May 18, 2006

JAMA Fiscal 2006 Business Plan
[May 2006]

Japan’s economy in fiscal year 2006 (ending March 31, 2007) is expected to reflect continuing uncertainties with respect to crude oil prices and currency fluctuations among other factors.  However, in view of the sustained growth that is forecast for the world economy, and particularly for that of the United States and of Asian countries, Japan’s economy is also projected to maintain positive growth on the strength of favorable trends in employment and income.

The Japan Automobile Manufacturers Association, Inc. (JAMA) strives to ensure the optimal performance of the automobile industry as a core sector of the national economy and to promote the growth of its international competitiveness. To that end, JAMA is engaged in a broad range of activities aimed at effectively addressing the critical issues facing the industry today.

On the basis of the projected positive trends in employment and income as well as in personal spending, Japan’s domestic motor vehicle market in 2006 is expected to chart growth over the previous year.

For exports, the buoyancy of the U.S. and Chinese economies should help maintain export shipments at about the same level as in fiscal 2005, not discounting the impacts of expanded overseas production, currency fluctuations, and respective corporate strategies.

The domestic motorcycle market is likely to be affected by a number of factors, including not only the nation’s shrinking youth population and the decline in the number of new moped licensees, but also, on the plus side, the introduction of a new license category for automatic-transmission models and the elimination of the ban on expressway tandem riding.  As a result, the small- and mini-sized motorcycle market segments should show growth on the year, whereas sales of both Class 1 and Class 2 motor-driven cycles are expected to drop.  Overall, the motorcycle market is expected show a decline from fiscal 2005.

While Japan’s domestic vehicle market has in recent years generally registered only a slight rise, the opposite trend is being seen in the newly emerging markets of Southeast Asia and the BRIC countries (Brazil, Russia, India and China), in addition to the growth taking place in the U.S. and European markets.  Moreover, with Japanese automakers’ overseas production now at the 10-million-unit mark and with further expansion foreseen in that regard, it can rightfully be stated that from a global perspective, the automobile industry is one of growth.

To sustain such growth in the years ahead will require a solid foundation of advanced technological expertise and a leading edge in both technical competitiveness and craftsmanship.  For the Japanese auto industry, ensuring the continued strength of both these elements, in terms of the advanced skills and research and development required, will mean that a certain scale of production — specifically, domestic output at the 10-million-unit level — must be maintained.

Mindful of that reality, Japanese automakers will therefore aim to supply high-quality, high-appeal products that meet social requirements as well as consumer needs.  The principal focus will be on increased vehicle safety and better environmental performance, and parallel activities will promote smoother traffic flow and more comfortable driving, for the benefit of the environment and all road users.  Other significant efforts will address expanding globalization in the auto industry and the ongoing process of establishing internationally harmonized automotive technical standards and certification systems.

JAMA will also aim to maintain swift decision-making processes and optimally efficient and transparent organizational management throughout the current fiscal year, on the basis of constant close teamwork with its member companies.  As always, its committee-based activities will guide the formulation of business programs targeting the diverse challenges now facing the industry; and in addressing those challenges, JAMA will continue to solicit the understanding and cooperation of the government entities concerned, industry partners and other players, and relevant expertise.

To supplement the foregoing overview of its projected activities, JAMA is pleased to present its priority business objectives for fiscal 2006, as follows.

1. Greater Vehicle Safety & Improved Environmental Performance

For many years, two leading priorities for JAMA have been motor vehicle safety and environmental protection.  During the current fiscal year as well, further efforts will be made to advance the specific goals outlined in JAMA’s publication On the Road to Sustainable Mobility (June 2005).

With respect to traffic safety, the Japanese government announced in 2003 its target of halving the number of domestic road fatalities (to under 5,000) over the next ten years, to make Japan’s roads the safest in the world by 2013.  Fully endorsing this objective, JAMA continues to promote the implementation of effective road safety measures, in terms of both “hardware” and “software,” in order to reduce road fatalities as well as road accidents and injuries.

JAMA’s broad-ranging activities in this area are focused especially on promoting the expanded use of vehicle safety equipment and cutting-edge Advanced Safety Vehicle (ASV) technologies; the more widespread application of ITS (Intelligent Transport Systems) technologies; the implementation of road safety campaigns; and the conduct of hands-on safe-driving programs.  JAMA also conducts surveys on road safety, submits safety-related proposals to the government, carries out diverse additional public awareness activities, and holds special safe-driving seminars for the elderly drivers.

In addition, JAMA works actively on Japan’s vehicle recall system not only by cooperating with government-sponsored measures aimed at preventing the recurrence of recalls, but also by examining ways to improve the recall system in order to maximize customer satisfaction.

