Japan's measures to withstand
impact of global crisis on
its automotive industry - JAMA shares at the 4th Indonesia International Automotive Conference

The conditions created by worldwide economic crisis are said to occur only once in a century. These conditions have impacted the automotive industry on a global scale with markets throughout the world experiencing unprecedented slowdown in operations.

Under such a scenario, it is timely for GAIKINDO (The Association of Indonesian Automotive Industries) as well as The Indonesian
 
 
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Automotive Federation, to organize the 4th Indonesia International Automotive Conference, on 23 July 2009 with the theme: "Triumph Over Crisis Through Innovation Towards Efficient and Environment Friendly Technology", coinciding with the Indonesian International Motor Show.

Speakers from the government spoke on policy plans to aid the automotive industry while other industry stakeholders briefed the audience on their efforts in the latest environmentally-friendly technology. JAMA too is honoured to be invited as a speaker to share its experience from Japan.

In her keynote speech, Dr Sri Mulyani, Coordinating Minister for Economic Affairs said,"The Indonesian government is highly committed to the development of its automotive industry, classifying it as the industry of the future." On top of current efforts to help the industry stay robust, she emphasized the need to improve business sectors' activity for long term growth.

JAMA is confident current difficulties in Indonesian’s automotive industry can be overcome on the basis of sustained cooperation between automotive industries of both countries.

The representative from JAMA, Mr Yoshihiro Yano, the Director-General of the International Department, was at the Conference to talk about Japan’s recovery measures to withstand the impact of global financial turmoil on its domestic automotive industry.

Japan’s automotive industry, like many over the world, is not spared from the crisis. Production of passenger cars, trucks and buses steadily increased from 2001 to reach 12 million vehicles. Since September 2008, production volume plummeted. Similarly, vehicle sales plunged at the same period last year and the decline reached its lowest point of 25% same month, year-on-year drop in March this year. Needless to say, exports nosedived too, reflecting the severity of global market conditions.

In its presentation, JAMA outlined two set of measures the Japan government has taken to assist the automotive industry in Japan--Tonnage and Acquisition tax cuts for eco-friendly vehicles, as well as promotion measures for purchasing 'green' vehicles.

(1) Tonnage and Acquisition tax cuts for eco-friendly vehicles

In Japan, tonnage tax is assessed for every year of vehicle ownership on the basis of vehicle weight, but imposed only at the time of mandatory vehicle inspection, which is three years after the purchase of a new vehicle and every two years subsequently.

In addition, an acquisition tax is also imposed at the time of purchase, amounting to 5 percent of the vehicle purchase price.

As a measure to assist the automotive industry affected by the downturn in economy, the Japanese government came up with tonnage and acquisition tax cuts for eco-friendly vehicles (passenger cars, heavy-duty trucks and buses) and exemptions for next-generation vehicles.

For example, the buyers of next generation and highly eco-friendly vehicles such as electric vehicles, plug-in hybrids, clean diesel vehicles, will enjoy an exemption from tonnage tax and acquisition tax for the three year period.

Other types of eco-friendly vehicles will have their tonnage and acquisition taxes reduced by 50% or 75%, depending on the specific emissions and fuel efficiency requirements they meet.

Such cost savings, depending on the gross weight and vehicle purchase price, enable a person who purchases a passenger car of up to 1.5 tons and price assumed to be under 1.8 million yen, to save between 20,000 yen to a little over 100,000 yen. These tax exemptions and reductions will be in effect for three years, starting from April 2009.

Tonnage & Acquisition Tax Cuts for Eco-Friendly Vehicles
Effective Period: For the vehicle Tonnage Tax: 1 April 2009-30 April 2012
  For the vehicle Acquisition Tax: 1 April 2009-31 March 2012
  Next-Generation Vehicles Low-Emission and Fuel-Efficient Vehicles (Passenger cars and mini-vehicles) Heavy-Duty Vehicles
(Trucks and buses with GVW 3.5 tons)
Electric (including fuel cell) vehicles
 
Emissions down
by 75% from 2005 standards
 
and
 
 
Fuel efficiency
25% above 2010 standards
 
 
Emissions down
by 75% from 2005 standards
 
and
 
 
Fuel efficiency
25% above 2010 standards
 
 
 
