May 15, 2003

Fiscal 2003 Business Plan

The Japanese economy in fiscal 2003 is expected to continue to be plagued by an unfavorable employment environment, reduced corporate earnings aggravated by depressed stock prices, and sluggish growth in consumer spending and capital investment. With this in view, the Japan Automobile Manufacturers Association, Inc. (JAMA) hopes that the Japanese government will take swift and effective measures, such as job creation and credit easing, to help guide the domestic economy to recovery.

There are also concerns that the situation in the Middle East, the spread of SARS (severe acute respiratory syndrome) and other uncertainties on the international front will negatively impact the global economy. JAMA supports strategic collaboration between individual countries to adopt measures to counteract the repercussions of such developments and return the world economy to a course of sustained growth.

Looking at the domestic automobile market in fiscal 2003, the Japanese automakerse automobile manufacturing industry subsumes a broad range of supporting industries. If motor vehicles are to retain their vital role in spearheading an economic recovery in Japan, the auto industry itself needs to be totally committed to making further progress, one firm step at a time. To succeed in this effort, it must promote the practice of craftsmanship in all its operations and adopt the consumer's point of view in relation to its products and activities. Automakers, meanwhile, must set high targets for their achievements and energetically pursue their goals in a combined spirit of competition and cooperation.

As a result of its merger in May 2002 with the former Japan Motor Industrial Federation and the Japan Automobile Industry Employersfor that reason it has consistently mounted constructive responses to such concerns.

In 2002 the world's first fuel cell-powered cars were marketed in Japan, representing another milestone on the Japanese automakers environment.

In-depth research and planning activities are also being conducted by JAMA in preparation for the enforcement of Japan's new Automobile Recycling Law beginning in January 2005. Specifically, JAMA is working with relevant groups in the public and private sectors towards the establishment of an end-of-life vehicle recycling infrastructure and the designation of tasks and responsibilities therein to ensure maximum operational efficiency of the overall system.

In 2002 the number of traffic fatalities in Japan fell to one half the peak number reached in 1970. This remarkable progress prompted the government to announce its new objective of reducing traffic fatalities by a further 50 percent over the coming decade. Success in this regard will require sustained efforts and new initiatives in promoting vehicle safety, improving traffic flow and the road environment, and implementing traffic safety awareness campaigns for all road users, with a special focus on the elderly.

JAMA, meanwhile, will continue to promote improved traffic safety through, first, the wider use of ITS (Intelligent Transport Systems), ASV (Advanced Safety Vehicles) and other cutting-edge technologies; second, through the implementation of traffic safety awareness programs; and, third, through groundbreaking proposals to the government in support of cohesive, integrated measures to help the country meet its traffic safety goals.

In 2003 JAMA will therefore formulate new policies and action plans to help resolve these and other issues related to the environment and safety, while also examining measures to promote an even greater awareness of the issues on the part of the public at large.

Responding to Globalization in the Motor Vehicle Industry

Hand in hand with the globalization of the motor industry, the automobile itself continues to evolve, winning increasingly wider acceptance as a truly international product. For automakers now expanding their manufacturing and supply activities beyond the boundaries of specific countries, the formulation of common trade and investment rules and the establishment of internationally harmonized standards and shared industry networks are of critical importance.

Towards that end, the auto industry will actively participate in key discussions related to the new WTO round of multilateral trade negotiations and the drafting of common rules for trade and investment in the context of regional trade agreements (RTAs), and will furthermore mount pertinent responses to the progress made in those talks. The industry will also continue to be energetically involved in efforts to establish internationally harmonized automotive technical regulations and certification systems.

China is at present mobilizing its new and liberalized economic framework to carry out reforms in the automotive sector, in parallel with its acceptance into the WTO. These and other moves have prompted demands that the Chinese government establish policies in support of a fair and open market environment. JAMA is keenly aware of China's importance in the global automobile industry and has plans to open an office there about midway through the current calendar year. This base will be pivotal in expanding the lines of communication with the Chinese government and motor industry and should thereby contribute to even more constructive Japan-China ties.

