AUTOMOTIVE PROFILE - JAPAN Section 1: Motor Vehicle Industry/Market Snapshot 1. Overview The automotive industry is one of the Japanese economy s core industrial sectors. In 2004 automotive shipments accounted for 16.1% of the total value of Japan s manufacturing shipments, and 34.3% of the value of the machinery industries combines shipments. Automotive shipments (both domestic and export shipments, including motorcycles, auto parts, etc) in value terms totalled over 45 trillion yen in 2004, down 0.4% from the previous year. Japan s domestic sales of new vehicles in 2005 totalled 5.85 million vehicles, registering no change from the previous year. Looking at the breakdown by vehicle type, passenger cars account for about 80% of sales, while commercial vehicles account for 20%. In other words, passenger cars are the core of the Japanese market. Another important characteristic is that the minicar segment cars of 660cc engine capacity or less accounts for more than 20% of the Japanese market. Vehicle production in Japan increased steadily from the 1960s through the 1980s owing both to domestic market growth and the development of export markets. It also 1
peaked in 1990, at 13.5 million units. Domestic vehicle production has basically been falling since then due to declining sales in Japan and increasing overseas production by Japanese automakers. Domestic production of cars, trucks and buses in 2005 totalled almost 10.8 million units, an increase of 2.7% over the previous year. Exports of motor vehicles in 2005 rose for the fourth consecutive year, posting a 1.9% increase over the previous year to total 5.05 million units. The total value of automotive exports expanded 7.0% to US$116.4 billion, with the value of automobile exports growing 6.8% to US$ 88.2 billion and the value of auto parts exports rising 7.6% to US$ 28.2 billion. 2. Right hand drive market Japan is right hand drive market. 3. Principal vehicle manufacturers DAIHATSU MOTOR CO., LTD, FUJI HEAVY INDUSTRIES LTD., HINO MOTORS, LTD., HONDA MOTOR CO., LTD., ISUZU MOTORS LIMITED, KAWASAKI HEAVY INDUSTRIES, LTD., MAZDA MOTOR CORPORATION, MITSUBISHI MOTORS CORPORATION, MITSUBISHI FUSO TRUCK AND BUS CORPORATION, NISSAN DIESEL MOTOR CO., LTD., NISSAN MOTOR CO., LTD., SUZUKI MOTOR 2
CORPORATION, TOYOTA MOTOR CORPRATION, YAMAHA MOTOR CO., LTD. 4. Principal components manufacturers AISAN INDUSTRY CO., LTD., AISIN AW CO., LTD., AISIN SEIKI CO., LTD., AKEBONO BRAKE INDUSTRY CO., LTD., ASTEER CO., LTD., BOSCH CORPORATION, CALSONICKANSEI CORPORATION, DAIDO METAL CO., LTD., DAITO PRESS MFG., LTD., DENSO CORPORATION, DIAMOND ELECTRIC MFG. CO., LTD., GKN DRIVELINE TORQUE TECHNOLOGY KK, HI-LEX CORPORATION, HIRUTA KOGYO CO., LTD., HITACHI LTD., ISHIKAWA GASKET CO., LTD., JATCO LTD., KEYLEX CORPORATION, KOITO MANUFACTURING CO, LTD., KOJIMA PRESS INDUSTRY CO., LTD., KYB CORPORATION, MARUYASU INDUSTRIES CO., LTD., MINORI INDUSTRY CO., LTD., MITSUBA CORPORATION, NGK SPARK PLUG CO., LTD., NHK SPRING CO., LTD., NIKKEI KAKOU CO., LTD., NISHIKAWA KASEI CO., LTD., NOK CORORATION, NSK LTD. PACIFIC INDUSTRIAL CO., LTD., PRESS KOGYO CO., LTD., RIKEN CORPORATION, SHIGERU CO., LTD., SHOWA CORPORATION, SIGMA CORPORATION, SUMITOMO ELECTRIC INDUSTRIES LTD., TOKAI RIKA CO., LTD., TOKAI RUBBER INDUSTRIES, LTD., TOPY INDUSTRIES, LTD., TOYODA GOSEI CO., LTD., TOYOTA BOSHOKU CORPORATION, YAZAKI CORPORATION (Board of JAPIA) 5. Vehicle production and sales overview (thousand units) Vehicle type 2000 2001 2002 Production Sales Production Sales Production Sales Passenger Cars 8,359 4,259 8,117 4,289 8,618 4,441 Trucks 1,726 1,686 1,601 1,600 1,572 1334 Buses 54 16 58 15 66 16 Total 10,140 5,963 9,777 5,906 10,257 5,792 Vehicle type 2003 2004 2005 Production Sales Production Sales Production Sales Passenger Cars 8,478 4,715 8,720 4,768 9,016 4,748 Trucks 1,746 1,091 1,730 1,067 1,706 1,085 Buses 61 21 60 18 76 17 Total 10,286 5,828 10,511 5,853 10,799 5,852 3
