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EURU Chairman Press Meeting (February 13, 2013)

2013/02/13


Following is a speech by EURU Chairman at a press meeting held on February 13 (Wed), 2013.

Mr. Kintaro Ueno

My goals as the Chairman of EURU

As a representative of the member importers protecting their interests, I think the most important role of our Association is to approach public offices including the government to promote fair and consumer friendly competition. To achieve that goal in my view the revision/reform of some laws and regulations, for instance becomes necessary. By carrying out what may be difficult to achieve by a single company as an effort of the entire industry by EURU, we will be able to become more powerful and more efficient. I want to further enhance that capability.

Second, by further promoting imported vehicles, I am convinced to contribute, at any cost, to stimulating not only the automobile industry in Japan, but also the Japan’s economy as a whole.

We can “offer a broad range of imported cars equipped with superior safety features and innovative environmental performance”. “Our range of products with its appeal stemming from globally-renowned brands” will lead to a further stimulation of Japan’s car market and will contribute to its economic growth.

Let me go on to the recent status of imported car sales and the future outlook as well, which are probably the most interested topics for many of you.

2012 Results

Partially helped by the eco-car subsidy, the motor vehicle market in Japan got off to an excellent start; however, after the end of the subsidy in the autumn, there was a backlash fall in demand, creating severe uncertainties. Owing to the significant impact of the Great East Japan Earthquake on domestic production two years ago, sales of registered vehicles were up 26.1 percent from a year earlier, but the figure of 3.4 million units is actually down more than 40 percent from the peak in 1990. On the other hand, Kei cars performed well throughout the year, indicating a continued shift in the market toward Kei vehicles.

Of the imported vehicles, sales of foreign brands were up 17.3 percent to about 241,500 units, continuing the steady recovery from the year before. The figure is achieved to 240,000 to 250,000 units stably posted during the early 2000s, and we are convinced that the market has finally returned to the levels of the past following the sharp fall after the Lehman Crisis of 2008.

Total imports, including Japanese brands, were up 14.6 percent to about 316,000 units. This is attributable to the “re-import” of vehicles produced overseas by Japanese automakers.

Of the foreign brands, those models qualifying for eco tax incentives have increased to account for about 57 percent of the total after three years since the start of the scheme, showing that the efforts by overseas manufacturers to develop and launch models which qualify for Japan’s incentive schemes are paying off. This is another factor contributing to the recovery of the overall market.

To qualify for eco incentives, overseas manufacturers, centred on the European players, have adopted various technology strategies, such as engine downsizing, which combines a smaller engine with powerful driving performance through the use of superchargers and the like based on both gasoline and diesel fuel. In recent years foreign brands have re-invented the high performance diesel engines to the Japanese market achieving all environmental exhaust gas limits. They are offering now a greater variety of choices for consumers and Japanese OEMs followed this example.

Further, by adopting highly efficient transmissions, these models are fun to drive, while being eco-friendly and highly fuel efficient. They have been well received by Japanese customers. In addition to efficient and clean vehicles with innovative technologies, our member companies are launching, one after another, distinctive and popular models, reflecting the history and culture of their countries of origin, which are fully equipped with the latest safety features, already long proven overseas before they finally could be certified and introduced to the Japanese market.

Outlook for 2013

Since the end of the eco-car subsidy last autumn, the motor vehicle market in Japan has been facing serious situations, and although the new government has hammer out a new macroeconomic policy and the Bank of Japan is making corresponding moves toward setting inflation targets, the future of the country’s economy still remains unclear. Aimed such circumstances, the ruling party recently announced the Fiscal Year 2013 Taxation Revision Outline, which specifies the abolition of the Automobile Acquisition Tax down the track. As it has been the request of our industry to the government of Japan over years, we are indeed pleased to see its realization. However, the Tonnage Tax, elimination of which has also been called for, will be continued as resources for road maintenance and the like. That means continuation of special taxes levied only on automobiles, which is our major concern.

As I will mention in detail later, for the taxation revisions of the years to come, EURU will seek closer cooperation with the Japan Automobile Manufacturers Association (JAMA) and other automobile organizations concerned to lobby for the achievement of fair and equal taxes.

Meanwhile, as an upbeat topic, we are seeing positive prospects, one by one, including correction of strong yen and associated rise in stock price. And as I have already mentioned, the number of foreign-brand vehicles registered last year reached the 240,000 mark. This was mainly driven by the brisk sale of a wide range of new models using innovative environment and safety technologies adapted to the Japanese market’s strong need for eco-friendly, safe and attractive vehicles. This year, EURU members will continue to take a unique and comprehensive approach to the balance between environment, safety and driving performance, which differs from that of Japanese automakers. We are convinced that by offering an expanding product mix, displaying “unique features” found only in imports, we can maintain and expand the on-going increase in sales.

