Automobile

Sales of foreign-brand four wheelers, mainly European brands, were negatively affected by the outbreak and spread of coronavirus (Covid-19) and stood at 256,096 units (down 14.5% from the year before), and the annual sales of all imported vehicles, including Japanese brands were 317,933 units (down 8.7% year-on-year). For the monthly breakdown, while the motor vehicle market as a whole nosedived, the imported car sector also posted a significant year-on-year decrease in May; however, hitting the bottom in the month, the sector continued to recover in June onward. For the October to December period, some brands posted record-high monthly sales, making a substantial recovery.

In 2021, although sales are picking up, the impacts of the spread of coronavirus infections continue to be a cause of concern. In addition, the impact of global semiconductor shortages on production is gradually coming to the surface, which is a major risk to four-wheeler sales in Japan. Last December, the Government of Japan (GOJ) announced the Green Growth Strategy through achieving Carbon Neutrality in 2050 with a policy announced in January, 2021 of achieving 100% electrification of new vehicles sold by 2035, and in April declared to raise the goal of reductions in greenhouse gas emission by 26% from the 2013 levels by 2030 to 46%. In such a turbulent market conditions, the EBC Automobile Committee – while continuing to launch new models equipped with advanced safety and environmental technologies, including an accelerated pace of introductions of BEV and PHEV models – call on the GOJ to accelerate the adoption of renewable energy in the energy sector to achieve net-zero carbon emissions. The EBC Automobile Committee also requests the GOJ to further upgrade and expand the charging infrastructure in terms of both quality and quantity for the spread of BEV and PHEV, continue and upgrade the tax system and subsidy programs for applicable vehicles and infrastructure, and ease/review regulations to promote carbon neutrality.

Furthermore, the EBC Automobile Committee hopes to see that GOJ will relax the restrictions on international traveling and entry ban while maintaining people’s safety and health as quickly as possible upon continuing the policies for economic recovery including the automobile industry based on its Green Growth Strategy during the declaration of state of emergency and after such declaration is lifted.

In regard to safety and harmonization of regulations issues, the EBC Automobile Committee has continued to work on abolition of Non-tariff measures (NTM) and realization of complete International Whole Vehicle Type Approval (IWVTA) as one of the most important issues. As a major milestone, the EU-Japan Economic Partnership Agreement (EPA) went into force as of February 1, 2019. The EBC Automobile Committee highly appreciates the efforts and contribution of all the parties concerned. It is a significant achievement, signalizing to the world that both the EU and Japan maintain open towards international business in a time when protectionism is rising and multilateral trade is under a growing threat. Meanwhile, what is important hereafter is the execution in an assured manner of the agreements reached between Japan and the EU in the EPA. Two years have passed since the enforcement, and further, the EBC Automobile Committee will continue to review the status of execution with the other parties concerned. Moreover, there still exist non-tariff measures such as Japan-unique regulations that remained unsolved in the process of the EPA agreement, which serve as factors of business risks and additional costs for the importers of European-brand passenger cars and commercial vehicles. The Committee will continue requesting abolition of NTM and realization of complete IWVTA.

Automated driving is increasingly spread in Japan, as laws and regulations for Level 3 automated driving on express ways and Level 4 automation in limited areas, were established, ahead of the world in 2019, which were enforced as of April 1, 2020, and in March 2021, the world’s first commercial model was released. Furthermore, the new UN regulations (R155 and R156) for cybersecurity (CS) and software update (SU) have been adopted in Japan, which will be applicable in July 2022. From November 2020, the new regulations were entered into force to the vehicles in use as the “specified modification, etc. permission system”. These are regulations that were not seen in the past in the way that they cover not only vehicles, but also organizations. Under the rules of the IWVTA, requirements on organizations are considered out of scope of mutual recognition of approvals, potentially resulting in additional costs. The EBC Automobile Committee will continue requesting that laws and regulations in Japan relating to automated driving and others will be internationally harmonized in line with the discussions made at the UNECE World Forum for Harmonization of Vehicle Regulations (WP29).

In addition to technical harmonization, tax system has its significant role for broader access to the market. In Japan, the tax system has been revised drastically based on from the FY 2020 to the FY2030 passenger car fuel efficiency standards. In order to qualify for tax incentives, it is now required to introduce even more environmentally-friendly products. FCEV, BEV and PHEV models could qualify for maximum-level tax exemption and/or tax cuts, and for clean diesel vehicles, a measure to ease drastic change is applied for two years. The Committee respects the taxation revisions relating to the clean diesels that are highly environmentally friendly and account for about 30% of the vehicles imported from Europe in order to further smoothen the transition into new drive train technologies. Concerning the auto-related taxes in Japan, which are more complex and heavier than in other countries, however, the Committee will call for further reductions in burdens on users.

The EBC Automobile Committee continues to support the goal of realising a truly open and fair market.