EURU Chairman Press Meeting (January 12, 2017)
EURU held a Chairman’s Press Meeting on January 12, 2017 Following is the speech by Chairman Kronschnabl.
Mr. Peter Kronschnabl
First and foremost, many people lost lives and suffered from the earthquake that hit the Kumamoto are in April last year. Also, production facilities and social infrastructure that support local economies of the affected areas were also damaged. I would like to pray for further progress of the efforts toward recovery this year.
1. Results of 2016
Reflecting on the Japan’s economy in 2016, modest recovery has continued throughout the year, but consumption has not picked up strongly, and we continue to see changes in international political climate and fluctuations in world economies and financial and capital markets.
Against such backdrop of modest recovery of Japan’s overall economy, the motor vehicle market also lacked strength on the whole, and the sales were below the five million mark for the first time in five years and down 1.5 percent from a year earlier.
Looking back on the imported car market of last year, the figures for the first quarter, from January to March 2016, of imported vehicles were down about 2 percent from a year ago, continuing the trend of negative growth posted for consecutive 7 months since September 2015. However, from April onwards, thanks to vigorous introductions by EURU members of next-generation vehicles including plug-in hybrids (PHEV) and clean diesel vehicles (CD), as well as new models equipped with latest technologies, such as Autonomous Emergency Brakes (AEB), Adaptive Cruise Control (ACC) and lane change assist, the sector turned around and posted year-on-year growth for 9 months running, till to date. As a result, throughout the year sales of imported 4 wheelers were 343,673 units, posting growth of 4.6 percent from a year ago, and the figure was the 5th highest record.
Foreign-brand 4 wheelers were 295,114 units, posting growth of 3.4 percent from a year ago, and the figure was the 3rd highest record.
Let me provide breakdown on sales of foreign-brand next-generation passenger vehicles, which were one of the main factors of sales increase in last year. For example, PHEV was up 126.8 percent and clean diesel cars, which have continued to perform well since 2015, were up 75.9 percent.
However, the share of foreign-brands to total passenger vehicles (4,146,459 units) was 7.1 percent, which was 6.7 percent a year ago, and the figure still remains low when compared with other countries.
2. Outlook on 2017
In line with the global trend of further “digitalization” in economy and business in general due to the integration of digital technologies, EURU forecasts greater need for advancement and diversification of cars that can realize significantly-improved safety and environmental performances, while expectations will grow for raising levels towards fully-automated driving in the future.
EURU member companies plan to energetically deliver to their customers E-mobility and CDs, among others, that are equipped with more advanced technologies. Also, by disseminating further auto driving technologies already introduced in the market to a wider model range, including automatic braking systems, ACC, lane change assist and parking assist, steady and brand-new steps will be taken toward “fully automated and connected driving” in the future.
These plans of EURU members are certain to meet advanced and diversified needs of Japanese customers, and for the outlook of the imported car market, we project that the trend of year-on-year growths that were posted consecutively since last April will continue in 2017.
On the other hand, we find considerable uncertainties in political and economic conditions of the world in 2017, as we yet do not fully understand the impacts of the result of UK’s national referendum for leaving the EU and the inauguration of a new administration in the US after the presidential election of last year.
Furthermore, concerning the tax system of Japan, which forms one of the conditions of the projection on the motor vehicle market, as I will elaborate later, we at EURU are concerned that, due to the postponement of the Consumption Tax hike to 10 percent by two-and-a-half years until October 2019, the abolition of Automobile Acquisition Tax is also delayed, which means that the achievement of reduced tax burdens on users has been rescheduled again, causing adverse impacts on the motor vehicle market and economic recovery of Japan.
In order to properly address the digitalization trend and accurately meet the needs and expectations of customers who are seeking advancement and diversification of powertrains, EURU members will be broadly providing them with “attractive imported vehicles” equipped with latest technologies for improved safety and environmental performances on the way to automated driving.
In addition, in an attempt to assist introductions of new models and attractive cars equipped with latest technologies as I just mentioned, EURU will continue making requests for the taxation revision and promoting market stimulation measures including test ride events, while doing its best to secure fair and equal market access to be able to deliver attractive imported cars to any customers at any time through active participation in discussions and efforts for international harmonization of Japan’s technical regulations.
3. Activity Plans of EURU
1) Activities to Request for Tax Revision
First, for the implementation of plans for taxation revision request activities in this year onward, we will give our top priority over “reduction of Automobile Tax”, which remains unresolved despite the description in the Taxation Revision Outline of Ruling Parties announced on December 8, last year that “comprehensive deliberation will be conducted for reduced tax burdens on vehicle ownership, and necessary measures/decision will be taken by the time of FY 2019 taxation revision”. This request is intended to lighten burdens of tax on car owners, while closing the gap in taxes between registered vehicles and kei-cars, which is very important.
Secondly, we will further request for drastic review of Tonnage Tax, including its abolition.
Towards fiscal year 2019 taxation revision, EURU will call for assured abolition of Automobile Acquisition Tax as of October 1, 2019, when Consumption Tax is hiked to 10 percent.
