JAIA Chairman’s Press Conference Speech, September 2022

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Chairman's Press Conference September 15, 2022

pic_about_Christian Wiedmann  
    Mr. Christian Wiedmann

1. Opening remarks: General remarks

The automotive industry is entering a period of major change due to CASE, including electrification, and the trend toward carbon neutrality is further accelerating the change. In addition, amidst uncertainty about the future, such as the situation in Ukraine and the shortage of semiconductors, JAIA will support the business activities of the member importers while responding to these changes, and will continue to carry out its activities to contribute to the sustainable development of the Japanese automobile market.

We will continue to make unremitting efforts to further develop the auto industry. We look forward to the continued support of the government.

2. Review of imported vehicle sales in the first half of 2022

While we saw recoveries in sales of foreign-brand four wheelers in the first six months of 2021, in the second half, due to the worldwide shortage of semiconductors and slow parts supply caused by Covid-19 and the Crisis in Ulraine, vehicle production went down, which adversely impacted vehicle sales, and monthly year-on-year growth in sales continued to be negative. Although orders were shown a steady growth, the short supply of vehicles had huge impacts on the number of new vehicles registered. In the first half of 2022, the impacts of the semiconductor shortage remained, and deliveries of vehicles were delayed despite orders. The JAIA members are sparing no effort to avoid causing inconvenience to the customers.

On the other hand, continuing from last year, SUV models – thanks to growing demand for outdoor activities serving as a tailwind – are selling well, and the share of SUV models to the overall sales of foreign-brand vehicles has continued to be above 40 percent in this year as well. Furthermore, JAIA member companies have expanded their lineup of electrified vehicles, and 62 models from 14 brands are presented in the market as of the first half of 2022. Compared to 10 brands and 20 models as of October 2020, it has tripled in a short period of time. Thanks to the upgraded lineups of xEV models of the JAIA members, sales of BEV and PHEV models have continued to grow for a long period of time. For BEVs in particular, the number of vehicles sold has increased steadily and the result for 2022 1H was up 58.8 percent from a year earlier to 5,192 units. On the other hand, in Germany, for example, electrified vehicles accounted for 24.7% of newly registered passenger vehicles in the first half of 2022, indicating that the penetration of electrified vehicles in Japan is currently at a low level.

Also, the overall sales of foreign-brand vehicles in the first half of 2022 were down 14.7 percent from a year ago to 116,408 units. The total imported vehicles including Japanese brands were down 17.6 percent year-on-year to 153,954 units.

3. Outlook on 2022 2H sales of imported vehicles

According to the reports of the Bank of Japan, the Ministry of Internal Affairs and Communications and the like, the Japanese economy is picking up, although, as of August, the underlying trend in consumer confidence – as seen from movements in the Consumer Confidence Index – is weak. However, partially due to the pandemic, consumers are increasingly shifting from public transportation to private cars, and demand for imported vehicles remains healthy.

Still, as I mentioned earlier, the semiconductor shortage and Ukraine Crisis may continue to adversely impact sales in the second half of 2022, although we are hoping to see improvement of the supply-side constraints and steady recovery of sales.

As to the sales of imported vehicles for entire 2022, we are hoping that the balance between orders and supply of the new mass-market models launched in 2021 will return to normal and that new models and limited editions of xEV, SUV and others, slated to be launched actively by the JAIA members, will contribute to more sales. In particular, popularity of the SUV or cross-over models that made up more than 40 percent of the total foreign-brand new vehicle sales last year is set to continue, and the lineups of xEV models of the member importers are expected to grow further which will lead to the spread of xEVs, and now with more choices for the customers and more grants of subsidies actively introduced by the Government, we expect to see further growth in sales of imported-brand BEV and PHEV models.

For what I just presented, we are hoping that sales will improve in the second half of 2022 onward.
I’d like to present concerns for realizing such expectation. That is, I have heard that the CEV subsidy is expected to deplete as early as in October. In the past, we have taken various opportunities to express our gratitude for the active introduction of subsidies by the government. As a result of such efforts, xEVs have continued to spread; however, I am concerned that the budget is running out at a faster pace than expected.

A depletion of the CEV subsidy in October/November may result in a period of no subsidy at least in this fiscal year. JAIA has constantly requested to continue and upgrade the support measures, and most importantly assure its consistent application.

I do not think I need to say it here, but including the purpose of promoting carbon neutrality, – assuring strong consumer confidence – we would like to call on the government to consider supplementary additions of subsidies from the perspective of constant financial support for CEV subsidies that are effective in promoting electrification in a consistent fashion.

