Posts Tagged ‘automobiles’

Gas station business losing to reality

Wednesday, January 16th, 2013

Tanks for the memories

According to the Petroleum Association of Japan, the demand for gasoline continues to decrease owing to the popularity of hybrids and mini-cars, the greater fuel efficiency of automobiles in general, and a trend that sees more and more young people foregoing the pleasures of motoring. In 1999, 250 million kiloliters of gasoline were sold in Japan. In 2011 the amount was about 200 million. Consequently, the country doesn’t need as many gas stations. There were 60,000 in 1994, only 38,000 in 2011.

The disappearance of gas stations will likely accelerate this year due to a revision to the Fire Prevention Law. Several years ago it was discovered that gasoline reservoirs — the tanks buried under gas stations to store fuel — were leaking at an alarming rate, so the government enacted a law to address the problem. If the tank is 40 years old or older, the owner of the gas station must replace it or repair it. If he doesn’t, his license to pump gas could be revoked. Either operation requires excavation and the use of heavy machinery, and costs between ¥1.5 and ¥2.5 million. Many gas stations, in fact, have at least three tanks underground: one for gasoline, one for diesel, and one for kerosene. Each would have to be replaced once it turns 40. The revision went into effect in February 2011, and all gas stations with tanks older than 40 years had two years to comply. At the same time, the government introduced a subsidy that would provide two-thirds of the cost of the replacement-repair if the application is made by the end of January 2013. According to an industry group survey cited in Tokyo Shimbun, as of the end of September only 30 percent of tanks that needed to be changed actually had been. Of the other respondents, 7.5 percent said they are considering closing their businesses due to the revision. Others said they will wait until the last minute to apply for the subsidy. An industry representative told the Tokyo Shimbun that the older the tank the older the gas station owner, so it is likely they will simply decide to retire if no one in the family wants to take over the business. Perhaps in light of these findings, the government has already decided to extend the subsidy period.

It may not make much of a difference. The projection for gasoline demand in 2020 is only 130 million kiloliters. The main problem with lack of demand is that it affects different regions differently. The loss of gas stations in major cities and densely populated suburban regions won’t cause major problems, but in outlying rural areas, where there is little public transportation and people rely on automobiles to get around, it could cause an increase in so-called gas refugees.

Among Japan’s prefectures, Yamaguchi pays the most for gasoline a year per household — ¥80,000 — while Osaka pays the least, about ¥14,000. If a gas station in Osaka closes, not many people will notice, but if one in Yamaguchi shuts down, the people who relied on it will have to drive even farther to fill up, thus consuming more gasoline just to buy gasoline.

As a side note, the development of electric cars doesn’t seem to be much of a factor in these projections. The magainze Toyo Keizai reports that despite government subsidies, the Nissan Leaf, which first went on sale in Nov. 2010, isn’t selling as well as expected (and Toyota, which just regained its position as No. 1 carmaker in the world, has cancelled its plans to make an electric).

As of last November, Nissan had sold 43,000 Leafs worldwide, including 19,000 in Japan and 17,000 in the U.S. Since manufacturing capacity is 50,000 cars a year, the model is only fulfilling 43 percent of its potential. Experts say the problem is still driving distance. Even with new improvements in battery storage and efficiency, a full charge for a Leaf will only get you 250 km, while the average compact with a full tank could get you up to 800 km.

The relative savings in gasoline costs enjoyed by the electric car driver doesn’t seem to be a major consideration for consumers at the moment. However, this may change as more gas stations disappear, since electric chargers can be installed anywhere without any expensive requirements: dealerships, service areas, even convenience stores.

Can financial incentives put a brake on senior driving?

Tuesday, January 24th, 2012

Two weeks ago a lawyer in Chiba was cited for leaving the scene of an accident. He had hit a pedestrian with his car but later told police he didn’t notice anything odd at the time the accident occurred. The police believe him because he’s 81. The victim was also “over 60.” This may be a pattern we have to get used to. According to the transport ministry, more than 6,000 traffic accidents a year involve a driver confusing the brake for the accelerator. Though the ministry doesn’t break this particular statistic down into age groups, it does report that in 2010 there were 0.5 traffic accidents per 10,000 drivers between the ages of 25 and 54, and 3.3 accidents per 10,000 drivers over the age of 75. In the same year 106,000 of the 724,000 traffic accidents were caused by drivers over 65, while 50.4 percent of the people who died in traffic accidents were over 65, both new records.

