January 1, 2010

New Year’s Message

Satoshi Aoki, Chairman

On behalf of JAMA and its member companies, I would like to convey our best wishes to all for 2010 as we move into a new year of hope and promise.

Marked by dramatic changes in the economic environment to a degree never before experienced by the Japanese automobile industry, 2009 was a tumultuous year. Spawned by the global financial crisis which emerged in autumn of 2008, the situation became extremely severe from the beginning of the year, triggering the swift implementation of emergency economic policies by countries around the world. Subsequent developments, including the recoveries in China, India and other emerging economies, lead us to believe that the economic decline has bottomed out. However, in Japan as well as in overseas markets there is still no sense that a genuinely robust recovery has taken root.

The past year also brought major upheavals in the political arena, including the January inauguration of President Barack Obama in the United States and the later transition to Prime Minister Yukio Hatoyama’s new administration in Japan.

Meanwhile, the chill in consumer spending linked to the harsh employment and income environments had a major impact. As a result, domestic passenger car and commercial vehicle demand in Japan in 2009 dropped to 4.61 million units, down 9.3% from 2008, for the fifth straight year of decline. Motorcycle sales fell for the fourth year in a row, finishing at 432,000 units, down 23.7% from 2008.

Despite this overall negative performance, the second half of 2009 saw an upturn in passenger car and commercial vehicle sales compared to the same period the year before, spurred by the government’s tax cuts (on the acquisition and tonnage taxes) and purchasing subsidies for eco-friendly vehicles, which helped boost replacement purchases and expand ownership of new, low-carbon cars. This turnaround fuelled hopes that the worst of the slump was over.

Similarly, vehicle production and exports were favorably impacted by the introduction in numerous countries of automobile purchasing stimulus measures, as well as by demand recoveries in emerging economies. Still, production and exports posted overall declines in 2009, reflecting the severity of the worldwide economic downturn.

In 2010, the automobile industry has strong hopes that further government stimulus measures and other positive initiatives will help promote a definitive economic recovery, although that recovery is unlikely to be swift in view of risk factors such as fluctuations in currency rates and stock prices.

Specifically, the government’s extension of tax reductions and purchasing subsidies for eco-friendly vehicles should, not discounting continued uncertainty with respect to the current economic environment, result in increased domestic demand in 2010 for passenger cars and commercial vehicles. Sales are forecast at a total of 4.80 million units, a gain of 4.1% over 2009. For motorcycles, however, a number of factors—including higher vehicle prices resulting from mandatory compliance with emissions regulations, as well as the chronic shortage of parking bays in urban areas—do not bode well for a demand recovery. Motorcycle sales should therefore total 404,000 units this year, a decline of 6.5% from 2009.

A pillar of Japan’s economy, automobile manufacturing depends on a wide spectrum of supporting industries and thus shoulders an important share of responsibility in terms of sustaining the health of national and regional economies and the welfare of communities. The industry is therefore determined to continue to move with speed and insight in order to address the challenges at hand, on the basis of close cooperation with key government authorities, industry partners, and other relevant stakeholders. Those challenges are extensive, underscoring the need to take concurrent action on many parallel fronts. Outlined below are the initiatives that we will pursue in three main areas.