4. JAIA’s key activities

I would like to introduce JAIA’s five main activities and explain their progress.

First of all, as the first pillar of our main activities, activities related to market revitalization are an important role of JAIA. I will explain our efforts to promote xEVs and increase awareness of xEVs, which are also related to the tax reform request activities and the environment and energy fields.

Regarding the request for tax reform, we believe that this year, based on the tax system revision outline, discussions will progress toward a drastic review of auto-related taxes. JAIA will continue to carry out the request activities for further reduction of the burden of auto-related taxes, which are excessive from an international perspective, and for the streamlining and fairness of the tax system.

Next, before introducing JAIA’s xEV initiatives, first, we would like to thank the government for including subsidies for the purchase of xEVs and charging infrastructure in the supplementary budget for fiscal 2021 and for the decision to make a significant increase in the initial budget for fiscal 2022 as well.

On the other hand, as I mentioned earlier, the spread of electrified vehicles in Japan remains limited. For that reason, we will continue to request the government etc. to continue and expand the subsidies for the purchase of xEVs, as well as the continuation of and relaxed requirements for charging infrastructure subsidies. I will explain these later.

In addition, under such situation, JAIA has been working as a platform to promote the spread of imported-brand xEVs since last year, and held an event in Osaka in June this year. On these also, I will give you more details later.

Next, I would like to explain the second pillar of our main activities, “activities in the environment and energy fields (carbon neutral)”.

We are aware that efforts to be carbon neutral are progressing not only in Japan but also in other countries around the world, and that measures to prevent global warming are an urgent issue. JAIA has also been working toward the realization of carbon neutrality.

First, I would like to present our initiatives related to the spread and promotion of xEVs.

In light of the trend of electrification of automobiles, JAIA carried out activities centered on the following four points.

The first is request activities, including subsidies for vehicle purchases and charging infrastructure. As I mentioned earlier, we thank the government for enacting the supplementary budget for fiscal 2021 enacted last year, including subsidies for the purchase of xEVs and charging infrastructure, and making the significantly increase the initial budget for fiscal 2022 as well.

On the other hand, in order to spread xEVs, in addition to continuing to support vehicle purchase subsidies for xEVs, etc., increase the amount of subsidies per vehicle, and ensure that subsidies are not interrupted due to budget years, budget shortages, etc., it is essential to have a charging infrastructure that is easy for anyone to use.

Regarding charging infrastructure subsidies thanks to the Government, last fiscal year, the 15km restriction on chargers installed in shopping malls was abolished with some other conditions relaxed. Along with the continuation of these measures, we will request to expand public charging facilities to supplement basic charging facilities including apartment houses, upgrade subsidies for ordinary chargers of over 6 kW, and support the promotion of installation of chargers in public roads, among others with a particular focus on fast chargers in order to pre-empt fast paced technological advancements.

Going forward, we will continue to use every opportunity to promote dialogue and strengthen cooperation with the central and local governments so that users will proactively choose xEVs and convenience will be improved.

The second point is PR-related activities and cooperation with charging infrastructure businesses.

Member companies have actively expanded their line-up of electric vehicles and promoted the installation of chargers at imported car dealers. Combined with the expansion of xEV purchase and charging infrastructure subsidies by the central and local governments based on JAIA requests, as mentioned earlier, sales of BEVs have steadily increased to 5,192 units, up 58.8% compared to the first half of 2021.

Under these circumstances, JAIA has been working as a platform to promote the spread of imported-brand xEVs since last year. And in June this year, as concerted efforts of JAIA members, we held an xEV exhibition in Osaka, featuring motorcycles and buses in addition to passenger cars for the first time in the history of JAIA, for the purpose of increasing awareness of imported-brand xEVs. For the event, we collaborated with charging infrastructure businesses that visitors could become aware of imported xEVs. We focused on sharing the solutions to the challenges we face with the visitors. JAIA will carry out activities to expand the charging network in cooperation with related industries. To continue the same event next year, JAIA is currently considering details such as the venue and number of days.

While JAIA member companies will continue to work together to expand the lineups of attractive imported xEVs, JAIA will further promote its activities as a platform to promote the spread of xEVs. We are planning to hold a test ride event for imported xEVs in November in Tokyo this year, so please come and visit us.
In addition, JAIA strengthened cooperation toward full-scale electrification by exchanging information with public charging network operators, charger manufacturers, businesses installing chargers in apartment houses, developers, and the condominium repair industry, etc, in addition to conducting briefing sessions for the members.

