Following is a speech by EURU Chairman at a press meeting held on July 17 (Wed), 2013.
Mr. Kintaro Ueno
Now, as the first half of 2013 is over and we have hit the halfway point of the year, I would like to talk about the first-half result of the imported car market, an outlook on the second half, and key activities and issues of EURU.
As mentioned at the press conference in February immediately after I assumed the position as the EURU Chairman, I am convinced that the most important element of our activities is lobbying the government and other public institutions for the facilitation of fair competition from the standpoint of our customers, acting as an industry representative consisting of the members of four-wheelers and two-wheelers.
These activities range widely and include those intended for revisions or review of laws and regulations, and others for calling on the government to make capital investment for common benefits of the member importers such as upgrading port facilities. At any rate, something that cannot be achieved solely by one company can be promoted strongly and efficiently by taking industry-wide actions represented by EURU. I am determined to continue maintaining and enhancing that capability.
While many of the member companies of EURU are subsidiaries of overseas vehicles manufacturers, including Mercedes-Benz at which I serve as the representative, we are all companies registered in Japan, executing a mission of providing Japanese customers with the attractive imported cars produced in other parts of the world in a timely manner. By “widely offering those imported vehicles equipped with innovative safety and environmental features” and, in turn, “those attractive products of the world’s renowned brands” accepted broadly by the customers in Japan, our activities will stimulate the motor vehicle market of the country, leading to contributions to Japan’s economy as a whole.
Results of 20131H
In the first half of this year, as opposed to the first six months of last year when the market was booming thanks to the tailwind effect of the Eco-car Subsidy program, the overall vehicle market faced severe results with registered vehicles down 11.6 percent from a year earlier and Kei vehicles also down 1.8 percent. I am concerned that the double-digit decline of registered vehicles, in particular, may indicate a trend of contraction of the entire market and I understand that the shift toward Kei vehicles is increasingly seen.
Under these circumstances, the sales of foreign-brand imported vehicles were up 12.6 percent from the first half of 2012 to about 133,200 units, continuing to post a healthy result. Furthermore, the share of non-Japanese brands to the overall registered vehicles was a record high at 8.1 percent. However, the share to the entire market including Kei vehicles remained at 4.9 percent.
The result for the entire imported vehicles including Japanese-brand imports was up 13.3 percent from a year ago to about 170,700 units. Increase in the import of Japanese-brand vehicles is attributable to increases in the number of models manufactured overseas.
Of the foreign-brand vehicles, those eligible for the Eco-car Tax Incentives accounted for about 66 percent; for the latest month of June, the figure rose to about 68 percent. It is a result of the efforts of overseas vehicle manufacturers to develop and launch models matched with the schemes in Japan, which is considered a fundamental factor of healthy sales of foreign cars.
For the technological approach to address the eco-car schemes of Japan, we are increasingly seeing engine downsizing. By achieving powerful performance with turbochargers or the like while reducing engine displacement and combining with highly-efficient transmissions newly developed, it is possible to manufacture cars that are environmentally friendly and highly-fuel efficient without sacrificing fun of driving. Also, by offering such models at relatively low prices, we are gaining support of Japanese customers. In addition, new-generation diesel engines that meet Japan’s stringent regulations are being introduced to the market, expanding choice for the customers.
Furthermore, as illustrated by vigorous introductions of automatic emergency brakes (AEB), adoptive cruise control (ACC) and other advanced safety features, against the backdrop of technologies and cultures of those countries with significantly longer history of car making than Japan, models of great individuality are offered one after another, all of which enjoy popularity.
Meantime, although not contributing so much to sales volume, those models priced at \10 million or higher are selling well, possibly attributable to the expectations for the Abenomics stimulus packages, which the government of Japan announced recently.
Outlook for 2013 2H
As mentioned earlier, Japan’s motor vehicle market is shrinking as a whole. It is an issue of greatest concern and EURU must drive forward those activities, in order to stimulate car market, to eliminate factors that impede buying motivation of the customers, such as the ongoing auto-related taxes.
Toward the taxation revisions of the future, EURU will continue taking lobbying activities to achieve fair and equal tax revisions including Kei vehicles, in close cooperation with the Japan Automobile Manufacturers Association (JAMA) and other auto industry groups.
On the other hand, after the change of the government in the end of last year, we are seeing a trickle of positive signs, including correction of the yen appreciation, accompanied by rising stock price. Yet, there are uncertainties such as the outlook on stock price and the pace of execution of the Regulatory Reform Implementation Plan.
Into the second half of the year, these innovative new models with the environmental performances and economy that are demanded by the Japanese market, the ongoing trend is expected to continue for the time being.