6. Motor Vehicles in use and average age by type 2000 2001 2002 Vehicle type Units Age Units Age Units Age Passenger Cars 52,437,375 5.84 53,540,516 6.04 54,539,839 6.23 Trucks 18,225,508 7.14 17,866,218 7.48 17,480,424 7.77 Buses 235,483 8.28 234,816 8.64 233,405 8.97 SPV* 1,750733-1,766,212-1,735,682 - Total 72,652,926-68,805,073-70,007,049-2003 2004 2005 Vehicle type Units Age Units Age Units Age Passenger Cars 55,212,590 6.39 55,994,050 6.58 57,090,789 6.77 Trucks 17,080,374 8.10 16,780,848 8.17 16,733,871 8.36 Buses 231,818 9.24 230,934 9.33 231,733 9.53 SPV* 1,689,629-1,649,686-1,630,062 - Total 70,818,364-71,857,480-72,652,926 - *SPV (Special-purpose Vehicles): emerging vehicles, special vehicles equipped with beds, refrigerated trucks, tank trucks, tractors, bulldozers, snowmobiles, etc. 7. Employment for automobile production Automobile Manufacturing 161,000 including motorcycles Auto parts and accessories manufacturing 543,000 Auto body and trailer manufacturing 42,000 Total 746,000 8. Trade summary <Value> - Trade value of motor vehicles including motorcycles and parts (x 100 million yen) 2002 2003 2004 2005 Exports in value (FOB) 115,675 118,363 124,773 135,132 Imports in value (CIF) 11,234 11,799 12,842 13,353 <Vehicle Units> - Exports (in units) 2002 2003 2004 2005 Motor vehicle exports 4,698,728 4,756,343 4,957,663 5,053,061 Passenger Cars 4,012373 4080,498 4,214,027 4,363,168 Trucks 637,593 630,254 687,795 611,956 Buses 48,762 45,591 55,841 77,937 Motorcycle exports 1,418,682 1,280,955 1,327,144 1,332,223 4
- Imports (in units) 2002 2003 2004 2005 Motor vehicle imports 290,514 283,664 289,261 284,734 Passenger Cars 288,657 281,526 286,798 282,654 Commercial Vehicles 1,288 1,405 1,715 1,420 Other 569 733 748 660 Motorcycle exports 629,193 562,415 485,572 444,635 5
Sction2: Trade and industry policy environment 1. Overview Japanese all tariff rate of motor vehicle that PMV, Truck, Buses are 0%. Japan has no requirements about customs procedures, import restrictions, investment requirements, export incentives/trade balancing requirements, manufacturing free trade zones, duty drawback arrangements. 2. Tariffs Tariff rate applied PMV(87.03) 0% Truck(87.04) 0% Buses(87.02) 0% Engines(84.07,87.08) 0% Body stampings(87.0829) 0% Transaxles/transmissions(87.0850) 0% Other(87.08) 0% 3. Customs procedures Japan has no special procedures. 4. Import restrictions Japan has no import restrictions. 5. Investment requirements Japan has no investment requirements. 6. Export incentives/trade balancing requirements Japan has no export incentives/trade balancing requirements. 7. Regional trade arrangements Japan is not a member of any regional economic integration. 8. Manufacturing free trade zones Japan has no manufacturing free trade zones. 9. Duty drawback arrangements Japan has no special arrangements. 6
Section3: Domestic taxation of vehicles 1. Overview Japan has various taxes related to vehicles. These taxes are levied on different types of tax base such as acquisition and possession of vehicles, or fuel consumption. To promote the more widespread use of fuel-efficient and low-emission vehicles, new tax incentives have been implemented since April 2005. <Taxes on motor vehicles> Tax Items Summary Tax Rate/Amount On Acquisition Acquisition Tax During Ownership Consumption Tax Tonnage Tax Automobile Tax Mini-vehicle Tax Assessed on the acquisition of an automobile, whether new or used, based on the purchase price Assessed on the purchase price of the automobile Assessed according to vehicle weight at each vehicle inspection. The term of required inspection is different by vehicle types. Fixed amount assessed each year on vehicles as of April 1, except mini-vehicles and motorcycles (see Mini-vehicle tax) Fixed amount assessed each year on mini-vehicles and motorcycles [For private use] - 5% of purchase price (3% for commercial and minivehicles) - Exempted for vehicles purchased for 500,000 year or less 5% [Example] - Passenger cars for private use which are required inspection every two years: 6,300 yen/year per 0.5t [Example] - Passenger cars of 2,001cc- 2,500cc for private use: 45,000 yen/year [For private use] - Mini-vehicles: 7,200 yen/year for passenger cars and 4,000 yen/year for trucks - Motorcycles: 1,000 yen - 4,000 yen/year based on engine displacement <Taxes on fuels> Tax Items Summary Tax Rate *Gasoline Tax Assessed on gasoline and designated 48.6 yen/liter of gasoline national road revenue source *Regional Road Tax Assessed on gasoline and designated 5.2 yen/liter of gasoline regional road revenue source *Diesel Handling Tax Assessed on light oil 32.1 yen/liter of light oil *LPG Tax Assessed on LPG 17.5 yen/kg of LPG Consumption Tax Assessed on the purchase price of fuels 5% of the purchase price of fuels (Note) *Those taxes are included in the fuel price. 7