Therefore, in 2013, it would not be unreasonable to look for sales of 250,000 units of foreign-brand vehicles. In order to help its member companies to launch new models without hindrance and to introduce innovative, appealing technologies to Japanese customers as quickly as possible, EURU will continue to work closely with the ministries concerned.

Let me explain some of the issues with which EURU is now dealing.

EURU Activities

(1) Technology and Environment- related
Before any vehicle can be sold in Japan it must demonstrate compliance with a wide range of regulatory requirements falling within the scope of the Road Vehicles Act, implemented by the Ministry of Land, Infrastructure and Transport (MLIT), the Energy Saving Act, the Auto Recycling Act, the Explosives Control Act and the High Pressure Gas Safety Act supervised by the Ministry of Economy, Trade and Industry (METI); the Air Pollution Control Act, the Noise Control Act and the Waste Management Act controlled by the Ministry of Environment (MOE); and, the Radio Act regulated by the Ministry of Internal Affairs (MIC). EURU tries to help its members to ensure that these various laws and regulations do not prevent the introduction of advanced safety and environmental technologies developed overseas.

To facilitate the introduction and widespread use of new technologies to protect the environment and secure safety, EURU members have high expectations for the adoption of International Whole Vehicle Type Approval, or the IWVTA scheme, currently being discussed in UNWP29 in Geneva under the leadership of the Japanese government, led by MLIT, and of the EU. EURU is determined to provide whatever support it can to bring about the early realization of the IWVTA scheme with the lowest level of exceptions for regional requirements.

The goal is to implement IWVTA in 2016. At that point, some important regulatory issues will not be covered by the scheme. Furthermore, other environment or safety issues need to be resolved well before then. For these items, we would like to see the Japanese authorities take action right away.

I would like to draw your attention to four specific problems concerning
 (i) The Worldwide Light Vehicle Test Procedures (UN/GTR-WLTP)
 (ii) Fuel Cell Vehicle Hydrogen Containers (High Pressure Gas Safety Act)
 (iii) Eco-friendly airbags using compressed hydrogen (High Pressure Gas Safety Act); and
 (iv) The introduction of MAC refrigerant to protect the ozone layer and prevent global warming (also the High Pressure Gas Safety Act).

(i) Early Adoption of Worldwide Light Vehicle Test Procedures (UNGTR-WLTP)
Fuel efficiency and emissions regulations have a huge impact on product planning and technological development. An inter-ministerial study group has already set Fuel Efficiency Standards for 2020 and has indicated that it will study how UN/GTR-WLTP might be adopted as the fuel efficiency testing procedure in Japan, once it has been agreed in Geneva.

We welcome the Cabinet decision, based on a recommendation of the Government Revitalization Unit, that as a first step the adoption of the UN/GTR-WLTP for emissions test procedures in Japan will be discussed in fiscal year 2013. Once WLTP has been adopted for measuring both emissions and fuel efficiency, EURU requests the harmonization of emission regulation values and the introduction of a unified emissions certification based on IWVTA.

Our ultimate goal is that all vehicles once certified in the EU or the US should be able to be imported and sold in Japan without any additional inspection or testing.

(ii) FCV Hydrogen Tank (High Pressure Gas Safety Act)
Overseas manufacturers are conducting fuel-cell vehicle proving tests in key markets around the world. The exception is Japan. Overseas manufacturers have been unable to obtain approval to test under Japanese road conditions new technologies already accepted in the US, the EU and China. In several cases this has forced EURU members to abandon road testing in Japan. The current High Pressure Gas Safety Act was not developed to regulate high-pressure gas tanks used in modern automobiles.

A UN/GTR for FCV is under study. But even this may not resolve the problem so long as Japan maintains unique material requirements. EURU would therefore like to request that, as recommended last April by the GRU in its Interim Report, that Japan should approve high pressure gas tanks which conform to foreign standards, including, but not limited to, EU and ISO standards.

(iii) Hydrogen Airbag Inflator (High Pressure Gas Safety Act)
Overseas manufacturers have begun to introduce in the EU and the US a new generation of air-bags inflated by compressed hydrogen. These airbags only produce water as a by-product. They are therefore friendly to both humans and the environment, and for that reason, they are quickly penetrating overseas’ markets. However the inspection requirements at the point of import imposed here in Japan by previously mentioned High Pressure Gas Safety Act have so far made their adoption by EURU members infeasible.

The issue is not the safety of the use of hydrogen as an ignition agent. This has been verified. The difficulties stem from the inspection requirements for imported gas canisters. EURU has therefore requested the relaxation of these requirements as a prelude to the adoption of a generic exemption from the application of the High Pressure Gas Safety Act of hydrogen airbag inflators meeting prescribed performance requirements.