Therefore, for the outlook of the entire year of 2013, while it of course depends on the economic conditions, sales of foreign-brand imports will likely exceed 260,000 units, possibly reaching 270,000 units. In the second half, our member importers will continue introducing to the market those products that meet the needs of those customers who seek “specific features of imports”, combined with outstanding driving performances, achieved through the approaches that differ from Japanese manufacturers. However, in order to allow those imported vehicles featured with new and attractive technologies to be delivered to the customers of this country as quickly as possible, it is necessary to solve some issues including substantial reduction in tax burdens levied on autos, and quick and steady implementation of regulatory reform. For that end, EURU, on behalf of the imported car industry, will further facilitate the activities for making requests to the ministries concerned, jointly with other automotive organizations.
(1) Taxation Revision Request
EURU has been calling for “streamlining and reductions” of the taxes levied on motor vehicles in collaboration with other auto-related associations, focusing on the abolition of the Acquisition Tax and Tonnage Tax. However, while the FY2013 Taxation Revision Outline of the ruling party specifies the “abolition of the Acquisition Tax as of the Consumption Tax rate hike to 10 percent”, the Tonnage Tax will, unfortunately, continue to be levied, leaving the issue unresolved. Furthermore, a policy has been presented that the “Tonnage Tax will be positioned as resources for maintenance and upgrading, etc of road infrastructure and will be reviewed in such a manner that the tax will be returned to car users”. We are seriously concerned about this situation in which the Tonnage Tax, which has lost its rationale due to the inclusion in general revenue, may practically be treated again as fund for a specific purpose.
The Automobile Tax and Tonnage Tax are levied during the ownership of motor vehicles, imposing heavy burdens on the users. We will continue calling for the abolition of the Tonnage Tax, jointly with other automotive associations.
In addition to these requests that are shared with other organizations, EURU has two requests of its own.
First is “reducing the Automobile Tax levied for ownership to a level equivalent to the ongoing rates for Kei vehicles from an international perspective and setting fair tax rates that are more directly linked with engine displacement”.
Second is “conducting a drastic review of the taxes on fuels and shifting tax burdens from acquisition and ownership to usage”.
In addition, while overseas manufacturers are developing and introducing to Japan those models equipped with advanced technologies that are friendly to passengers, pedestrians and the environment, for the policy incentives to be implemented in Japan, we strongly request to design schemes from the perspective of global standards and conduct lobbying activities to make sure that any Japanese scheme will become a disadvantage for imported vehicles.
(2) Technical and Environmental Issues
EURU member companies have been making strenuous efforts to contribute to progress of mobility by automobiles in Japan, while attempting to adopt latest technologies for the environment, passengers and pedestrians under broad-ranging laws including: the Road Vehicles Act under the control of the Ministry of Land, Infrastructure and Transport (MLIT); the Energy Saving Act, the Automobile Recycling Act, the Explosives Control Act and the High Pressure Gas Safety Act under the control of the Ministry of Economy, Trade and Industry (METI); the Air Pollution Control Act, The Noise Abatement Act and the Waste Disposal Act by the Ministry of Environment (MOE); and the Radio Act under the Control of the Ministry of Internal Affairs and Communications (MIC). However, we often find ourselves in a situation in which those new technologies already introduced in overseas are difficult to be introduced here in Japan.
From the standpoint of facilitating introductions of new technologies that are environmentally friendly and contribute to improved safety, EURU is expecting the most from the development of globally-harmonized vehicle certification system currently discussed at the UN/ECE World Forum for Harmonization of Vehicle Regulations (WP29), which the government of Japan, led by MLIT, is driving forward. We are determined to extend support to the maximum extent possible to be able to achieve the above system in such a manner that a minimum of country-specific regulations will remain.
The globally-harmonized vehicle certification will be introduced in 2016; however, there are some regulations that will not be included at that point in time or that cannot wait until 2016 to properly address environmental or safety issues, which should be handled immediately.
Specifically, we have four issues:
(1) Worldwide Harmonized Light Duty Test Procedure (WLTP) and World Harmonized Test Cycle (WHTC) for heavy-duty vehicles;
(2) Fuel-cell vehicle and hydrogen tank safety;
(3) CNG vehicle and gas tank safety; and
(4) Environmentally-friendly airbags.
(1) WLTP and WHTC
Those standards concerning fuel efficiency and exhaust emissions have huge impacts on our product planning and technological development. For passenger cars, the FY2020 Fuel Efficiency Standard was approved in 2011 at the three-ministry joint study group with a decision to study the adoption of the WLTP upon agreement at WP29 on its adoption as fuel efficiency measurement procedures. Meanwhile, for passenger car exhaust emissions, we welcome the ongoing discussions concerning the adoption in Japan’s emissions tests of the globally-harmonized test procedures based on the recommendations of the Central Environment Council of 2012. EURU calls on the Japanese government to proceed with adoptions in cooperation with other countries.
Furthermore, for heavy duty vehicles, we welcome the ongoing discussions on the adoption in Japan’s emissions tests of the WHTC based on the recommendations of the Central Environment Council of 2010.