Addressing Safety and Environmental Protection in Road Transport

With regard to safety, road fatalities in Japan in 2009 are expected to drop for the ninth consecutive year, attesting to the effectiveness of measures taken and targeting the three factors involved in road safety: vehicles, road users, and infrastructure.
Japan’s automakers will continue to advance both active safety (collision avoidance) and passive safety (injury mitigation when accidents do occur) through the development and application of in-vehicle safety technologies, while further improvements in road infrastructural provisions (including traffic management systems, notably through the expanded implementation of ITS) will be the focus of cooperation between the public and private sectors. JAMA will also be promoting increased safety awareness among road users through its public information campaigns as well as its safe-driving and other educational programs, while lobbying for further measures to improve the road use environment.
The foregoing efforts will thus address road safety in terms of both the “hardware” and “software” involved, and serve the government’s goal of making Japan’s roads the safest in the world.
Meanwhile, with respect to environmental protection, Japan has pledged to an extremely challenging mid-term goal of reducing greenhouse gas emissions by 25% by 2020 compared to the 1990 level. Recognizing that global warming countermeasures are bound to have significant economic and societal impacts, the Japanese automobile industry believes that the formulation of official GHG reduction targets requires not only the disclosure of their projected ramifications on economic activity and employment, but also accountability with respect to the opinions of all sectors of society, including industry, in their regard.
Last December in Copenhagen, countries participating in the 2009 United Nations Climate Change Conference (“COP15”) failed to reach a consensus on a new, post-2012 international framework for reducing GHG emissions. Because global warming obviously cannot be addressed through the efforts of a single country, Japan’s auto industry endorses Japanese Prime Minister Hatayama’s position, reiterated at COP15, with regard to Japan’s GHG reduction pledge—namely, that it is premised on “agreement on ambitious targets” by all of the world’s largest economies. We therefore look forward to the full participation of the “major emitters” in the establishment of a fair and effective international framework for climate change mitigation.
Because of their long-held conviction of the urgency of this issue, Japanese automakers have, over many years, implemented a broad range of measures to combat global warming. Advocating the integrated approach, involving all the stakeholders involved, to reducing CO2 emissions in road transport, the automakers will, for their part, continue to invest maximum efforts in the following areas: accelerating the development of technologies for increased fuel efficiency and next-generation vehicles; promoting the more widespread use of low-carbon models; advancing research on and proposals for road congestion mitigation measures; and encouraging the adoption of ecodriving by vehicle users.
JAMA members will also continue to work closely with the members of the Japan Auto-Body Industries Association (JABIA) to ensure that a stringent (and voluntary) CO2 emissions reduction target at production plants is achieved jointly by the auto and auto-body manufacturers.

Promoting Greater International Cooperation and Understanding in Support of Free Trade

The global scale of its operations underscores for the Japanese automobile industry the importance to further progress of free trade promotion and the forging of a fair international business environment.
Reaching consensus in the World Trade Organization’s Doha Round of multilateral trade negotiations and establishing economic partnership agreements between countries and regions are therefore seen as key elements in supporting the growth of the global economy. Particularly in view of the current severe economic conditions, JAMA believes that progress in these areas will effectively underpin business recovery and stability.
Globalization has brought to the forefront such issues as double taxation, which has underlined the need for international harmonization to reduce the heavy financial burdens enterprises are otherwise forced to carry in this regard.
The violation of intellectual property rights is another issue that urgently requires action. IPR infringements impede fair business activity and feed the diffusion of counterfeit products on a global basis, thereby causing economic losses and potentially jeopardizing the health and safety of consumers.
JAMA will continue to address these issues from a standpoint that emphasizes close cooperation with governments and industry partners worldwide and, at the same time, reinforces the positions and policies of the Japanese government.

Providing Increased Convenience and Enjoyment for Vehicle Users

Although attendance at last autumn’s 41^st Tokyo Motor Show lagged compared to the previous show, the event nevertheless attracted impressive numbers of car and motorcycle enthusiasts. Visitors showed an especially keen interest in models equipped with cutting-edge environmental technology and in the possibility of test-driving new passenger cars and two-wheelers. The show thus served to underscore, once again, the responsibilities of the automakers in meeting the high hopes and expectations of vehicle users.
Acutely aware of the need to expedite the market introduction of eco-friendly next-generation vehicles, Japan’s automakers also continuously strive to supply products that meet customers’ ever-diversifying requirements, while at the same time promoting the pleasure and convenience of their use.
The auto industry believes, however, that enhancing the enjoyment and convenience of vehicle use is also premised, in Japan, on reducing the country’s onerous automobile-related taxes. We therefore cannot condone the recent decision to maintain (albeit with certain exceptions) the high “provisional” tax rates in an alternative form—particularly since the grounds for their assessment no longer exist—and will continue to press the authorities to simplify the structure of Japan’s automobile-related taxes and reduce the heavy financial burden they impose on vehicle users.
Meanwhile, with the Japanese government now studying the possible introduction of a carbon tax, the industry is lobbying for a national debate that does not proceed on business-as-usual assumptions and takes into account the potential impacts of such a tax on international competitiveness and on people’s lives and livelihoods.
Also to increase user convenience, JAMA is redoubling its commitment to submitting petitions and proposals for the creation of more motorcycle parking bays in Japan’s urban areas. Automakers are, in addition, promoting the wider use of assisted-mobility vehicles for the benefit of physically disabled and elderly persons with otherwise limited mobility.

Throughout 2010 and beyond, JAMA will work closely with its member companies in an ever-expanding range of activities targeting the achievement of genuinely sustainable mobility.

From all of us, our profound thanks for your continued invaluable support and encouragement.

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