Caution, geezer on board: ochiba (fallen leaf) car decal identifying elderly driver, now replaced with a more ambiguous design

Consequently, a number of local governments have been trying to convince elderly residents to surrender their drivers licenses, and have turned to financial incentives to do so. Ichihara city in Chiba Prefecture will launch a program in February wherein “old people” (no actual age is designated) who voluntarily give up their licenses will receive in return an identification card that allows them a 10 percent discount with 17 taxi companies operating in the city. Normally, municipalities offer discounts for bus rides, which may not sound like much of a trade-in considering that, traditionally, many local governments actually subsidized public transportation for elderly riders, in many cases giving then free passes. That time-honored practice started disappearing as the percentage of elderly, especially in rural areas, steeply increased over the past two decades. Local governments just couldn’t afford to pay for all those fares.

But driving could become even more dangerous as the baby boom generation enters its twilight years. Among previous generations, the driving population was mostly limited to men, but among boomers there are just as many women behind the wheel, which means there will soon be a sudden steep increase in the number of elderly drivers. In addition, insurance companies want to increase premiums for older drivers. Many of these people consider their drivers licenses more than a necessity, so local police departments issue unten keireki shomeisho, or “certificates of driving history,” a form of ID that looks just like a drivers license but isn’t. The psychological effectiveness is questionable, but in any case it is this card that can be used for discounts when using taxis or public transportation. To make the card more attractive, local merchants in Shizuoka Prefecture have agreed to offer discounts to anyone who produces one (rather than a bona fide drivers license). Last year in Kagawa Prefecture, 976 people gave up their licenses, a threefold increase over the previous year owning to a new discount service provided by the local taxi union and a special low-priced IC bus card especially for older patrons.

A university professor who specializes in “traffic sociology” told Nishi Nihon Shimbun that local government’s face a very real problem of guaranteeing old people mobility in the future. If public transportation isn’t available and affordable, then the elderly are going to drive as long as they possibly can, a possibility some carmakers are trying to take advantage of. It’s basically up to friends and relatives, and not just the local authorities, to convince them to give it up “without hurting their pride.” Economic incentives may be a good way to convince them, but first bus and train lines have to be substantialized and taxi service increased.

Car taxes could be cut next year

Wednesday, November 2nd, 2011

Old or new, buy later and save!

When you buy an automobile in Japan you pay a bunch of taxes. And when you own an automobile in Japan, you pay a bunch even more taxes on a yearly or biannual basis. Since car sales are considered an engine of the economy second only to home purchases in terms of consumer spending, the government wants more people to buy cars and is thinking about slashing these related taxes.

A tax study group is now discussing the abolition of the jidosha shutokuzei (car purchase tax), which currently amounts to 5 percent of the price paid for a regular automobile and 3 percent for a “mini” (kei) car whose engine displacement is 660 cc or less. This tax is levied on all car sales, new or used, of over ¥500,000 and goes to local governments. Since it’s estimated that car purchase tax revenues for fiscal 2011 will amount to ¥200 billion, it’s quite a sacrifice, but the auto industry has taken a pounding since the March 11 disaster and taxes constitute a fairly large portion of the outlay for a car purchase.

However, there’s more. The Ministry of Economy, Trade and Industry, as well as the various related industry associations, are pushing for eliminating or reducing other auto-related taxes, in particular the annual automobile tax, which is ¥39,000 for passenger cars and ¥7,200 for kei cars. Then there’s the juryozei (weight tax), which is levied at the time of purchase and then every time the automobile is brought in for its mandatory vehicle inspection (shaken) and brings in about ¥700 billion for the central government. That’s ¥37,000 for a vehicle of less than one ton, ¥56,000 for vehicles between 1 and 1.5 tons, etc. Then there’s also a special tax just for kei cars, and, of course, don’t forget that consumption taxes apply to all purchases of cars and parts, not to mention gasoline taxes.

Local governments will probably have something to say about the reduction of all these taxes since they are the main beneficiary. The provisional tax reduction for automobiles designated as being environmentally friendly (eco cars) is scheduled to end on April 30 of next year, and the study group is thinking of eliminating or at least greatly reducing both the car purchase tax and the weight taxes for eco cars in order to promote their sale. In any event, if and when the reductions are approved, they won’t go into effect until fiscal 2012.