Compliant with 2009 emission standards

 
and
 
 
Compliant with 2015 fuel efficiency standards
 
 
Emissions down
by 75% from 2005 standards
 
and
 
 
Compliant with 2015 fuel efficiency standards
 
Plug-in hybrid vehicles
Clean diesel vehicles
Hybrid vehicles
Natural gas vehicles
Tonnage Tax Exempt 75% reduction 50% reduction 75% reduction 50% reduction
Acquisition Tax (new vehicles only) Exempt 75% reduction 50% reduction 75% reduction 50% reduction

(2) Promotion measures for purchasing 'green' vehicles

The second set of measures as part of the Japanese government’s economic stimulus program to help boost the Japanese automotive industry is the purchasing subsidies for ‘green’ vehicles. Beginning in April this year and lasting for a year, these measures offer incentives to owners of vehicles that are 13 years or older to scrap their aging vehicles and replace them with new eco-friendly ones. Similarly, purchases of new eco-friendly vehicles also enjoy purchase subsidies.

In this scheme, the Japanese government provides a subsidy of 250,000 yen for the purchase of a new, eco-friendly passenger car (standard or small sized) replacing an old model. For a mini-vehicle, the purchaser enjoys a subsidy of 125,000 yen.

Subsidies are also provided for non-replacement purchases of new eco-friendly vehicles. For passenger cars and mini-vehicles, the subsidy amounts to 100,000 yen and 50,000 yen respectively.

The subsidy also extends to purchases of new heavy-duty trucks and buses meeting the stipulated fuel efficiency and emissions criteria.

Japan's "Green" Vehicle Purchasing Promotion Measures
Effective Period: 10 April 2009-31 March 2010

(1) Subsidies for Purchases of New Vehicles Replacing Older Models
The provisions below apply to new vehicle purchases in the case of owners who scrap older vehicles and replace them with new models meeting the stipulated environmental performance criteria.
Passenger Cars (including Mini-Vehicles)
Requirement Subsidy Amount
(Standard or Small Car)
Subsidy Amount
(Mini-Vehicle)
Replacement of a vehicle first registered 13 years ago or earlier with a new model compliant with 2010 fuel efficiency standards JPY 250,000
(USD2,700)
JPY 250,000
(USD1,300)
Heavy-Duty Vehicles (Trucks & Buses)
Requirement Subsidy Amount
(GVW 3.5-ton class)
Subsidy Amount
(GVW 8-ton class)
Subsidy Amount
(GVW 12-ton class)
Replacement of a vehicle first registered 13 years ago or earlier with a new model compliant with 2005 new long-term standards JPY 400,000
(USD4,300)
JPY 800,000
(USD8,500)
JPY 1,800,000
(USD19,000)
(2) Subsidies for Purchases of New Vehicles (No vehicle replacement required)
Passenger Cars (including Mini-Vehicles)
Requirement Subsidy Amount
(Standard or Small Car)
Subsidy Amount
(Mini-Vehicle)
Fuel efficiency at least 15% better than 2010 standards and a four-star emissions performance rating (= down by 75% from 2005 standards) JPY 100,000
(USD1,100)
JPY 500,000
(USD550)
Heavy-Duty Vehicles (Trucks & Buses)
Requirement Subsidy Amount
(GVW 3.5-ton class)
Subsidy Amount
(GVW 8-ton class)
Subsidy Amount
(GVW 12-ton class)
Fuel efficiency compliant with 2015 standards and NOx or PM emissions down by at least 10% from 2005 standards JPY 200,000
(USD2,100)
JPY 400,000
(USD4,300)
JPY 900,000
(USD9,600)

As a result of this subsidy scheme, JAMA noted positively that there had been immediate and strong response from consumers who are visiting the showrooms in increasing numbers. The domestic market vehicle is seeing a steady recovery so far.

Furthermore, the sales of eco-friendly vehicles qualifying for the government’s tax reduction now accounts for nearly 50 percent of total vehicle sales in Japan, with hybrids becoming especially popular.

Besides outlining the present stimulus measures for the automotive industry, JAMA also shared with the Conference its views on the future direction of the automotive industry.

Confident that next-generation alternative-energy and clean diesel vehicles will play a key role in road transport CO2 reduction, Japanese automakers are carrying out development activities to aim for an expanded supply of next-generation vehicles, adding to the current fleet of natural gas, flex-fuel and hybrid vehicles etc in the near future. To ensure the widespread and practical use of these vehicles, governmental support such as provision of purchase incentives, development of infrastructure and support for research and development are essential.



 

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