Three major factors influence the Japanese automotive industry – environment, motor vehicle safety, and trade policy. The Kyoto Protocol encourages the use of low-emission environment-friendly vehicles, and Japan is gearing up for the first commitment phase of this protocol. The Government already offers tax incentives for low-emission and clean-energy vehicles and has set fuel economy targets to encourage the use of these vehicles. Safety is also a priority in this industry, with the State establishing targets for the reduction of road fatalities. This endeavor has received an impetus with the increase in the number of senior drivers in the country. This change in driver demographics is expected to raise the demand for advanced in-vehicle safety systems and tailor-made vehicle ergonomics to suit the requirements of elderly drivers.
Japan’s trade policy seeks to reap the benefits of its R&D developments by entering bilateral trade agreements with key trade partners. Japan has been one of the biggest investors in China and has negotiated a comprehensive economic partnership with the Association of South East Asian Nations (ASEAN). It also has economic partnerships with Malaysia, Mexico, and Thailand, while bilateral agreements with South Korea and Thailand are in progress.