(iv) Introduction of MAC Refrigerant Useful for ozone layer protection and warming prevention (High Pressure Gas Safety Act)
A new mobile air-conditioning refrigerant that protects the ozone layer and prevents global warming has already been introduced in Europe and the US. In Japan, once again the High Pressure Gas Safety Act, which treats this refrigerant as a flammable gas, makes its use in Japan extremely difficult.

The High Pressure Gas Safety Act requires that this refrigerant must be stored in explosion-proof facilities which must also be used to recharge mobile air-conditioning units. It would however be impractical to provide auto service shops with such facilities and equipment. In the EU and the US where such restrictions do not exist, the use of this new refrigerant has already started. Here too, EURU requests deregulation to allow the introduction of technologies and products that are useful for environmental protection and practical in their application and which are already in use in Europe and the US.

(2) Incentives to Promote Safety
Just as the Japanese government provides incentives and subsidies to encourage the early adoption of eco-friendly vehicles, EURU believes that there is a strong case for the use of similar schemes to promote advanced safety technologies which will help reduce road accidents.

Currently, subsidies and tax incentives are available for the purchase of HDV equipped with automatic emergency brakes, but no similar incentives at all are granted to purchasers of passenger cars using active safety devices. EURU proposes that tax incentives and subsidies should be made available to speed up the introduction of such devices.

EURU also suggests that the discounted rates of auto insurance already granted to vehicles equipped with airbags, ABS, “collision-safe” bodies and the like, should be extended to other advanced safety devices. Unfortunately, however this idea has not been adopted so far in Japan.

EURU considers that the New Car Assessment Programme, currently the only measure designed to promote safety systems, is insufficient. EURU calls for more comprehensive measures to promote advanced safety systems, including tax incentives, subsidies and insurance discounts, in addition to the Assessment Programme.

(3) Request for Tax Reform
In the past, in collaboration with other automobile organisations, EURU has called for streamlining and reductions of auto-related taxes, particularly the abolition of the Acquisition Tax and the Tonnage Tax. In the FY2013 Taxation Revision Outline, however, the elimination of the Acquisition Tax is specified, but the Tonnage Tax will, unfortunately, be continued, making the issue remain to be resolved. Furthermore, a policy has been presented that “the Tonnage Tax will be positioned as resources for maintenance, upgrading and the like of road infrastructure and a review will be conducted toward a direction of demonstrating benefits passed on to car users”, which means a situation in which the Tax, whose reason for levying has been lost after inclusion in general revenue, may become fiscal resources for specific purposes again, which is a grave concern for us.

As you are well aware, in the stage of vehicle ownership, the Automobile Tax and the Tonnage Tax are levied, forcing car users to bear heavy burdens. We will call, more strongly, for the abolition of the Tonnage Tax in collaboration with other auto-related associations.

In addition to these requests, which are common to other associations, EURU has two requests of its own:

– Currently, Kei-cars benefit from preferential tax treatment. Tax for all passenger car categories should be unified so that the rate of tax is more directly proportional to engine displacement.

– To encourage fuel efficient driving patterns, the burden of the taxation of automobiles should be shifted from acquisition and ownership to usage through a drastic review of the taxes on fuels.

EURU hopes that, in promoting safe and eco-friendly mobility in a low-carbon society, the Japanese authorities will follow global best practice, and adopt technological and performance standards which do not favour vehicles of any category or size.

(4) Motorcycle Services
More than two years have passed since EURU welcomed motorcycle importers and commenced activities for them. While the Motorcycle Committee, established at the same time, has been taking initiative in this area of services, we are currently focusing our efforts on the development of PHP certification scheme for two-wheelers.

For imported motorcycles, there has not been any system of type approval like those for four-wheelers, creating a need to define supporting procedures for the members and how to finance them. By conducting study sessions to which MLIT officials were invited, we have just started to create a suitable scheme. At the same time, we make proposals for the establishment of regulations that take into account international standards harmonization in response to tightening of emissions and noise regulations for motorcycles.

Another challenge is to stimulate the motorcycle market, which is on the decline. In this area, jointly with the Motorcycle Committee of the Japan Automobile Manufacturers Association (JAMA), we are calling for a review of highway tolls for two-wheelers and improvements to the riding license scheme.

Closing

In closing, may I please re-emphasise that EURU members are determined to contribute to the growth of the imported car market and to the development of a safe and eco-friendly land transport system through coordination with the Japan Automobile Manufacturers Association (JAMA), the Japan Automobile Dealers Association (JADA) and other related organizations, and in cooperation with the Ministry of Economy, Trade and Industry (METI), the Ministry of Land, Infrastructure and Transport (MLIT) and other government bodies concerned. We would like to ask for your understanding and continued support in those endeavours.

EURU will continue to contribute to the sound development of the imported car market, and to the overall economy of Japan.


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