For the next step, we are requesting the government to unify the emission regulation values, endurance tests and the like, and the inclusion in International Whole Vehicle Type Approval (IWVTA) of harmonized emission certification. Our ultimate goal is to be able to introduce those models already certified in the US/EU to the Japanese market as-is without going through additional tests.
(2) Fuel-cell vehicle and hydrogen tank safety
EURU highly appreciates the adoption of WLTP for fuel-cell vehicles and hydrogen tanks, achieved through the initiative of MLIT. Going forward, we expect to see the facilitation of adoption in Japan through a concerted effort of MLIT and METI. However, that does not solve issues entirely, as there are other matters not included in WLTP such as provisions on tank materials and engraved marks on tanks/valves. It is a must to quickly solve those issues. In that perspective, the Regulatory Reform Implementation Plan of the government contains, among others, packaging of the High Pressure Gas Safety Act and Road Vehicles Act, and standardization of performance requirements for the materials that can be used. We expect to see prompt implementation of these plans.
(3) CNG vehicle and gas tank safety
As with FCV, due to Japan’s High Pressure Gas Safety Act, overseas vehicle manufacturers are facing difficulties with the introduction of CNG vehicles in the country. On this subject, since the globally-harmonized UN regulations already exist, we are hoping that they will be adopted quickly in Japan in a concerted effort of MLIT and METI.
(4) Environmental-friendly airbags
Airbags utilizing hydrogen are friendly to both human and environment, generating only water as by-product, and therefore they are penetrating rapidly in the US/EU. In Japan, however, due to the regulations under the High Pressure Gas Safety Act, problem is found with Japan-specific import inspection requirements, practically preventing import of the products. The root of the problem is not the safety issue of the use of hydrogen as ignition system, but it is with the Japan-unique test requirements. We are calling for the achievement of exemption of the hydrogen airbag inflators from the import inspection as a permanent solution.
(3) Expectation of Safety Feature Promotion Measures
The government of Japan is very positive about the incentives and subsidies for the promotion of eco-friendly vehicles, but we would like to see the introduction of tax incentives and/or subsidies for safety features that can help reduce traffic accidents.
As of the present, preferential tax measures are applied to automatic emergency brake (AEB) systems in heavy-duty vehicles. But there is no such incentive for passenger cars. EURU would like to see the introduction of incentives and subsidies designed to promote widespread use of these systems.
(4) Motorcycle Activities
This year will mark the third anniversary of the motorcycle importers joining EURU and the commencement of their activities.
So far, EURU has conducted activities aimed at easier utilization of PHP (Preferential Handling Procedure for imported vehicles) for motorcycles and adoption in Japan of the global-standard UN regulations (UN/ECE), achieving certain results in the areas of technology and environment.
As opposed to four-wheelers, the Type Designation System or PHP has not been used for imported motorcycles. That situation created problems that must be solved in terms of procedures, cost burdens and convenience not only for the member importers, but also for our customers. Aimed at easier utilization by motorcycles of PHP, EURU has repeatedly conducted study sessions to which MLIT officials were invited, and as a result, several importers are now actually obtaining certification through the PHP system.
Also, as a result of our activities, Japan’s motorcycle noise regulations have essentially been harmonized with UN regulations.
Going forward, we will work on global harmonization of other regulations including exhaust emissions and lamps, in addition to improving procedures for the utilization of the highly efficient PHP certification system.
There is another issue to be solved, which is the stimulation of the motorcycle market of Japan that had been on the decline over years. We carried the issue forward last year, but EURU will attempt to improve conditions for the users by requesting for an improved motorcycle license system, development of parking spaces and the like, jointly with JAMA’s Motorcycle Committee.
(5) Participation in Tokyo Motor Show as Co-organizer
As in the last time, EURU will participate, as a co-organizer, in “the Tokyo Motor Show 2013” to be held between November 22 and December 1 this year.
As to our roles, first, I, as Chairman of EURU, will assume position as a vice chairman of the Show and attend official events including the opening ceremony. The EURU secretariat also participates in preparatory meetings for the organization of the event to present views of imported vehicles in a constructive manner, in an attempt to make TMS worthwhile for visitors.
I am confident that TMS will succeed in providing an opportunity for the visitors from home and abroad to touch and feel the attractiveness of imported cars featured with superior environmental performances, economy and driving performances, while making comparison with domestic models. You, the people of the media, are requested kindly to extend support.
EURU is determined to continue making efforts for the growth of the imported car market and, in turn, the growth of automotive society that is safe and environmentally friendly, in coordination with JAMA, JADA and other automotive associations and through cooperation with METI, MLIT and other government bodies concerned. By delivering a number of attractive imported models to the hands of our customers, we hope to contribute to sustained growth of Japan’s motor vehicle market and economy as a whole.