JAMA looks to future

The Japan Automobile Manufacturers Association (JAMA) says the greater-than-anticipated impact of the April 2014 hike in consumption tax has fuelled hopes the new Abe administration will act fast to promote bold economic policies. Fumihiko Ike, chairman of JAMA, says these include growth strategies and election pledges to accelerate business recovery, and move Japan into a full-fledged positive growth cycle. “Sustainable growth in Japan’s domestic vehicle market faced a tough challenge last year when overall consumer confidence chilled following the consumption tax increase in April and a pre-tax hike rush in demand,” says Ike. “With rises in mini-vehicle tax rates for new vehicles purchased from April this year, stringent market conditions are also projected for 2015.  Through new models and other initiatives, the industry will pursue measures to stimulate domestic demand.” Despite slowdowns in some emerging economies, the global vehicle market in 2014 was supported by robust demand in the US. Expectations for 2015 include continued buoyant demand in the US, a strong recovery in Europe and growth in emerging markets, says Ike. “However, optimism in the overseas sector is mitigated by such factors as the risks of downturn prompted by uncertainty in the global economy and intensified international competition.” he adds. “Being a pillar of the economy, Japan’s automobile industry has a critical role to play in promoting growth. In 2015, although the challenges will be considerable, our priorities will remain revitalising the domestic market, improving the business environment, and creating safer, more comfortable and sustainable mobility.” What follows are edited extracts from Ike’s new year’s message.

Revitalising Japan’s domestic vehicle market

Targeting a reversal of two decades’ sluggishness in the domestic market, the Japanese automobile industry will press on with its core mission of supplying customers with automobiles and motorcycles of greater value and appeal. Events in 2014 – including the Tokyo Motor Festival 2014, a motorcycle day in Hamamatsu and visits by industry executives to university campuses – were held to promote motor vehicles among the public not necessarily directly familiar with their use.  This year’s highlight will be the 44th Tokyo Motor Show opening on October 29. Aiming to create an exciting experience for visitors, preparations are well under way. Domestic market revitalisation is also predicated on the provision of an environment that facilitates the ownership and use of vehicles. There is a need for revisions to Japan’s automobile-related taxes, which are burdensome. Faced with a stagnant domestic market, the ruling coalition released at the end of last year a tax plan for fiscal year 2015 to lower the tax burden on owners through specific provisions. Compensatory measures introducing surcharges on older mini-vehicles and delaying for one year the hikes in tax on motorcycles. However, issues that need to be addressed include modifications to automobile tax based on environmental performance when the consumption tax rate is raised to 10 per cent, and simplifying Japan’s auto-tax structure and reducing rates JAMA has long called for. We also request the government adopt additional measures to lower the overall burden on vehicle owners.

Improving the business environment

An enhanced domestic business environment is essential to sustain production and employment, and secure the foundation of manufacturing. A revitalised sector with greater international competitiveness is critical to achieving long-term economic growth. Current government growth strategies include reducing corporate rate to below 30 per cent, improvements in investment for research and development (R&D), and promoting economic partnership agreements. JAMA looks forward to efforts by the government to achieve a better business environment by implementing these strategies. We welcome not only the government’s initial corporate tax rate cut effective from this April, but also its decision to maintain existing incentives for R&D because these will bolster international competitiveness. We consider it vital to achieve freer trade and investment. We advocate accelerating talks to reach early accord on the Trans-Pacific Partnership and European Union-Japan Economic Partnership agreements.

Creating safe and sustainable mobility

Leading priorities for the automobile industry are safety and environmental sustainability. JAMA and its members are continuously engaged to achievegreater safety for all road users. In 2015, automakers are targeting advances in onboard driving support systems and intelligent transport systems (ITS)-based road-to-vehicle and vehicle-to-vehicle technologies. Signatories to the United Nations’ framework convention on climate change have been asked to submit greenhouse gas emissions reduction targets applicable post-2020. For its part, the automobile industry continues to develop next-generation vehicles to counter global warming, achieve energy security and improve air quality. Progress in automotive environmental technologies will not be restricted to alternative-powered vehicles. With projected growth in ownership in emerging markets in the coming years, increased fuel efficiency in vehicles equipped with conventional internal combustion engines will also be a factor in reducing CO2 emissions. Meanwhile, JAMA and its members are working with related industries and petitioning for government support in expanding the infrastructure needed for the wider use of fuel-cell and electric vehicles.