May 20, 2010

JAMA’s Fiscal 2010 Business Activity Plan

Considering the possibility of a rapid economic recovery unlikely, and taking into account risks associated with currency exchange rates, equity prices and other factors, JAMA’s outlook for fiscal year 2010 (ending March 31, 2011) is not optimistic.

Although the government’s extension of its purchasing subsidies program for eco-friendly cars, trucks and buses is expected to have positive market effects, JAMA anticipates that the program’s termination will result in a drop in demand, with total 2010 sales finishing at 4.65 million units, down 4.9% from fiscal 2009. Growth in motorcycle demand is also unlikely, in view of the impact of stricter emissions regulations on vehicle prices and the continuing shortage of parking bays in urban areas, among other negative factors. JAMA therefore projects 2010 motorcycle sales at 384,000 units, down 6.6% from fiscal 2009.

Incorporating a broad array of supporting industries, automobile manufacturing in Japan is a key sector in terms of national as well as regional economic health. On behalf of its membership, JAMA works closely and in a timely way with relevant government entities, industry partners, and other players to effectively address the many challenges that face the automotive industry, in order that it may continue to fulfill its role in Japan’s economy and society.

Those wide-ranging challenges require comprehensive measures and concerted action. Priority issues for the industry in 2010 are outlined below, and JAMA will work hard for further significant progress in each area.

1. Promoting Greater Safety and Environmental Protection in Road Transport

While its members continuously advance vehicle-based active and passive safety technologies (for collision avoidance and injury mitigation, respectively), JAMA’s approach to the issue of greater road safety encompasses a wide scope. This includes promoting, in addition to vehicle safety technologies, the further development and integration of Intelligent Transport Systems (ITS) within the national road infrastructure, conducting regular information campaigns on road safety and safe-driving programs to increase public awareness, and actively advocating a range of other measures targeting increased road safety.

JAMA will thus continue to address road safety from the perspective of both the “hardware” and “software” required, in line with the Japanese government’s goal of making Japan’s roads the safest in the world.

Promoting environmental sustainability in road transport and addressing the priority issue of climate change is another major area of activity for JAMA.

In the fight against global warming, the Japanese automobile industry is and will continue carrying out comprehensive measures to expedite the shift to low-carbon transport. Such efforts include the continuous advancement of technologies to enhance automotive fuel efficiency; the development and commercialization of next-generation alternative-energy vehicles; research on and the promotion of road infrastructure measures enabling smoother traffic flow; and the promotion of ecodriving and other strategies for more efficient vehicle use. Low-carbon road transport is only achievable, however, by means of an integrated approach involving the efforts not just of vehicle manufacturers but of all the stakeholders concerned, including fuel/power suppliers, government, and vehicle users.

Japan’s automakers have also made steady and very significant progress in reducing CO2 emissions in the vehicle production process itself, and since 2008 they have been working together with Japan’s auto-body manufacturers to achieve plant CO2 reduction goals on a joint basis.

Meanwhile, although the Japanese government has announced its target of reducing Japan’s greenhouse gas emissions by 25% compared to the 1990 level by 2020, discussions on the specifics of how this target is to be achieved are still in the offing. JAMA is and will continue lobbying the government to i) make the target-compliance process not only effective but fair from an international perspective, ii) ensure that its policy reflects the views of all stakeholders and sectors, and iii) clearly disclose in the debate the impact of the necessary cuts on employment as well as the cost to the public, among other projections.

2. Promoting Greater International Understanding and Cooperation in Support of Free Trade

Because the automobile industry operates on a worldwide scale, it is crucial that further progress be made in terms of trade liberalization and the establishment of fair business environments.

For the growth of the global economy as a whole, JAMA therefore looks forward to the early conclusion of the World Trade Organization’s Doha Round of multilateral trade negotiations and endorses the creation of bilateral economic partnership agreements between countries or regions.

JAMA also favors the early establishment of an International Whole Vehicle Type Approval (IWVTA) reciprocal recognition system. Among its other merits, IWVTA would greatly enhance efficiency in worldwide automobile distribution and expedite international harmonization of vehicle technical standards in Asian and other countries where motorization is expanding at a rapid pace.

Globalization in the auto industry has also underscored the urgency of addressing the issue of double taxation and the need for international coordination to ensure that enterprises engaged in international trade are not saddled with unfair tax burdens in the pursuit of their business activities.

Firm and concerted international action must also be taken against intellectual property rights violations, because such infringements can not only result in economic losses by impeding the conduct of legitimate commercial operations, but also jeopardize the health and safety of consumers.

In 2010 JAMA will continue its proactive involvement with these and other issues of global scope by working directly with industry counterparts and national authorities worldwide, on the basis of coordinated efforts with the Japanese government and in strong support of its relevant policies.

3. Promoting More Enjoyable Mobility and Improved Conditions for Vehicle Users

Japan’s automobile and motorcycle manufacturers are and will remain fully committed to the advancement of safety and environmental technologies and to the early market introduction of eco-friendly vehicles that meet the diverse needs of users, in terms of both performance and overall appeal.

There are, however, other factors involved in energizing the marketplace. These include reducing the tax burden imposed on vehicle owners in Japan and meeting essential requirements with respect to the vehicle use environment.

As regards Japan’s extremely onerous auto taxation regime, JAMA views, with certain exceptions, the government’s decision to retain so-called provisional tax rates (albeit in amended format) as a highly regrettable course of action. This year as in past years, JAMA will therefore continue to press the authorities for comprehensive automotive tax reform.

Against this backdrop, JAMA will respond to the government’s ongoing examination of a possible national carbon tax by calling for in-depth discussions on this issue that take into account the impact such a tax would have on international competitiveness, employment, and on the conduct of daily activities.

In 2010 JAMA will also continue to press for further improvements to the vehicle use environment, including a greater availability of motorcycle parking bays in Japan’s cities as well as provisions enabling a wider use of assisted-mobility vehicles.