EURU Chairman Press Meeting (January 20, 2015)
Following is a speech by EURU Chairman at a press meeting held on January 20 (Tue), 2015.
Mr. Shigeru Shoji
Results of 2014
Last year, Japan’s economy was affected in many ways by the hike in the Consumption Tax as of April, and the key topic of the lower house election of the year end was “complete departure by the Japanese economy from deflation”. For the automobile industry, it was a year of being tossed around by the last-minute increase in demand up to March and reactionary declines in April onward. The result for the overall domestic market was up 3.5 percent from a year earlier; however, while the registered vehicles almost remained flat, the share of Kei cars has surpassed 40 percent for the first time. The change in the market configuration has become prominent.
For the imported car market as well, adverse impacts of the decline in consumption in April onward were very serious. However, thanks to the savings of up to March and the effect of vigorous introductions of new models by the member importers in fall onward, the result for foreign-brand vehicles for the entire year was about 290,000 units, up about 10,000 units or 3.4 percent from a year ago. Fortunately, we were able to post the third highest figure in history.
This figure is deceptive. Foreign brand imports took only 5.2% of the total new vehicle market, including Kei-cars, remained almost flat compared to 2013. This share remains significantly lower than in other comparable markets. On the other hand, foreign brand imports accounted for a record 8.8 percent of total registered vehicle sales. This suggests that if imported compact cars were able to compete on equal terms with Kei-cars there would be scope for a further increase in import penetration in all sectors of the domestic market.
Outlook of 2015
The declining birth rate and the ageing population, together with the declining population, are expected to progress further in Japan in the years to come. That trend will have huge impacts on the country’s auto industry, and the motor vehicle market as a whole is expected to continue shrinking in the mid- to long-ranges.
The imported car sector has gradually penetrated and grew by carefully selecting and providing the customers with attractive models that are manufactured in different areas of the world and developed through the culture and histories of each country. Over the years, Japanese people have selectively adopted excellent automotive and other technologies and products from all over the world. We are determined to continue meeting this need for selection and broadly providing Japanese customers with “attractive products” of both two- and four-wheelers, equipped with excellent safety features and innovative environmental performance.
For the outlook on 2015, a continued year-on-year decline is likely to be unavoidable up to March, but the full year result is expected to be slightly higher than last year. In 2014, we were tossed about by the impact of the Consumption Tax hike, but even under such circumstance, sales of high-priced vehicles and new models with added values did not fall. I am convinced that the appeal of imported cars as products is improving indeed and demand is steady for those with added values.
On the other hand, however, according to the Taxation Revision Outline announced in the end of last year, reductions in the burden of taxes levied on motor vehicles will not be attained , and planned changes will make the scheme of incentives much more complex, while basic tax rates will not be lowered. I am concerned that it may pour cold water on recovery of demand for automobile.
EURU Activities and Challenges
1) Taxation Revision Request
First, with respect to our activities for the Taxation Revision Request, we will, of course, continue aiming at the achievement of “streamlining and reductions”, but we will also seek the development of a tax system that is truly fair and equal.
As the criteria for Eco-Car tax incentives will be made more stringent from the next fiscal year according to the Ruling parties’ outline of FY2015 Tax Revision published on December30,2014 , we evaluates that these changes in criteria will primarily benefit hybrids and Kei-cars and will make light of the continued important role of internal combustion engine Vehicles.
We will be strongly calling for a scheme that is based on fair and reasonable criteria, instead of the “measurement of vehicles” , that will encourage well-balanced technological development and environmental performance improvements, while taking into account every power train, ranging from next generation vehicles to internal combustion vehicles. We will also make appeals to ensure that imported vehicles will not be disadvantaged and that the customers will be provided with genuine eco-friendly and safe vehicles.
2) Efforts on Technical and Environmental Issues
Next topic is about the focus of our efforts in the areas of technology and environment.
Presently, the “safe driving assist systems” and the “autonomous driving systems” are listed as those technologies, development of which is expected in terms of improving safety of motor vehicles. And the “fully-automated driving system” is considered as the ultimate goal. In fact in Europe, development is ongoing for practical application in ten to fifteen years from now.
In order to achieve it, however, there are so many aspects that cannot be attained solely by the development of automotive technologies. How far is auto driving allowed under the Road Vehicles Act? Does the responsibility lie on the vehicle side or the driver side? And, where are the boundaries? Further discussions are needed in legal aspects. Also, while radio wave is often used for those onboard sensors to grasp conditions surrounding the vehicle, in addition to the communications between vehicle and infrastructure and between vehicles, Japan-specific regulations have continued to be applied to the use of the radio wave.
For example , some import models use 76GHz radars as part of the safe driving assist systems, and to improve accuracy of obstacles detection, the bandwidth of the frequencies used must be wide enough. While such systems are already marketed in Europe using a bandwidth of 1GHz, they have not been allowed to be introduced in Japan due to the regulations under the Radio Act.
