Regulatory Developments The Japanese automobile industry is booming. Profits are at a record level. In 2006, production in Japan increased for the fifth consecutive year and exports soared by 21% in volume to 5.3 million units. The prosperity of the Japanese automobile industry is, however, disproportionately dependent on the growth of overseas markets. By contrast, the domestic market is in decline, except for Japan's unique mini-car ("kei" car) segment. Not surprisingly therefore, sales of imported vehicles are flat and have never recovered the peak of 311,000 units reached in 1996. In 2006, imports - of which European brands have a share of more than 85% - took just over 5% of the total passenger car market, including mini-cars. However, import sales of 244,000 units were virtually unchanged from the previous year. The Japanese Government needs to take more vigorous action to stimulate the domestic market so that importers can enjoy similar opportunities in Japan to those which domestic manufacturers experience in overseas markets, including Europe, where Japanese exports grew by 11% in 2006 to 1.3 million units. Prospects for EU-Japan Economic Integration The automobile industry has been
at the forefront of the globalisation of the world economy. The regulatory
regime for automobiles is evolving to reflect the global operations of the
industry. This gives European and Japanese automakers a common interest in
the international harmonisation of technical standards. While competing
fiercely in the market place, the two industries cooperate to ensure that
the industry can meet the legitimate demands of consumers for safe and
environmentally friendly products at the lowest regulatory cost. Key Issues and Recommendations ■ Harmonisation of technical standards and certification procedures Yearly status report: limited progress. So far, Japan has adopted a total of 32 out of some 120 UN-ECE Regulations. In FY 2006, Japan only adopted 3 additional UN-ECE Regulations. The schedule for FY 2007 is hardly more ambitious and does not include Regulation 51: Proximity Noise, an item of particular interest to importers of European rear-engine and high performance vehicles. MLIT has decided to incorporate the English text of ECE regulations directly into Japanese law. This will not affect Japan's long-term adoption schedule, but it should make it easier to incorporate amendments of ECE Regulations into Japanese law. Nonetheless, inconsistencies in the interpretation of UN-ECE Regulations continue to exist between Japan and Europe. Recommendation:
■ Tax reform Yearly status report: limited progress. Compared with other major countries, Japan imposes an excessively heavy tax on the acquisition and ownership of motor vehicles. In addition to consumption tax, the purchaser of a vehicle must also pay an Automobile Acquisition Tax. To help stimulate the domestic automobile market, the EBC Automobile Committee strongly supports the call of the Japanese automobile industry for the elimination of this double taxation. Recommendation:
■ Diesel promotion Yearly status report: limited progress. The Japanese government increasingly recognises that diesel passenger cars have a role to play in enabling Japan to meet her CO2 reduction targets under the Kyoto Protocol. However, even those diesel vehicles which comply with the most stringent emission requirements in the EU and the US cannot be sold in Japan without engineering modifications. To enable foreign manufacturers to recoup the development cost of this engineering, the Japanese government should accept for a fixed volume of imports whose compliance with the latest EU and US diesel emissions regulations meets the requirements of Japan's Post New Long Term Emission Standards. Recommendation:
■ Kei cars Yearly status report: new issue.
"Kei" or mini-cars are those vehicles legally restricted to a
maximum length of 3.4m, a width of 1,48m, a height of 2m, and to an engine
displacement of 660cc and below. Originally, conceived to provide
affordable transport for low-income earners, kei cars now take more than
30% of the passenger car market. Kei cars benefit from lower automobile
related taxes, automobile liability insurance and motorway tolls and are
subject to less stringent overnight garaging requirements. The original
justification for the kei car segment has meanwhile become questionable
since more than 70% of kei cars are now operated as second cars. This
segment is only supplied by Japanese OEMs since no similar segment,
artificially created by regulation, exists in any other market of the
world. The continued existence of the privileges enjoyed by kei cars is an
anachronism which distorts the competition with imported compact and
subcompact cars sold in other global Recommendation:
■ Treatment of modifications Yearly status report: new issue. A Completion Certificate must be issued in respect to each new vehicle registered in Japan verifying that the vehicle is identical in every respect with the model that has received type approval. Whenever a European manufacturer makes an improvement to the vehicle, the approval of the MLIT must be obtained before further Completion Certificates can be issued, even if the change in specifications does not affect the vehicle's compliance with safety and other regulations. Recommendation:
■ Technical guidelines for new safety technologies Yearly status report: new issue. MLIT has set technical guidelines for new driving assistance systems on the verge of commercialisation. MLIT claims that, if a European automaker provides appropriate technical argumentation, the guidelines can be amended to accommodate safety devices installed in imported vehicles which achieve the same objectives but use different technology. In reality, amending the guidelines has proved difficult and time-consuming. The technical guidelines therefore act as a deterrent to the import of vehicles incorporating advanced safety features, which do not comply with the guidelines, to the detriment of the Japanese consumer. Recommendation:
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