdrop, sales of new imported vehicles in 2022 are expected to be positively impacted by normalization in the balance between orders and supply of new volume-sales models introduced in 2021 and by sales of new and limited-edition models, including electric vehicles and SUVs, that companies are planning to actively introduce. In particular, SUVs and crossovers, which accounted for around 40% of new vehicle sales by foreign automakers last year, are expected to maintain their popularity, and sales of imported EVs and PHEVs are projected to continue to increase as JAIA member companies steadily expand their electric vehicle lineups and the government’s active introduction of subsidies bears fruit. There is also focus on how changes in lifestyles as telework has been promoted since last year, such as people relocating from major cities and splitting time between two residences, are increasing demand for automobiles.

Based on the above, we expect to see a recovery this year, with sales volume improving.

4.About JAIA’s Main Activities

JAIA’s five main activities and their progress.

The first is activities of the “Market Revitalization”, one of the key roles of JAIA. In connection with our request for tax revision and initiatives to promote the spread of electric vehicles and raise awareness of them, which is also related to our environment and energy-related activities.

First of all, with respect to tax revision request, we believe discussions will proceed this year in the direction of fundamental reforms to automobile-related taxes based on the Tax Revision Outline that was agreed on in December of last year. JAIA will continue to request 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 system.

In addition, before I go over JAIA’s initiatives for electric vehicles, I first want to express our gratitude to the Japanese government for incorporating subsidies for the purchase of electric vehicles and establishment of charging infrastructure into its fiscal 2021 Supplementary Budget, and to the Cabinet for approving the government bill to vastly increase these subsidies in the initial budget for fiscal 2022.

Thanks in part to these government efforts, JAIA members have actively expanded their lineups of electric vehicles, and sales of EVs and PHEVs increased sharply as a result. Sales of EVs in particular increased by about 2.7 times compared to the previous year, with cumulative sales of 8,610 units from January to December 2021. EVs, however, still account for only around 3% of imported vehicle sales.

By contrast, to give an example from another country, in Germany, EVs and PHEVs make up around 26% of new vehicle sales, and this number is steadily increasing.

Given this situation, since last year JAIA has acted as a platform for promoting the spread of imported electric vehicles. JAIA held its first ever electric vehicle exhibition in June of last year with the JAIA members united together in order to further raise awareness of imported electric vehicles.

Subsequently in November, JAIA held a test drive event for members of the media to experience the appeal of imported electric vehicles in November, 2021. JAIA has held a total of 40 imported vehicle test drive events since 1982, but this was our first exclusively for electric vehicles.

JAIA members will continue expanding their lineups of highly appealing imported electric vehicles, and JAIA plans to further carry out activities as a platform for promoting the spread of electric vehicles.

Specifically, to further raise awareness, continuing on from the exhibition and test drive events in Tokyo last year, we plan to promote these events in a new form while incorporating different methods and while also including other regions. Collaborating with companies involved in the charging infrastructure beyond industry borders, we will continue to conduct initiatives while making various refinements.

Enhancing a charging infrastructure that can be used easily by anyone is essential to the further spread of electric vehicles and is an urgent issue in city centers. Another issue is enhancing public charging stations around residential areas as a supplement as well as basic charging facilities at condominiums in particular.

A majority of the people currently purchasing EVs and PHEVs are those who have chargers at their houses, or people who don’t mind spending time and efforts to charge their vehicles outside of their house. However, going forward, as more latent demand surfaces thanks to the government’s efforts and JAIA members expanding their lineups, it will be important to have a grasp of which types of chargers are best and where they should be located.

JAIA has carried out a variety of activities in this regard, meeting with charger manufacturers, companies involved in public charging networks, and companies that install chargers at condominiums in order to exchange opinions and information, and we have held related briefings for members as well.

We invited charging-related companies to exhibit at the November test drive event mentioned earlier, and the media members, government officials, and others in attendance were shown how enhancing the charging infrastructure, including installing chargers at condominiums, is an important issue for the further spread of EVs and PHEVs.

This year, we will continue to engage in dialogue with the government and local public bodies and conduct activities toward establishing effective and focused charging infrastructure in order to increase the convenience for users.

Activities related to “Environment and Energy” in Carbon Neutral Era.

Fiscal 2030 Fuel Efficiency Standards for passenger vehicles will require a 44.3% improvement based on average fuel efficiency compared to fiscal 2020 levels, so JAIA believes that systematic support measures will be needed, measures like off-cycle credits, which have already been introduced in Europe and the US. JAIA sincerely hopes to continue exchanging opinion on that issue with the government. Aside from that, JAIA member companies view energy efficiency and prevention of climate change measures as an opportunity, and by providing customers with electric vehicles and cars with cutting-edge technologies that make possible CO2 emission reductions at a high efficiency, they will contribute to Japan’s carbon neutrality policy.

As the government’s carbon neutrality policy is steadily executed, a lifecycle assessment perspective will be important. In connection with this, we as importers recognize that tackling the issue of recycling and reusing lithium-ion batteries constitutes an indispensable component in disseminating electric vehicles.

JAIA’s third main area of activity is “Safety and Harmonization of Regulations”.