With respect to environmental protection, JAMA’s major areas of focus are global warming countermeasures and vehicle recycling.

In April 2005, the Japanese government announced an updated plan for promoting the achievement of its national greenhouse gas emissions (GHG) target as established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change.  As regards increased automotive fuel efficiency, all JAMA member companies have already announced their early compliance with Japan’s passenger car fuel economy targets for 2010.  As a result, JAMA is now working with the government to determine next-generation fuel economy standards for passenger cars and new standards for heavy-duty vehicles.  However, reducing CO2 emissions in the transport sector will also require improvements in traffic flow and in distribution, and JAMA intends to be a steady source of practical proposals in these areas as well.

As regards CO2 emissions from plant facilities, JAMA and the Japan Business Federation had originally worked together in the formulation of a voluntary action plan to cut auto factory CO2 emissions by 10 percent by 2010, compared to 1990 levels.  This goal too has already been achieved, with efforts now aimed at even further reductions in plant emissions in future.

The nationwide end-of-life vehicle recycling system that was launched with the enforcement of Japan’s new Automobile Recycling Law in January 2005 is operating smoothly, and JAMA will continue its support of and collaboration with the Japan Automobile Recycling Promotion Center in the years ahead.  At this juncture, the key effort now in the transition towards a recycling-oriented society is to make significant progress in increasing vehicle recyclability.

JAMA is also stepping up efforts to ensure the total elimination of asbestos in the manufacture of automotive parts.

2. A More Comfortable Environment for Vehicle Use

JAMA continuously promotes measures aimed at improving the vehicle use environment.

For example, JAMA has for many years lobbied vigorously for a streamlining of and reductions in Japan’s complex and highly onerous automobile taxation system.  In addition, as a member of the Automobile Tax Reform Forum, JAMA has more recently been a vociferous opponent to the policy move that is currently afoot to reallocate road-designated revenues to the general revenue pool, and has helped organize petition drives and promote public awareness activities in this regard.

JAMA also strongly advocates a broader implementation of ITS, a greater diffusion of assisted-mobility vehicles, an enhanced environment for motorcycle use, vehicle theft countermeasures and other initiatives to provide consumers with a more user-friendly motoring environment.

During fiscal 2006 JAMA will be moving ahead with preparations for the 40th Tokyo Motor Show to be held in the autumn of 2007.  With that event, the Tokyo Motor Show will become a single, biennial show covering passenger cars, motorcycles, and commercial vehicles and including auto-body and auto-parts displays.

JAMA will also participate in the planning of the International Skills Festival for All to be held in Shizuoka Prefecture in November 2007.

3. Globalization in the Automobile Industry

Expanding globalization in the automobile industry worldwide underscores the need for greater progress in the areas of trade and investment; for international harmonization of automotive technical standards and certification systems; for improved fuel quality; for improved automotive environmental performance, including reduced exhaust emissions; for increased road safety; and for intellectual property rights protection, to name the dominant issues.

In the current round of World Trade Organization international trade liberalization talks, JAMA is actively encouraging the elimination of sector-specific tariffs and non-tariff barriers.  In parallel with moves towards the establishment of economic partnership agreements, JAMA will promote productive discussions with the ASEAN nations concerned.  In these and other ways, JAMA will actively support Japanese government initiatives to organize government/industry meetings in the relevant countries in order to enhance communication and mutual understanding.

Against the backdrop of China’s rapidly expanding vehicle market, the adoption of new auto-sector policies in Asia is advancing systemic reforms.  JAMA will continue to actively support the establishment of an equitable and transparent environment for market competition in the region, strengthening its appeals to China in this regard and bolstering mutual understanding between the Japanese and Chinese automobile industries.

In ASEAN — in addition to the push towards establishing economic partnership agreements — dialogues with individual national governments and industries will be energetically pursued.  JAMA’s activities will focus on its participation in human resource development programs, on the harmonization of technical standards and vehicle certification systems, and on efforts to improve fuel quality throughout the ASEAN region.

In North America, meanwhile, JAMA will continue to monitor government and auto industry trends and to formulate pertinent responses.

In Europe, JAMA will be tracking the latest developments in policy and in the auto market under the new EU system of enhanced cooperation; whenever necessary, it will submit comments/appeals to the European Commission, the European Parliament and individual national governments.  At the same time, it will seek further progress in its discussions with its counterpart, the European Automobile Manufacturers Association (ACEA), and other industry groups.

Fiscal 2006 will also see JAMA preparing for its participation in the 5th Global Automotive Industry Meeting (for passenger cars) and the 4th Global Commercial Vehicle Meeting.  Both gatherings will seek to deepen the awareness of auto industry leaders with respect to common issues facing the global industry, and to enhance communication and understanding among the national industry associations and governments concerned.