VZCZCXRO2377
RR RUEHFK RUEHGH RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #0890/01 1070858
ZNR UUUUU ZZH
R 170858Z APR 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 2398
INFO RUEHBJ/AMEMBASSY BEIJING 8870
RUEHRL/AMEMBASSY BERLIN 1631
RUEHBY/AMEMBASSY CANBERRA 3131
RUEHOT/AMEMBASSY OTTAWA 9799
RUEHFR/AMEMBASSY PARIS 6502
RUEHUL/AMEMBASSY SEOUL 4893
RUEHGP/AMEMBASSY SINGAPORE 7370
RUEHFK/AMCONSUL FUKUOKA 3584
RUEHHK/AMCONSUL HONG KONG 6756
RUEHNAG/AMCONSUL NAGOYA 1272
RUEHNH/AMCONSUL NAHA 5922
RUEHOK/AMCONSUL OSAKA KOBE 7385
RUEHKSO/AMCONSUL SAPPORO 4120
RUEHGH/AMCONSUL SHANGHAI 0572
RUEAEPA/HQ EPA WASHDC
RUEHBS/USEU BRUSSELS
RHEHAAA/NSC WASHDC
RUEHIN/AIT TAIPEI 7315
RUEATRS/TREASURY DEPT WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 TOKYO 000890 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J 
STATE ALSO FOR S/SECC, OES/EGC, AND EEB/IEP 
PASS TO USTR FOR AUSTR CUTLER AND M. BEEMAN 
PASS TO COMMERCE FOR K. ROTH AND D. BARZDUKAS 
PASS TO EPA FOR SFULTON 
PASS TO DOT FOR LLAWSON, CMILTTELHOLTZ 
 
E.O. 12958: N/A 
TAGS: EIND ETRD SENV PREL WTRO ENRG JA
SUBJECT: GOJ INCENTIVES FOR ECO-FRIENDLY VEHICLES 
 
REF: TOKYO 850 
 
SENSITIVE BUT UNCLASSIFIED.  CONTAINS BUSINESS SENSITIVE 
INFORMATION. 
 
¶1.  (U) Summary:  The GOJ stimulus package Prime Minister Aso 
announced April 10 includes measures to encourage purchase of 
environmentally friendly automobiles.  Although some imported 
European brands would benefit from the incentive, no U.S. 
autos now appear to qualify.  American automakers reps here 
continue to deliberate their public response to the measures. 
 End Summary. 
 
¶2.  (U) Ministries are now working on various aspects of the 
general economic stimulus package that the PM announced April 
¶10.  The detailed package is expected to go to the Diet April 
¶27.  Among the measures now included in the package are two 
specifically targeted to autos. 
 
--"Scrap" Incentive:  This measure is a 250,000 yen ($2500) 
incentive for consumers who purchase a new passenger vehicle 
that meets Japan's 2010 fuel-efficiency (FE) standards and 
who "scrap" a vehicle 13 years or older.  For light "kei" 
vehicles (660cc vehicles), the incentive is 125,000 yen 
($1250).  "Scrapping" a truck or bus to purchase an eligible 
vehicle entitles purchasers to receive a payment of 400,000 
yen ($4000) for small (3.5-ton) vehicles; 800,000 yen ($8000) 
for mid-sized (eight-ton) vehicles, and 1,800,000 yen 
($18,000) for large (12-ton) vehicles. 
 
--New Purchase Incentive:  This initiative targets consumers 
who purchase vehicles with a "high level of environmental 
performance."  Those purchasing vehicles with a "four star" 
rating, which also performs 15 percent above 2010 FE 
standards, would receive 100,000 yen ($1000) for passenger 
vehicles and 50,000 yen ($500) for light "kei" vehicles. 
(Note:  The "four star" rating is based on a system 
established by the Ministry of Land, Infrastructure, 
Transportation and Tourism (MLIT).  End Note.)  The measure 
applies to consumers who purchase trucks and buses that meet 
2015 FE standards, except for nitrogen oxide and particulate 
matter, for which the vehicle must exceed the standard by 10 
percent (i.e., a further 10 percent reduction in emissions). 
Purchasers of these vehicles would receive 200,000 yen 
($2000) for a small (3.5-ton) vehicle; 400,000 yen ($4000) 
for a mid-sized (eight-ton) vehicle; and 900,000 yen ($9000) 
for a large (12-ton) vehicle. 
 
¶3.  (U) The proposed incentives would apply retroactively for 
autos purchased after April 10.  A draft of the measures 
estimates they will cost the government 370 billion yen. 
Some media reports speculate the measure, in conjunction with 
recently passed automobile tax exemptions and reductions, 
could boost auto sales by one million units, presumably over 
the next year. 
 
Response from Japan Auto Importers Association (JAIA) 
--------------------------------------------- -------- 
 
¶4.  (SBU) The Japan Auto Importers Association (JAIA), which 
represents foreign auto makers including GM, Ford, and 
Chrysler, had hoped for broader measures, JAIA 
representatives told emboffs April 10.  In mid-March, JAIA 
 
TOKYO 00000890  002 OF 002 
 
 
wrote the Ministry of Economy, Industry and Trade (METI) 
requesting "economic support measures for new vehicle 
purchases that can stimulate buying motivation of consumers 
more widely and directly."  Specifically, JAIA proposed a 
five percent government rebate on purchases of new vehicles 
for consumers who replace vehicles nine years old or older. 
 
¶5.  (SBU) Although METI was supportive of JAIA's request, the 
Ministry of Finance (MOF), according to the JAIA 
representative, wanted more targeted measures and a focus on 
eco-friendly vehicles.  Without the focus on environmental 
measures, he continued, it would appear as though the 
government was providing subsidies too broadly, and the 
public would not support the measure. 
 
¶6.  (SBU) Among JAIA's members, some German automakers would 
benefit from the GOJ proposal, but American and French 
automakers would not, the representative asserted.  Most 
imported cars became popular in Japan because of their 
"foreignness," and many -- especially the U.S. autos -- are 
luxury vehicles with low fuel efficiency, he continued.  For 
this reason, the new stimulus measures will not assist 
foreign automakers.  However, it would be helpful to U.S. 
automakers if the GOJ could find ways to support the flexible 
fuel vehicle (FFV) that accepts up to 85 percent ethanol. 
 
Big Three Automakers Pessimistic 
-------------------------------- 
 
¶7.  (SBU) Members of the American Chamber of Commerce in 
Japan (ACCJ) American Auto Industries Committee also report 
no U.S. autos sold in Japan would qualify for the incentives 
as currently described.  One U.S. auto executive here fears 
that once consumers realize American cars will not qualify 
for the incentives, the reputation of U.S. automakers -- that 
they have not developed clean vehicles -- will be reinforced. 
 The GOJ's proposals are therefore "a non-tariff barrier and 
are protectionist," the Chrysler representative said April 17 
in a meeting with us and with other U.S. automakers.  (Note: 
His Ford and GM counterparts were present but did not support 
his remarks or otherwise comment.  End note.)  The three 
automakers, under the auspices of the ACCJ American Auto 
Industries Committee, are drafting a formal coordinated 
response for public release. 
ZUMWALT