The third point is to address technical issues related to charging infrastructure.

This year, JAIA launched a new EV Technology Task Force for electrified vehicles, and started full-scale efforts to address Japan-specific technical issues related to charging infrastructure.

As the capacity of on-board batteries for xEVs expands and increases, it is becoming possible to charge batteries in a shorter time by improving charging efficiency. The EV Technology TF will identify the needs of the member companies regarding voltage restrictions, etc which is unique to Japan and related to the Electricity Business Act, and work to resolve issues in cooperation with relevant organizations, etc., based on the trends in other countries.

The fourth point is the life cycle approach including in the field of batteries.

Discussions on the life cycle assessment of automobiles are progressing at the international level. In addition, while keeping in mind trends in other countries (e.g. European battery regulation proposals) such as the reuse and recycling of batteries, which are indispensable for the promotion of electrification, we will work with relevant ministries and agencies to find proper ways to improve the sustainability of batteries throughout their life cycle.

In addition to addressing electrification, improving the fuel efficiency of internal combustion engine vehicles is also an urgent issue.

While member companies intend to introduce vehicles equipped with advanced technologies that are highly efficient and have low CO2 emissions, since the 2030 passenger car fuel efficiency standards require an improvement of 44.3% on average fuel efficiency compared to the 2020 standards, we believe that institutional support such as flexible measures and off-cycle credits introduced in Europe and the United States is necessary.
Through these efforts, JAIA will contribute to Japan’s carbon neutral policy.

Next, I will discuss JAIA’s activities related to safety, international harmonization of regulations and certification, which is the third pillar of our main activities.

To address systems related to connectivity technologies, which have become increasingly important in recent years, JAIA newly launched the Safety Parts and Communication Working Group by expanding the scope of activities and renaming the panel to understand the trends of telecom equipment installed inside and outside vehicles and the moves of communication infrastructure for social implementation expected of automated driving, while calling for international harmonization of the systems, as necessary. In addition, in individual fields, we will request to expand the scope of application of the recently-introduced subsidies related to the advanced safe driving support technologies. Furthermore, in anticipation of the future progress of digitalization, we will gather information to introduce advanced technologies in the telecommunications field related to Beyond 5G and ITS without delay.

In addition, in order to ensure the safety of advanced vehicles such as self-driving cars, such regulations as those for “cyber security (CS)”, “software update (SU)” of in-vehicle systems are also important, and through dialogue with MLIT, we will aim for rational operations and cooperate with OEMs to appropriately deal with the new CS/SU regulations.

In the past, in order to provide Japanese consumers with imported cars that can ensure safety and environmental performances without additional costs, JAIA has been working together with relevant authorities to harmonize regulations internationally and to utilize the mutual recognition based on the UN 1958 Agreement for certification systems.

As a result, the international whole vehicle type approval system, IWVTA, which is the framework for whole vehicles, was established. In the 04 Series of Amendments to UNR0, which went into effect in June 2022, UN-R154 for emissions, fuel and electricity consumption, was also added to the elements of IWVTA which has been a long-standing request of JAIA. JAIA will continue to work toward the realization of a more complete IWVTA system to increase the utility value of IWVTA.

On the other hand, in the aspect of safety technology, at the WP29 (World Forum for Harmonization of Vehicle Regulations) held in June 2022, the 02 Series of Amendments to UN-R157 for automated driving systems were approved, achieving the international harmonization of more general regulations for automated driving systems of Level 3, covering up to cruising speeds in addition to congestions in motorway only, which are expected to be realized early next year. JAIA also has great expectations for the practical application of automated driving, such as the reduction of traffic accidents caused by human errors. In addition, member companies will expand functions such as high-performance AEBS for intersections, lane keeping/departure prevention devices, and high-performance headlights, and will promote the provision of safer products.

While promoting such efforts, JAIA member companies will also contribute to providing customers with higher safety and convenience by introducing vehicles equipped with automated driving and connected technologies to the market in a timely manner.

In this regard, JAIA will request the government to support our efforts with respect to regulations and rules as necessary.

Next, I would like to talk about the fourth pillar of our main activities, which is automobile fair trade and after-sales.

Regarding automobile fair trade, JAIA actively participates in the working groups of the Automobile Fair Trade Council, and continues to promote activities aimed at ensuring that JAIA members are fully aware of the Automobile Fair Competition Code and practice fair trade.