To solve the issue, EURU has had a series of discussions with MIC over that past two years, and as a result, in the end of last year, we finally saw a path to revisions to the legal scheme.
As such, in order to simply revise regulations on the bandwidth of the frequency that is already allocated, it is necessary to obtain understanding and cooperation of the parties concerned and the experts, in addition to a long period of time for discussions. As it is anticipated that there will be a number of cases in which the existing laws, regulations and the like will serve as barriers to the introduction of new technologies for autonomous driving, EURU is determined to continue seeking reasonable regulations and regulatory revisions from a global perspective.
In addition, while work is ongoing under the UN to develop the UN Regulations for the harmonization of regulations relating to the certification of next generation vehicles including EV, PHEV, clean diesels, HFCV and the like, penetration of which is called for to protect the environmental, there are many aspects yet to be completed.
Related to the High Pressure Gas Safety Act, a material issue remains for deregulation of the “hydrogen tanks for fuel-cell vehicles”, “natural gas vehicle fuel tanks” and the like. While EURU experts made serious efforts in past years to explain to the ministries concerned that there is no safety issue with the existing regulation in EU and US, we are asking for quick approval and introduction in Japan of those systems already certified in overseas to be able to contribute to the protection of the environment and compete against domestic products.
We take it as our final goal to see that every regulation is harmonized internationally and there is no need to conduct additional tests or take extra steps for certification on those vehicles that have obtained international certification in their countries of origin.
The international certification just mentioned refers to a scheme for certifying individual systems. Several years ago, the UN started the work to establish a globally unified scheme of vehicle certification (called “International Whole Vehicle Type Approval”), which extends the international certification of individual systems to whole vehicles, and its first step will be implemented in 2016. It is based on the initiative of MLIT and represents a significant progress toward the final goal of EURU.
In order to encourage seamless introductions of new technologies to the Japanese market, EURU has been actively talking with the ministries concerned and providing support to its member companies for such introductions, which will be one of our effort of focus for this year.
3) Motorcycle Services
Next topic is our motorcycle services.
For two-wheelers, our efforts so far focused on obtaining certification through the PHP system, and fortunately, we have achieved some positive results. Of the eight EURU member motorcycle importers, four companies now utilize the system and the vehicles certified by such already account for about one half of the total vehicles registered. This year, EURU will continue providing support to help other members in utilizing the system for more convenience.
With regard to the activities for international harmonization of standards and regulations, we will continue working with the ministries concerned for the adoption of proximity exhaust noise regulations based on reference values, harmonization with the EU5 and the like.
Also, for market stimulation, we will be actively participating in the “Bike Love Forum”, the public-private joint program designed to regain a domestic motorcycle market of a scale of one million units a year, while thoroughly implementing measures to ensure safety.
In addition, while EURU organized a joint exhibition at the “Bike Love Forum” of last year held in Hamamatsu, which attracted many visitors, this year, we will conduct the “Joint Motorcycle Test Ride” for the very first time in April at the Oiso Prince Hotel in Kanagawa Prefecture, to which representatives of the media will be invited. Through the media, we wish to promote imported motorcycles as attractive products that are something different among our future customers.
50th Anniversary Project
Established in 1965, this year marks the 50th anniversary of EURU. So, in this year of milestone, out of gratitude for our customers, media representatives and others concerned who have supported the growth of the imported car sector over the last five decades, we will look back the 50-year history of imported cars and vigorously promote imports on various occasions including showcasing futuristic concepts and innovative technologies, in an attempt to further penetrate imported models toward the 44th Tokyo Motor Show to be held in fall.
First, at the Joint Test Ride for the Media, which is held annually in the first week of February in Oiso, Kanagawa Prefecture, 13 symbolic imported models that have colored the 50 years of history will be exhibited, and together with photo panels, the “footstep of imported cars in Japan” will be presented. At the same time, for the test ride, we are planning to offer test drive of the models loaded with latest technologies and features to let the participants clearly feel the innovativeness of imported vehicles. I am sure that many of you have participated in the event, but you can expect more this year. New participants will also be welcome.
Next is the “Imported Car Photo and Essay Contest” for the general public, broadly inviting to send in “your happy memory/life/dream with an imported car”. At the same time, a EURU 50th anniversary special website will be launched to run publicity of various kinds, in addition to accepting applications for the above event, for penetrating appeals of imports to more customers.
On May 29, the “Celebration Gathering for the 50th Anniversary” will be held as an opportunity to invite many guests, celebrate the 50th anniversary and express gratitude. In addition, prize winners of the Photo and Essay Contest will be recognized, and there will be a talk show on imported cars by famous persons.
This year, I would like to ask you to pay more attention and give more focus than usual on imported vehicles.
Last but not least, as EURU is determined to further contribute to the stimulation of Japan’s motor vehicle market through coordination with other automotive organizations and collaboration with the government bodies concerned, I would like to request you to extend further assistance and cooperation.