Japan’s Auto Parts Industries Association (JAPIA) representing 445 members was at last week’s Paris motor show – Le Salon de l’Automobile. Simon Warburton caught up with JAPIA managing director, Takehide Takahashi, in between the supplier body’s hectic round of meetings and its AGM with US organisation, OESA and European counterparts, CLEPA.

Several enormous issues have confronted JAPIA and its members during the past year and a half. Not least of which are the on-going power challenges following the Japanese earthquake, the impact of the Thai floods and the stubbornly fixed yen/dollar exchange rate of JPY78/1US$.

J-a: How would you characterise the state of the Japanese market currently?

TT: “In Japan, we can’t expect too much, but it is not so disappointing, that means so-so. The first half of this calendar year, demand has been boosted by some subsidies from the government.

“For example, for eco cars for high efficiency electric vehicles, plug-in hybrids and hybrids, [but] it [was] a temporary measure. The government decided there [would] be no [more] they declared they have no money, resources have run out.”

j-a: Can you estimate what the next year or two will bring for your members?

TT: “About the long term, if you have any concrete ideas, I will buy [them]. Now, carmakers try to introduce new models in the coming year [but] no-one has confidence. I dare not say no, I dare not say yes, but it is worth a try to introduce new models.

“What we want really is more car sales in the domestic market. If the government has some good ideas…that will be appreciated.”

j-a: It is quite some time since the catastrophic earthquake in Japan – how have your members changed how they operate?

TT: “We have learned a lot because the supply chain is quite vulnerable [for example also] because of the huge Thai floods. It [earthquake] revealed our global supply network is also vulnerable – we have to ponder how to treat it.

“Some of our members tend to go to other countries such as India, Vietnam, India or Mexico. They try to duplicate the supply chain with dual sourcing and procurement.

“If some of our Tier 1 members want to go outside Japan, they have to think about their Tier 2 and Tier 2 must think about their Tier 3. The network itself has been transplanted – transplants mean [a] group of companies goes to the west, south, north, where-ever.”

j-a: Should the unthinkable happen and another earthquake hit Japan, how do you think JAPIA members and the country as a whole would cope this time?

TT: “It depends on the magnitude of the disaster and where it is. If [an] earthquake hits the Tokyo area and its prefectures, that is still fatal to Japanese automotive companies.”

j-a: How is Japan sourcing its power now following the public reaction to the continued use of nuclear-derived energy?

TT: “We have several sources of electricity power generation – almost all nuclear stations have stopped. There are no concrete ideas for coming back to nuclear power because the regulatory system has been changed. They are now making new rules to regulate the nuclear power stations.

“Certainly, Tokyo has enough [power] substitutes, [but] we must scrutinise the situation on a company by company basis.”

j-a: Have JAPIA members had to change the way they use power in Japan?

TT: “Certainly, this summer, we are asked to reduce use of electricity, but there are no power cuts, we can use air conditioning quite moderately [but] we are living in quite high temperatures.

“That is why we are encouraged to wear casual clothes, it is crazy hot and humid in Japan. Especially for foreigners, you can not endure that kind of humidity.”

j-a: Have JAPIA members had to pay more for power with the current challenging energy situation?

TT: “The fare [price] of electricity is hiking – that is a very big problem. More than 10% in Tokyo.”

j-a: Japanese auto companies have cited the yen/dollar exchange rate as causing them problems – what is JAPIA’s view?

“The yen exchange rate is a big issue. JPY78 to the US dollar is unacceptable from the viewpoint of our exporters [although] JPY78 for our importers is good. Some [Japanese] government officials came to our [Tokyo] office to explain the exchange rate and they said the government can do nothing.”

“Of course, we can hedge the exchange rate to the future [but] from our point of view, JPY100 or JPY120 would be preferable.”

j-a: You have been at the Paris Mondial de l’Automobile for JAPIA’s annual global meeting with your fellow supplier bodies, CLEPA from Europe and OESA from the US – what did you discuss?

“There are so many issues we can easily co-operate [on]. For example, intellectual property, that is a very good issue to co-operate with each other.

“We issued a joint statement between OESA, CLEPA and JAPIA, which says we are against counterfeited products. They are, quite frankly speaking, dangerous and bad to your health. IP problems were raised and discussed and we decided to continue to scrutinise the situation and exchange information.

“It [counterfeiting] is not such a big problem in Japan because Customs are quite good. But in emerging markets, counterfeiting is quite a big problem.”