May 20, 2004

JAMA Fiscal 2004 Business Plan
[English text released June 2004]

While Japan’s economy in fiscal 2004 is forecast to see gentle recoveries in corporate production, capital investment and on other fronts, pointing to signs of improvement in certain sectors, the employment and income environments are likely to remain difficult. The Japan Automobile Manufacturers Association, Inc. (JAMA) therefore hopes that the Japanese government will, with a firm yet flexible hand, promote sound economic policies designed to fuel recovery in consumer spending and foster a stronger push towards structural reform and the forging of a solid, reliable financial system, among other measures to support a full-fledged recovery in the domestic economy.

In parallel with these anticipated developments, Japan’s motor vehicle market in 2004 should benefit from the impact of new model launches, model changes and other moves to invigorate the sales environment. The sum of these efforts should result in a slight growth in the market compared to fiscal 2003.

For motorcycles, positive developments should include the impact of lower-priced models introduced to the market in the 50cc & under class, as well as growing demand for scooters in the 126cc-250cc class. However, with the 51cc-125cc and over 250cc class models expected to perform less well than in the previous year, the motorcycle market as a whole is expected to post a small decline from its 2003 level.

Despite continued uncertainty with respect to currency rates and other factors, export shipments should, meanwhile, be buoyed by the firm trends being charted in the U.S. economy. As a result, sustained growth is anticipated in this market segment.

The automobile industry is an integrated sector encompassing production, sales, maintenance, materials and various other subsectors. It is one of the core industries supporting the Japanese economy. As such, it is critically important that the industry sustain sound growth over the years to come in order to maintain its significant contribution to the national economy. To rise to this challenge, the industry must boldly respond to environmental and vehicle safety issues by mobilizing its prowess in the research and development of relevant advanced technologies. At the same time, the Japanese automobile industry must constantly strive to understand the market from an international, customer-based perspective so as to provide a steady supply of products that accurately meet market requirements.

An important event for JAMA in the 2004 calendar year was its move in January to Tokyo’s Jidosha Kaikan, which concentrates in one venue the operational bases of numerous automobile-related organizations. JAMA aims to use this venue to raise the caliber of collaboration between these different entities, enabling the Kaikan to serve, in effect, as a comprehensive information communication center and hub of exchange and interaction for Japan’s motor vehicle industry. Backed by its member companies, JAMA intends to address, with optimum effectiveness, all the challenges encountered in the conduct of its business through a combination of efficient decision-making and fully transparent management.

Taking this commitment to heart, JAMA is pleased to present the following summary of its priority business objectives for fiscal 2004.

1. Promoting the Provision of Safer and More Eco-Friendly Motor Vehicles

Over the years, JAMA has mounted increasingly vigorous responses to the key issues of vehicle safety and the environmental impact of automobiles. With those issues today in the forefront of industry concerns, strengthened responses to them will be instrumental in sustaining the growth of the Japanese automobile industry in the years ahead and ensuring that Japanese auto manufacturers will continue to excel in the fiercely competitive global marketplace. For 2004, JAMA has defined its goals in these areas with even greater clarity and will be implementing specific strategies to meet those goals.

Improving road traffic safety involves the application of comprehensive and diverse measures with respect not only to automobiles, but also to road users and road infrastructure.
In January 2003 the Japanese government announced its intention to halve the number of domestic road traffic accident fatalities within one decade, which would make Japan’s roads the safest in the world by 2013. Entirely supportive of this aim, JAMA plans to contribute to the fullest of its ability to the achievement of the government’s stated goal.
Its efforts will include the continued promotion of vehicle safety measures, the organization of more effective traffic safety awareness campaigns, and the submission of road traffic safety policy proposals to the authorities concerned. These efforts will focus particularly on the elderly, a demographic segment that accounts for an extremely high share of traffic accident-related deaths in Japan, even as the overall number of such fatalities declines. Among other efforts to promote greater traffic safety in a rapidly aging society, JAMA will establish traffic safety educational programs that better serve the specific needs of senior citizens.

To help curb global warming, JAMA is endorsing the adoption of measures that will enable compliance with Japan’s fuel economy targets for 2010. It is also promoting the more widespread use of fuel-efficient, low-emission vehicles and the commercialization of fuel-cell vehicles. On a related front, JAMA will continue to work closely with the petroleum industry to advance research on improving the quality of automotive fuels.
In December 2002 Japan introduced to its market the world’s first commercially available fuel-cell vehicle - a breakthrough that demonstrated the extraordinary technological advances being made today by Japanese automobile manufacturers. JAMA will strongly encourage further progress in such advanced technologies in the years to come in the interests of sustainability and environmental protection worldwide.

Improving air quality involves further reductions in vehicle exhaust emissions. After meeting the demands imposed by the enactment of the national Motor Vehicle NOx and PM [Particulate Matter] Law in 2003, Japan’s automakers are now working hard to develop the technologies required for compliance with new, long-term emission regulations to be enforced as of October 2005. Those regulations, to be imposed on all vehicle types, will be the most stringent such regulations in application worldwide.