<Incentive Measures for Low-Emission Vehicles> Tax Items Scheme Tax Rate/Amount Automobile Green Tax Vehicles meeting 2010 fuel Tax Scheme (FY2006-2007) economy target values +20% and new low-emission vehicles (*1) Acquisition Tax Special Scheme for Fuel-Efficient Vehicles meeting 2010 fuel economy target values +10% and new low-emission vehicles (*1) Vehicles meeting 2010 fuel economy target values +20% and new low-emission vehicles (*1) Vehicles Vehicles meeting 2010 fuel economy target values +10% and new low-emission vehicles (*1) Clean-Energy Vehicles (FY2006) Electric (including fuel-cell), CNG, methanol, and hybrid vehicles (trucks and buses) Hybrid vehicles (passenger cars) 50% reduction of automobile tax(*2) 25% reduction of automobile tax 300,000 yen deductible from purchase price 150,000 deductible from purchase price 2.7% reduction of acquisition tax 2.2% reduction of acquisition tax Note (*1) Low-emission vehicles : Motor vehicles whose emission values represent at least 75% reduction from 2005 regulatory levels for emissions. (*2) Also applies to electric (including fuel-cell), CNG, and methanol vehicles. <Incentive Measures for Diesel Commercial Vehicles> Tax Items Scheme Tax Rate/Amount Acquisition Applies in Trucks and buses complying with 2005 2.0% reduction of Tax FY2006-2007 to trucks and buses emissions regulations +10% (NOx or acquisition tax PM) and meeting 2015 fuel economy target values Trucks and buses complying with 2005 emissions regulations and meeting 2015 fuel economy target values In case where trucks and buses not meeting the standards that stipulated in the Motor Vehicle NOx and PM Emission Act have been deregistered and replace with vehicles that comply with all relevant standards, the Acquisition Tax assessed on those replacement vehicles will be reduced in conformity with the following schedule: 1.0% reduction of acquisition tax -1.5% reduction during FY2005-2006 -1.2% reduction during FY2007-2008 8
Session4: Standard and technical regulations 1. Overview In Japan, with a view to securing the safety of motor vehicles, the prevention of environmental pollution, the saving of energy, regulating the traffic, helping victims caused by traffic accidents and the construction and improvement of road, the laws and regulations related to motor vehicle traffic have been stipulated as below. They have been classified, respectively, into those related to (1) the construction and devices of motor vehicles, (2) humans (drivers and pedestrians) and (3) roads. 2. Laws and Regulations related to the construction and devices of motor vehicles 2-1. Road Vehicles Act Road Vehicles Act (Law No. 185 of 1951) has been stipulated for the purpose of assuring the safety of construction and devices thereof preventing environmental pollution. Moreover the Act has been stipulated aiming at stimulating to further improvement in maintenance and contributing to the healthy development of motor vehicle maintenance and repair business. To achieve its intended purposes, the Act has prescribed the requirements with which the construction and devices of motor vehicles should comply. It has also introduced Type Designation System to assure the conformity of motor vehicles to the regulations, and systems, such as registration, inspection, and maintenance business, to expect the appropriate usage of cars. 2-1-1. Safety Regulations for Road Vehicles The Safety Regulations for Road Vehicles refer to those technical standards pertaining to the safety or the prevention of environmental pollution to be pursued. 2-1-2. Motor Vehicle Type Approval System Motor Vehicle Type Approval System has been introduced for the purpose to have prior examination whether the motor vehicles conform to various applicable standards related to the safety and the prevention of environmental pollution. It has three systems; Motor Vehicle Type Designation System, Motor Vehicle Type Notification System and Preferential Handling Procedure for imported Motor Vehicles. Motor Vehicle Type Designation System This is a system to designate certain type of mass-production motor vehicles with identical construction, devices and performance. Examination of the designation are conducted mainly as to the conformity of motor vehicle with regard to Safety Regulations, uniformity of motor vehicles, and completion inspection system for motor vehicles etc. This type designation system has been utilized fully for those types of 9