In order to provide imported vehicles with safety and environmental performance without added cost to consumers in Japan, JAIA has been conducting activities with related authorities for the international harmonization of standards and the utilization of a mutual recognition system based on the 1958 UN Agreement.

As a result, International Whole Vehicle Type Approval (IWVTA), an approval system that applies to entire vehicles, went into effect in April 2019. In addition, in November 2021, agreement was reached at the World Forum for Harmonization of Vehicle Regulations on adding a new regulation related to exhaust gas and fuel and electricity consumption, which had been among the important issues remaining. By harmonizing test cycles and standardizing testing methods and fuel properties, the main equipment that generates a vehicle’s driving force will become subject to the IWVTA system, and from JAIA’s perspective, this represents a major step closer to the more complete realization of IWVTA.

In terms of safety technologies, Advanced Emergency Brake System, “AEBS” will be phased-in as mandatory under Japanese regulations. Outside of this as well, we will promote the provision of safer products by expanding functions such as high-performance AEBS with intersection response, lane keeping/deviation prevention equipment, and high-function headlights.

Moreover, as connected technologies further evolve, utilizing communications technology will make it possible to seamlessly connect cars, people, and social infrastructure, which is expected to increase safety and security, as well as convenience for users. JAIA member companies are also introducing such as vehicles with, automated emergency call, theft prevention, automated parking support functions, and various infotainment functions.

Further, for automated driving, on which development has been proceeding toward the realization of a society with zero accidents—the ultimate goal—international harmonization of related regulations is essential, including for automated lane keeping systems and “Data Storage Systems for Automated Driving”, the core technologies for Level 3 automated driving, which is self-driving under certain specific conditions, on express way, for example. These technologies will be promoted to be commercialized from now on.

In order to ensure the safety of advanced vehicles like automated cars, regulations for on-board system’s “Cyber Security” and “Software Updating” are also important, and we believe it is necessary to consider increasing efficiency by allowing CS/SU management system conformance certificates issued by overseas certification institutions to be utilized in Japan as well.

As these initiatives are being carried out, JAIA member companies plan to launch vehicles with automated driving and connected technologies onto the market in a timely manner, contributing to providing a greater safety and a larger convenience to customers. In this regard, JAIA requests the government to support these efforts in terms of regulations and rules, if necessary.

Our fourth main area of activity, automobile Fair Trade and After-Sales Service.

With regard to automobile fair trade, JAIA actively participates in the working groups of the Automobile Fair Trade Council, and we will continue to raise awareness among JAIA members of the automobile fair competition rules and conduct activities aimed at ensuring fair trade.

I touched on this earlier in the safety section, but in the area of after-sales service as well, with the development of connected technologies, various services have become possible, and we plan to carry out activities to help JAIA members to respond appropriately to issues such as the new permit system for software updates using telecommunication lines and the electronic vehicle inspection system using on-board diagnostic systems, which are now scheduled to be introduced, as well as the problem of securing adequate numbers of auto technicians and other service personnel.

5. Motorcycle Activities

Lastly, our activities related to “Motorcycles”

New imported motorcycle registrations totaled 23,073 units which an increase of 8.4% from the same period of the previous year (21,293)

This change is partly attributable to people turning to the highly appealing and distinctive lineups of imported motorcycles during the pandemic as a mode of transportation that avoids the three C’s and as a way of having fun that avoids crowds.

The first of the two major pillars of our motorcycle activities is market revitalization. As a part of this, in April of last year we held a test ride event with COVID-19 measures in place, the first such event in the past two years. We are also planning a test ride event in April of this year, and I wholeheartedly expect you come to the event.

In addition, three of our member companies exhibited at the first EV Bike Collection held by the Tokyo Metropolitan Government in December of last year. Going forward, JAIA plans to actively participate in similar events held in major cities and continue moving forward with carbon neutrality initiatives.

JAIA, in partnership with other organizations, is actively involved in the Motorcycle Industry Policy Roadmap 2030 that was announced in November of last year, and contributing to the achievement of carbon neutrality as one of the issues the roadmap identifies. One initiative in this area is having adjustments made to expressway tolls for motorcycles. As a result of various request activities, a campaign that reduces expressway tolls for motorcycles to half the amount charged to regular passenger vehicles—if an application is received in advance—will be conducted beginning in April of this year; this represents a step forward. JAIA will continue working for further improvements to the usage environment for motorcycles.

Regarding the second pillar of our activities, activities to promote international harmonization of regulations, last year, UNR 41-05, a uniform provision for motorcycle noise, was adopted by the UN Conference, and JAIA intends to continue actively working toward further international harmonization of safety and environmental regulations for motorcycles.

This year, JAIA welcomed Kawasaki Motors Japan as a new motorcycle member, the first company related to Japanese manufacturer to become a JAIA member for motorcycles. Motorcycle membership began with five companies in 2010, increased to ten in 2016, and now in its eleventh year, membership has increased to 11. JAIA will continue working to further popularize imported motorcycles and stimulate the domestic motorcycle market.

6. Conclusion

JAIA member companies will continue providing appealing products with exceptional environmental and safety performance, and JAIA will work with the Japanese government and all organizations concerned with automobile industry and market to reduce the burden on users and help build a carbon neutral society.