In recent years, the shortage of auto mechanic personnel has become an even more pressing issue shared by the whole industry. Recently, JAIA has also established a Liaison meeting for Information on Auto Mechanic Personnel. At the liaison meeting, we will gather information on the issues we are currently facing and start working to solve them, and we will also ask the government and others to create conditions for overcoming the issues of auto mechanic personnel.

JAIA will also promote efforts such as strengthening cooperation between auto mechanic training institutions and member companies. JAIA has been collaborating with related organizations in the past, and at the event to promote the spread of xEVs in Osaka held on June 30, which I mentioned earlier, it was listed as an important theme, and we invited people from automobile technical schools, member companies, dealers, German Chamber of Commerce, and others to exchange opinions that would lead to solutions to the issues.

Also, in June, the MLIT set up a study working group on securing mechanic personnel, and JAIA will continue to participate in the WG and actively engage in activities.

Furthermore, as I mentioned earlier relating to safety, in the after-sales field as well, with the development of connected technology, various services have become possible. JAIA will properly address institutional systems, including the new system of approvals for over-the-air software updates, the electronic vehicle inspection system using OBD devices that will be applicable also to new type-designated vehicles of imported brands from October this year and the electronic vehicle inspection certificates that will be applicable in January 2023.

In the automobile recycling field, in July 2021, the 15th year evaluation of the Auto Recycling Act was conducted, and we have just started working on its proposals. We will attend the meetings of the parties concerned and aim to develop a system that leads to the sophistication of automobile recycling and the reduction of the burden on automobile users. In addition, we will support members to appropriately deal with the recovery of on-board batteries as electrified automobiles accelerate.

Finally, I would like to introduce our activities related to motorcycles, which is the fifth pillar of our main activities.

The number of newly registered imported small motorcycles in the first half of 2022 was 12,976 units, up 13.1% compared to the same period of the previous year (11,476 units). We believe it is attributable to more people turning their attention to imported motorcycles, which have a wide range of unique products and are more suited for hobbies as a means of transportation that can avoid the 3 Cs to fight Covid-19, and as a way to play without becoming close contact.

Now, one of the major pillars of motorcycle activities is “activities for revitalizing the market.” As part of it, on April 12th and 13th of this year, we held a test-ride event for imported motorcycles at Oiso Long Beach. We were able to implement thorough corona measures and closed the event successfully without any major accidents or the like. A total of 152 journalists from 49 media attended the event.

In addition, the 1st Nagoya Motorcycle Show was held at the Aichi Sky Expo exhibition center for three days from April 8th to 10th. JAIA provided nominal support, and 7 JAIA motorcycle members exhibited. Thanks to vigorous visitor attraction initiatives such as free admission for high school students and younger, and females, the number of visitors was 36,188, against the target of 30,000. Also, at the event to promote the spread of electric vehicles in Osaka on June 30, which I mentioned earlier, eight electric motorcycles were exhibited. JAIA will continue to actively participate in similar projects in major cities and promote the carbon neutral initiatives.

In addition, on August 25th, for the first time in three years in a real format, the 10th BLF (Bike Love Forum) was held in Hita City, Oita Prefecture, where the METI led the discussion on the future of motorcycles. JAIA took part in the event.
For motorcycles, JAIA is requesting to separate the expressway toll category, expand motorcycle parking lots, and review the motorcycle license system. In cooperation with other organizations and centering on the BLF, etc., we have carried out request activities to separate the expressway toll category and proper tolls at the motorcycle-related project teams of the government and political parties, at review meetings, etc. As a result, from April this year, expressway operators (NEXCO East Japan, etc.) have implemented a campaign that offers a 37.5% discount for riding over 100 km if applied in advance.

In addition, as a result of conducting activities to request expansion of motorcycle parking lots, in March of this year, the National Police Agency issued a circular notice concerning the expansion of motorcycle parking lots and a review of parking regulation enforcement. In connection with this, in Tokyo the Governor Koike has announced that motorcycle parking lots would be set up at the International Forum, and the operation started on July 1st.

Regarding the other pillar of motorcycle activities, “activities for international harmonization of regulations”, for the emission regulations for motorcycles, new regulations are applied from November 2022, and many of our members have already obtained approvals under the new regulations. We are making steady progress.

JAIA will continue to work on the spread of imported motorcycles and revitalizing the domestic motorcycle market.

5. Closing

JAIA member companies will continue to provide attractive products with excellent environmental and safety performances, and JAIA will cooperate with the Japanese government and all organizations involved in the automobile industry and sales market to reduce the burden on users and contribute to the realization of a carbon-neutral society.