Association, Inc.

Issue No. 2, 2007

Address by Mr Fujio Cho
Chairman, Japan Automobile Manufacturers Association
JAMA Annual Reception, Brussels, 4 July 2007 

Thank you for the introduction.

First of all, I would like to express my own and JAMA’s gratitude to our guest speakers, Commission Vice President Mr Verheugen and Czech Vice Minister Mr Szurman, for the valuable comments they have just made. 
Mr Vice President, Mr Vice Minister—thank you, indeed.

Your Excellencies, Distinguished Guests, Ladies and Gentlemen: 
Good evening.  Welcome to JAMA’s twelfth Annual Reception here in Brussels.

On behalf of JAMA, I wish to thank all of you for joining us tonight.  It is a further honor to welcome Ambassador Hayashi, from Japan’s Embassy in Belgium, and Japanese Ambassador to the EU Mission, Mr Kawamura.

It’s also a pleasure to acknowledge all the representatives from the European automotive industry, with whom our partnership has become increasingly close over the years.  I take this opportunity to thank our European colleagues for their continuous support.

Automobiles play an indispensable role in everyday life, and the automotive industry is thus an engine of economic growth.  In addition, the industry brings benefits to EU citizens through the jobs it creates.

Japanese automakers—through their manufacturing, research and development, distribution and sales activities in the EU—also contribute significantly to the economy and employment in Europe.

Looking at the data, JAMA members and their local affiliates currently operate 16 production bases and 13 R&D centers across Europe.  In 2006 their EU-wide production totalled 1.51 million units, and roughly 160,000 people were employed throughout their EU operations.

Also in 2006, Japanese automakers purchased a record-high 13.2 billion euros’ worth of EU-made parts, while their cumulative investment in the EU increased to 15.9 billion euros.

JAMA supports Europe’s CARS 21 initiative and the recommendations contained in its Final Report.  JAMA especially supports those concerning the simplification and internationalization of the regulatory environment through better regulation, and the adoption of an integrated approach in responding to the need to reduce CO2 as well as improve road safety.

JAMA believes that, in the interest of advancing the competitiveness of the European auto industry, the CARS 21 recommendations should be taken fully into account during the formulation of new regulations.

The biggest challenge now facing the automobile industry in Europe is CO2 reduction, and this is the focus of my remarks here tonight.  The problem is, of course, an urgent worldwide concern.  Recognizing that countering global warming is a crucial issue for the sustainability of the motor industry, Japanese automakers are according the highest priority to making progress in this area.  The CO2 emissions performance of their vehicles attests to this.

Nevertheless, in regard to the European Commission’s Communication on the reduction of CO2 emissions from cars, which was released in February this year, the Japanese manufacturers believe that the proposed new regulation’s target application year of 2012 should be reconsidered.

As most of you are well aware, the development and production of a new car model, from the earliest design stage to its entry on the market, is a very long process.  Development and product cycles in our industry require a lead time of at least seven years.

This lead time includes:  A five-year period that covers, first, a concept phase for design and the introduction of safety as well as environmental technologies—that is, emission, engine, and other technologies;  and second, an execution phase for trial production and adjustment and assessment, among other tasks.  Following that, at least two years are required for application to individual models.

In recognition of the lengthiness of this process, Japan has introduced new fuel-efficiency standards whose target values will be enforced in 2015.  This provides auto manufacturers with a realistic lead time of eight years.

In addition to the problem of inadequate lead time posed by the Commission’s proposal, manufacturers, meanwhile, will be further burdened by cost-effectiveness issues as they also strive to comply with other EU emissions regulations, including the EURO 6 provisions which are to be enforced in September 2014.

JAMA and its members respectfully call upon the Commission to consider all these factors.

The CARS 21 Final Report notes that, in order to strengthen the competitiveness of the European auto industry, cost-effective compliance with CO2 regulations will require the efforts of all the stakeholders involved.  In other words, it advocates the adoption of an integrated approach.  This includes, in addition to industry efforts, the efforts of government, for improvements in road infrastructure and traffic management, and those of vehicle users, for eco-friendly driving.

In Japan, a CO2 reduction target for Japan’s road transport sector has been established under Japan’s Kyoto Protocol commitment.  I am pleased to report that substantial progress is being made towards meeting that target, not only as a result of steady improvements in vehicle fuel-efficiency performance, but also as a result of road infrastructure upgrades and enhanced traffic management.

As regards the Commission’s policies for CO2 reduction in the EU, Japanese auto manufacturers hope that policymakers will not fail to take into account the significant contributing factors of improved road infrastructure, improved traffic management, and the adoption by car users of eco-driving practices.

In closing, please allow me to emphasize the following points which we believe to be important.

The dialogue between the Commission, other relevant entities, and JAMA provides JAMA members with a vital means by which to contribute to the increased competitiveness and growth of the European automobile industry.  JAMA hopes this valuable dialogue with all concerned parties will be maintained in the years ahead.  Likewise, JAMA looks forward to the development of an even closer partnership between the automotive industries of Europe and Japan.

Ladies and Gentlemen, I thank you for your kind attention, and wish you a very pleasant evening.