January 1 , 2007

New Year's Message

Fujio Cho, Chairman

As 2007 gets underway, I am pleased to extend my best wishes to all for a very happy new year on behalf of the Japan Automobile Manufacturers Association.

Over the past year our industry was hit by the steep rise in crude oil prices, but bolstered by favorable job and income environments and strong corporate earnings.  The Japanese economy experienced modest growth throughout the year, sustained in part by steady capital investment which helped turn Japan’s ongoing economic expansion into the country’s longest post-war growth period.

In 2006 automobile production in Japan was buoyed by robust overseas demand and consequently topped 10 million units for the fifth consecutive year.  Domestic demand, however, dropped 1.9% from 2005 to 5.74 million units, the second straight year-on-year decline.  Motorcycle demand also dipped for the second year in a row, down 0.3% from 2005 to 740,000 units.

Sustained corporate investment in plants and equipment and continuing improvements in the employment and income environments are forecast for 2007.  Stable growth is projected for the global economy, particularly in the United States and Asia, which should buttress similar growth for the Japanese economy as well.  Domestic demand for passenger cars, trucks and buses should total 5.63 million units, while domestic demand for motorcycles should reach 720,000 units.

It is thus anticipated that motor vehicle manufacturing will maintain its vital role as a core sector of the national economy.  But the high expectations that go hand in hand with that role require the automobile industry to be more than ever aware of the social demands it must successfully address.  At the same time, Japanese automakers are determined to supply consumers with vehicles that have optimum functionality and appeal.

In all its wide-ranging activities, JAMA will continue to place vehicle users’ needs and concerns first and foremost.  The paramount issues it will address will be greater road safety and better automotive environmental performance, effective responses to the globalization of the motor industry, and the achievement of a more comfortable and enjoyable environment for automobile users.

The greatest and most pressing challenges for JAMA are the issues of increased safety and improved environmental performance.  I am pleased to report that the number of road deaths in Japan continues to drop, falling to the level of half a century ago, or 6,000 fatalities annually.  However, the figures for road accidents and road injuries remain high.  In 2005, furthermore, road accidents occurring as a result of driving under the influence of alcohol once again pushed drunk driving to the forefront of urgent social concerns.  In full support of the Japanese government’s goal of making Japan’s roads the safest in the world, our activities towards that end cover a broad spectrum of effort in terms of improving both the hardware and the “software” - from enhancing vehicle safety equipment to conducting traffic safety campaigns promoting greater public awareness of road safety.

With respect to environmental protection, JAMA is promoting Japan’s plan to achieve its target under the Kyoto Protocol to the United Nations Framework Convention on Climate Change.  A top priority for Japanese automakers is to supply products whose environmental performance will contribute to improved air quality.  For its part, JAMA carries out studies on and proposes measures for alleviating traffic congestion.  It also promotes a better understanding of environmental protection on the part of automobile users and urges drivers to adopt sounder driving practices through its eco-driving campaigns.  Meanwhile, Japan’s auto manufacturers have joined forces in pushing up the vehicle recycling rate to 90% (by vehicle weight) to contribute to the fostering of a society that is genuinely recycling-oriented.

Another challenge for automakers is how best to address the globalization of the motor industry.  With operations in countries around the world, vehicle manufacturers hold the view that improvements in the trade and investment sectors are of critical importance.  Accordingly, JAMA heartily welcomes the promotion of WTO-endorsed multilateral accords and economic partnership agreements.  We also energetically and proactively support the initiatives of the Japanese government in this area.

Scheduled for October of this year are global industry meetings for both passenger cars and commercial vehicles, which will mark the fifth time that each of these forums is held.  Providing the chief executives of the world’s leading vehicle manufacturers with the opportunity for genuine dialogue, this year’s meetings will underscore not only the need for improved fuel quality and reduced exhaust emissions but also the protection of intellectual property rights, against a background of strong cooperation among global industry players.

To encourage a more user-friendly environment for motorists, JAMA will maintain its longstanding policies and practices with respect to automobile taxation in Japan and improvements to its roads.  A source of particular concern in regard to the national road network has been the proposal to reallocate road-designated auto-related tax revenue to the central government’s general revenue pool.  Over the past year JAMA has worked with the Japan Automobile Federation, the Automobile Tax Reform Forum and the oil industry to advance a unified campaign on this issue.  One result of this collaboration was the collection of 10.33 million signatures from citizens opposed to the proposed reallocation of taxpayer funds.  At the end of 2006, however, the government issued a report entitled “Specific Measures for Revisions in Road-Designated Revenue” in which it announced its intention of maintaining current, onerous auto-related tax rates while reallocating a certain portion of road-designated tax revenue to general revenue funds.  This decision flies in the face of the automotive tax-paying public.  In response, JAMA will continue to appeal vigorously to the government on behalf of motor vehicle users.

For increased comfort, safety and convenience for drivers, JAMA is also promoting other wide-ranging measures including the implementation of intelligent transport systems (ITS) nationwide, expanded parking space availability in urban areas, and the greater use of assisted-mobility vehicles.

In autumn this year the 40th Tokyo Motor Show will be held in its new, all-inclusive format covering passenger cars, motorcycles and commercial vehicles, as well as auto-body and parts displays.  This dynamic celebration of cutting-edge technologies and the best of automotive design - actual and potential - will offer special features and events and a hands-on interactive experience to visitors, whom we look forward to welcoming in large numbers.

We also look forward to working closely and productively with our associates, friends and colleagues worldwide in 2007 and I take this opportunity to thank all of you for your continued support and cooperation in the new year.