Elsewhere in Asia, JAMA is staunchly supporting AFTA (the ASEAN Free Trade Agreement) as a means of bolstering the competitive strength of the ASEAN auto industry. Through programs that dispatch experts to Thailand, Malaysia, Indonesia and the Philippines, JAMA is also contributing to human resource development in those countries. In addition, JAMA will continue to hold productive exchanges with its counterpart organizations in the ASEAN region and in South Korea.

As for the United States, JAMA will be building upon its long history of exchange and interaction with American government and industry leaders in a concerted effort to achieve even greater mutual understanding and partnership with the U.S.

In Europe, JAMA will actively lobby the European Commission, the European Parliament and other top-ranked bodies with regard to the WTO's new Doha Round, environmental issues and other broad-ranging concerns, while also responding to interim revisions in the European fuel economy consensus.

To advance business operations infrastructure in step with the motor industry's accelerating globalization, JAMA is promoting international interfaces for JNX, the Japanese automotive Network eXchange [sic], a network shared throughout the Japanese automobile industry. Following JNX's linkage with the United States Advanced Network Exchange (ANX), progress will be made this year towards the establishment of interfaces with Europe, Australia and South Korea through the Global Network Exchange (GNT).

The second Global Automotive Industry Meeting of CEOs from the world's top manufacturers of passenger cars and buses will be held in Japan this October during the Tokyo Motor Show. Automakers from Japan, the United States and Europe will discuss broad-ranging issues related to sustainable mobility, in support of a greater shared awareness of the challenges involved for the automobile industry worldwide. The Global Meeting will also serve as a springboard for expanded exchanges and cooperation between the automobile industry associations and governments of the participating countries.

Enhancing Motor Vehicle Use

In setting its sights on truly advanced motorization for Japan, JAMA will pursue efforts to improve the environment for motor vehicle use through a number of approaches.

Japanese car owners are asked to shoulder a complex and excessive tax burden at the main stages of vehicle acquisition, ownership, and operation. Consistently over the years, automakers have urged a major revision of Japan's automobile tax structure in favor of a system that is simpler, fairer, and more in line with auto-related tax systems overseas and, additionally, takes international harmonization and environmental protection factors into consideration (in 2002, for example, JAMA stressed the need to adopt provisions in the domestic auto tax framework promoting the use of fuel-efficient and low-emission vehicles). Fiscal 2003 will see the motor industry continuing to press strongly for a more user-friendly automobile taxation system.

As in 2002, JAMA will call for the abolition of a temporarily high tax rate imposed on tax revenue earmarked for road and highway projects, as well as oppose the proposed diversion of this revenue into the government's general accounts budget. Also on the slate this year are studies and proposals aimed at upgrading road and other systems in the transportation environment and expanding the implementation of ETC (Electric Toll Collection), among other efforts in support of improving the overall driving environment.

Currently under examination is the introduction of a system offering "one-stop services" for the various procedures required in motor vehicle ownership. Here, too, JAMA is striving for greater user convenience and accessibility by joining forces with the government and other organizations in promoting the implementation of such a system.

The 37^th Tokyo Motor Show for Passenger Cars and Motorcycles will open in October this year under the slogan "The Challenge: Driving Towards a Better Future." JAMA's goal for the exhibition is to communicate the excitement and appeal of automobiles to an even larger number of people by adopting a format that will be more direct participation-oriented than ever before, while maintaining the strengths and traditions built up over the near half-century of the show's existence. This sharper focus will be facilitated by expanded information communication functions, increased opportunities for international exchanges, and other features designed to help make the Tokyo Motor Show the No. 1 event of its type in the world.

Looking further ahead, a JAMA Pavilion is being planned for the Expo 2005 Aichi world exposition to open in Aichi Prefecture, Japan, in March 2005. "People, Vehicles, and the Planet Moving to the Future" will be the banner theme for the pavilion, and detailed studies will begin this year on the specific content of the displays to be featured at that venue.

Finally, JAMA will expand its public relations activities as a key effort in its mission to heighten the general public's awareness of the very significant and broad-ranging contributions the automobile industry has made to social welfare.

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