domestic motor vehicles as well as of foreign motor vehicles which are sold in great quantities in the Japanese market. Furthermore, in the case of import motor vehicles, they are entitled to receive a preliminary examination overseas. Motor Vehicle Type Notification System This is a system that tests whether the conformity of the common construction and devices with regard to the Safety Regulations as a type is confirmed on not are carried out in connection with the basic motor vehicle (sample vehicle) prior to the initial inspection for individual motor vehicles with purpose to provide to rationalize the initial inspection. This type notification system has been utilized widely for large-sized trucks and buses in which versatility in use are required. Preferential Handling Procedure for Imported Motor Vehicles This is a system that can be applied to types of imported motor vehicles that are sold in a small quantity in the Japanese market. Under the arrangement of this system, the examination of application documents alone is conducted in advance so as to determine the conformity with regard to provisions of the Safety Regulations for Road Vehicles. This system has been applied for up to 2000 units per year for each type. 2-1-3. Equipment Type Approval This is a system that the examination of the equipment to confirm the conformity to the Safety Regulations is omitted at the examination for type designation of motor vehicle in which equipment is used in common by receiving the type approval with regard to equipment of motor vehicle in Japan. This system is also expected to reduce the time and cost for the examination of type approval. 2-1-4. Motor Vehicle Registration System Motor vehicle has to be registered. 2-1-5. Motor Vehicle Inspection System Motor Vehicle Inspection System is conducted to determine the conformity of motor vehicles to the Safety Regulations for Road Vehicles. A valid motor vehicle inspection certificate can be obtained with the passage of motor vehicle inspection. Motor Vehicle Inspection System is consisted of the Initial Inspection, the Renewal Inspection, and Modification Inspection etc. 2-1-6. Motor Vehicle Check and Maintenance System Motor Vehicle Users are obliged to check at regular intervals, with a view to assuring the safety and prevention of environmental pollution of in-use motor vehicles. Motor Vehicle Check and Maintenance System is consisted of daily check and maintenance and periodical check and maintenance. 2-1-7. Motor Vehicle Maintenance Business System The Road Vehicles Act stipulates the requirements to which motor vehicle maintenance and repair business operators should meet, and also stipulates the provision by which operators are to be designated or qualified. 10
3. Regulations related to safety The Safety Regulations for Road Vehicles stipulate requirements necessary for assuring the safety of motor vehicle construction and devices as mentioned above. 4. Regulations related to the prevention of environmental pollution Regarding the regulations related to the prevention of environmental pollution, the Safety Regulations for Road Vehicles stipulate the motor vehicle emission control standards and the motor vehicle noise control standards so that the permissible limits stipulated under the provisions of the Air Pollution Control Law and the Noise Control Act may be assured. 5. Measures to control Environmental Pollution 5-1. Measures saving energy and measures against the global warming With a view to contributing to assurance of efficient use of fuel resources, the Rationalization of Energy Consumption Act calling for appropriate measures to promote the rationalization of energy consumption of factories, buildings and machinery such as motor vehicles has been put into effect. The Act stipulates the standards for fuel consumption rate of motor vehicle taking into consideration of the preventing the global warming. 5-2. Re-use of resources Motor vehicle has indicated as on of the designation goods in the Act regarding stimulating the use of re-use resources. The Act has stipulated the guideline to stimulate the use of re-use resources for the motor vehicle manufacturer and repair business operator. 6. Traffic Congestion Problem To ease the traffic congestion, many measures, such as enlargement of capacity of traffic and management of demands for traffic, have been taken. * * * * * * 11