Recycling end-of-life vehicles will become mandatory in Japan with the enforcement in January 2005 of the country’s Automobile Recycling Law, which is being positioned as a key legislative tool for the building of a recycling-oriented society. As it has for many years in preparation for the introduction of this legislation, JAMA will continue in 2004 to work jointly with government authorities and industry partners towards the full implementation of an operational framework that will give optimal support to the application of this law.

2. Addressing Globalization in the Automobile Industry Worldwide

Continuously expanding globalization in the worldwide automobile industry has made automobiles themselves full-fledged international commodities. For the industry, today’s business environment underscores more urgently than ever before the need for common trade and investment rules, global technical regulations, and internationally harmonized vehicle certification systems.

JAMA will use its participation in the auto-related meetings held under the umbrella of the World Trade Organization’s new round of negotiations to closely monitor, on the one hand, progress in the elimination of both sector-specific tariffs and non-tariff barriers, and, on the other hand, moves to raise tariffs accompanying Russia’s accession to the WTO. In doing so, JAMA will continue to mount strong appeals to key government figures for positive modifications with respect to these issues. In the area of free trade agreements, following Japan’s signing of an FTA with Mexico, negotiations targeting similar pacts will be advanced with South Korea, Thailand, Malaysia, and the Philippines. JAMA will provide energetic support to the efforts of the Japanese government as these talks move forward, and will work with counterpart organizations and government policymakers in the individual countries to help assure successful transitions to a new stage of mutual understanding and progress.

In relations with Asia, dramatic changes in auto-related policies are anticipated with the swift expansion of the Chinese motor vehicle market. Seeking a fair and equitable environment for market competition, JAMA will use the forum of the Japan-China government/private-sector dialogues on automobile development as a platform for reinforcing its constructive appeals to China and otherwise promoting greater understanding between the two countries. With respect to ASEAN, support will be provided for activities aimed at strengthening partnerships with the individual countries in the region in the move towards full-fledged integration of the ASEAN market. To bolster the international competitiveness of ASEAN’s automobile industry, active cooperation will be furnished for human resource development programs, and JAMA also will energetically contribute to efforts to establish harmonized technical and certification standards in the region.

In relations with North America, JAMA will keep a close eye on developments in the U.S. corporate milieu and on auto market conditions there. It will also monitor trends in Congress and other government sectors in the lead-up to the U.S. presidential elections this autumn, and will respond as necessary.

On the European front, JAMA will continue to promote negotiations with ACEA (the European Automobile Manufacturers Association) and submit pertinent appeals to the EU Commission, the European Parliament, and the national governments concerned. Efforts will be expedited to achieve a consensus on the issue of European fuel efficiency, and JAMA will also carefully study optimal measures to be taken in response to the latest regulatory developments.

JAMA’s international activities will further include appeals to relevant entities to streamline procedural regulations pertaining to customs clearance and maritime transport, as part of overall efforts to achieve greater efficiency in overseas distribution.

Preparations are moving ahead for the 2nd Global Commercial Vehicle Meeting to be held in November this year and the 3rd Global Automotive Industry Meeting scheduled for early 2005. Both gatherings will be pivotal in underscoring the many common issues facing automakers today. They are expected not only to deepen mutual understanding within the global industry, but also to advance the levels of communication and exchange between the industry and governments worldwide.

3. Enhancing the Conditions of Motor Vehicle Use

JAMA works continuously for improvements in road infrastructure and the enhancement of the role and use of automobiles in daily life.

Japan’s automobile tax structure is complex and very onerous for Japanese motor vehicle owners. In response, JAMA regularly appeals to the government for a revampment and reduction of the automobile tax burden and sponsors a range of public interest activities intended to promote greater awareness in this regard. JAMA is also formulating a basic stance with respect to the debate over the introduction of an automotive “green tax.” Towards that end, it is carefully studying other national automotive tax systems.

JAMA is also highly active in promoting the expanded use of ETC (electronic toll collection) systems and advanced onboard telematics; advances in the development and use of assisted-mobility vehicles; infrastructural improvements to enhance motorcycle use; the more expedient issuance of driver’s licenses to disabled persons; and a greater implementation of vehicle anti-theft measures, among other significant steps to create a more efficient and enjoyable environment for vehicle users.

In November this year, the 38th Tokyo Motor Show for Commercial & Barrier-Free Vehicles will offer a unique experience in interactive participation that will allow visitors to significantly increase their understanding of the integral ties between automobiles and society, in an informative and stimulating atmosphere. JAMA will also have its own pavilion at Expo 2005 Aichi, the much-anticipated world exposition opening in March 2005 in Aichi Prefecture, Japan. Backed by an organization specifically created to coordinate planning and implementation, construction of the JAMA Pavilion is currently ongoing, while provisions with respect to content, logistics, etc. enter their final preparatory phase.

It was a little over two years ago, in May 2002, that the former Japan Motor Industrial Federation and Japan Automobile Industry Employers’ Association were officially integrated with JAMA. The broad-ranging expertise created through this union continues to be fully mobilized, in terms of JAMA’s traditional core activities; in terms of the planning and administration of even better, more efficient future Tokyo Motor Shows; and in terms of sound human resources management in the Japanese motor vehicle industry. In every sphere of endeavor, and on the basis of timely and flexible responses to developments taking place in and around the automobile industry, JAMA’s goal is to make lasting contributions that genuinely enhance motorization - both present and future, in Japan and abroad.