Also, for the Eco-car Tax Incentives, which has been extended by this taxation revision, but of which criteria have been raised significantly. The target vehicles and criteria will be reviewed again as of the fiscal year 2019 taxation revision; however, in light of the trend of “advancement and diversification of powertrains and progress of digitalization”, EURU will seek appropriate criteria that are not overly strict and that can promote well-balanced development of technologies for EVs, PHEVs, Clean Diesels, FCEVs and CNG.
2) Activity Plans for Technical and Environmental Areas
Next, I would like to speak about our key activity plans in the areas of technology and environment. Over years, EURU has been making requests for facilitation of international harmonization of technical and environmental regulations to be able to provide Japanese users with vehicles of the world that are equipped with leading-edge technologies for safety, environmental protection and automated driving. From this year onward also, we seek further acceleration of international harmonization of Japan-unique regulations that remain applicable. Let me show you some examples of recent progress and our plans in these areas.
(1) International Whole Vehicle Type Approval (IWVTA)
First, Japan’s Ministry of Land, Infrastructure and Transport is taking initiative in creation of the International Whole Vehicle Type Approval (IWVTA) at the UNECE World Forum for Harmonization of Vehicle Regulations (WP29). In June last year, revisions to the 1958 Agreement were approved at WP29, which will go into effect in September this year. When the scheme is fully complete, certification procedures in Japan of those vehicles approved under IWVTA will be significantly streamlined, and for that reason, we at EURU highly appreciate it with great expectations. Japan has adopted, and has been applying since April 2016, a new certification system partly based on IWVTA, and we hope to see that streamlining of certification procedures will continue by seamless implementation.
(2) Acceptance in Japan of Daytime Running Lamp (DRL)
Secondly, we are pleased that the ban on use of daytime running lamps in Japan was lifted, which EURU has long been requesting, and thanks to the acceptance of UN Regulations, use of DRL in JAPAN was allowed in October last year. EURU will continue making requests for accelerated pace of international harmonization of other Japan-unique regulations.
(3) Activities concerning Automated & Connected Driving
Thirdly, amid the digitalization trend, EURU will further promote, in cooperation with ACEA, JAMA and other organizations, activities concerning automated and connected driving for harmonized progress toward introductions and widespread use of automated driving technologies in the future and reasonable revisions to regulations and schemes from the perspective of international harmonization.
In addition, the Strategic Innovation Program-Automated Driving for Universal Service (SIP-adus) established within the Cabinet Office plans to start conducting field operational tests (FOT) in September this year, and the project welcomes participation by foreign automakers. EURU will gather information and exchange views on SIP-adus and FOTs throughout 2017.
(4) Refueling Vapor Measures
A council of the Ministry of Environment will issue a report on measures against evaporative fuel emissions during refueling. Specific candidate methods under consideration include (A) Stage II on the gas station side and (B) ORVR, which stands for Onboard Refueling Vapor Recovery, on the vehicle side. From the perspectives of the swiftness of effects and international harmonization, EURU will continue calling for “adoption of option (A), the Stage II, which is more cost effective and rational”. We will make further efforts to realize this request this year.
(5) Revisions relating to Emission and Fuel Efficiency Tests, etc.
EURU welcomes planned adoption in Japan of World Light Vehicle Test Procedure (WLTP) in October 2018 and associated revisions to laws and regulations.
In addition, while discussions are ongoing recently concerning strengthening of regulations and test procedures for emissions and fuel efficiency, as well as the introduction of Real Driving Emission (RDE) regulations, the Ministry of Land, Infrastructure and Transport will conduct hearing this month to find out views of the industry. In order to ensure enough lead time for overseas OEMs, EURU will have discussions and make coordination with the ministries concerned, while fully taking into account international harmonization of regulations.
(6) Future Powertrains and infrastructure
Most OEMs are investing heavily in the development of next generation powertrains like CD, HEV, PHEV, EV, FCEV, and CNG/LNG.
The corresponding fuel supply need new additional infrastructures based on internationally accepted standards e.g. electric charging facilities, hydrogen fuel stations, CNG/LNG fuel stations etc. are important requirements. While the competition between alternative powertrains intensifies on global scale the infrastructure for a stable and secure supply of relevant fuels is yet not in place. The environmental impact of new fuel/energy sources varies from region to region depending on the available fuel/energy production process. Importers see further necessity for global harmonization of standards for next-generation vehicles as well as the infrastructure development road-maps.
3) Imported Motorcycle Activities
First, concerning activities of international harmonization of regulations relating to motorcycles, we had a great progress in April last year of the realization of reference value-based proximity noise regulations.
Also, concerning lamp regulations, the DRL regulations remain applicable, but we are hoping that the revisions proposed by Japan to the UN in last June will be agreed internationally this year and adopted in Japan.
Next, for the stimulation of the motorcycle market of Japan, building on the success of the Second EURU Motorcycle Test Ride held in April 2016, we have decided to continue holding the event in this year onward. The Third Test Ride will be held on 19th and 20th of April this year in Oiso. We are pleased to invite you to the event.
In closing, through collaboration with ACEA, JAMA and other automotive associations, and coordination with the government bodies concerned, amid the trend of digitization, EURU will make further efforts to make contributions for stimulation of Japan’s motor vehicle market.