Disaster area quickly becomes huge automobile market

Friday, April 8th, 2011

One of the most indelible images people will take away from all those horrifying videos of the tsunami of March 11 is automobiles being swept up by the dozens and carried away. What’s important to remember about the Tohoku region, especially the coastal part, is that cars are an indispensable component of everyday life there. In Tohoku, there is one car for every two humans. Because much of the area is cut off from the rest of Honshu by mountains, there aren’t that many train lines. In fact, many of the people who died were in their cars at the time, trying to escape inland after the tsunami alert was broadcast. There are many stories of people driving to the homes of elderly relatives to pick them up and then getting caught in the wall of water.

In Miyagi Prefecture alone, according to a report on TBS, 146,000 vehicles were destroyed. The central government has pledged to do the cleaning up, but cars pose a special problem. Much of the debris is beyond being recognizable, but cars, even ones that no longer function, tend to be intact and thus are considered private property by local governments. They cannot simply be carted away as garbage. The process so far has been for tow trucks to bring the damaged vehicles to large lots where the owners can claim them and then sign a release allowing them to be scrapped.

However, in many cases the owners don’t even know where their cars are, so it is taking a long time to process all the junked cars being brought to the lots. For instance, hundreds of cars were parked at Sendai Airport when the tsunami struck, and afterward their owners came to look for them but couldn’t find them. Local governments have to somehow inform those people where the collected automobiles are being kept, and it’s time-consuming. But that’s not the end of the process. As one mechanic told TBS, before the car is scrapped and placed in a compactor, all the mud has to be removed from the interior. (Removing the gasoline isn’t a problem since it seems that in almost all cases thieves had already siphoned off the fuel when the tow trucks showed up.) Before scrapping, the engines are removed and can sometimes be recycled, but not in this case. Sea water effectively destroys automobile engines.

If anyone benefits from this aspect of the tragedy it is, of course, automakers. Since the eco point system ended last year, manufacturers have been looking for a means to boost sales, and now they have an instant customer base of hundreds of thousands of potential buyers. The central government is going to help with a bill that will provide certain tax exemptions for victims of the earthquake/tsunami. Any victim who purchases a car, either used or new, will not have to pay the automobile purchase tax; nor will they have to pay the regular car tax based on weight, which is due when you register the car and every time you bring it in for mandatory inspections. Already, there is a paucity of available vehicles for sale in the Tohoku region, a situation exacerbated by production fall-offs nationwide due to a shortage of parts that are made in the Tohoku region. However, today Toyota announced that it would resume car production on April 18. There’s no time to lose.

Crash test dummies agree: Legacy is the one!

Thursday, April 29th, 2010

Can I take this baby out for a test crash?

Can I take this baby out for a test crash?

The National Agency for Automotive Safety and Victim’s Aid recently released the results of its 2009-2010 New Car Assessment Program, which is designed to test the safety of new automobiles in six different crash situations. The winner of the Grand Prix was Subaru’s Legacy touring wagon (list price ¥3.2 million), which, according to the results, was the only model out of the 17 tested this time that received high marks across the board, including the so-detailed-it’s-scary “pedestrian head protection performance test.”

Good news for Subaru, though when we visited a showroom the salesman said his dealership had yet to take PR advantage of the news. Considering the controversy over the recent Toyota recalls in the U.S., one might think any salesman would make a big deal out of such a positive safety assessment. After all, when Consumer Union in the U.S. releases test results for new cars in its Consumer Reports magazine, positive ratings can do wonders for a model’s sales.

But Consumer Reports tests everything, not just body integrity in a collision. The purpose of the NCAP is to promote safety-related research and development among auto makers, but all it really does is test these cars in crash situations. As it stands, all the cars seem to do quite well: The difference between the Legacy and the other cars tested is a matter of very small degree. In fact, NASVA was just investigated by the Government Revitalization Unit, which is trying to cut bureaucratic waste. Apparently, there are two government organizations testing cars in crashes, the NASVA and the National Traffic Safety and Environment Laboratory. The differences in the two bodies’ test methods appear to be very slight, so the investigating unit wanted to know why Japan needed two. Apparently, the “power of impacts” tested are different. In any case, NTSEL may receive less money in the next budget.

Of course, what would really help potential car buyers is data about individual models that have been involved in accidents in the past, but that information is closely guarded, even by the police , who never reveal makes and models of cars involved in accidents, though they surely have that information on record. The NCAP obviously has a function, but the very fact that they award a Grand Prix suggests they’re less interested in safety than in devising tests. After all, they have never reported a car as being not safe. So the Subaru salesman’s blasé attitude about the Legacy’s prize is understandable. For most consumers, a safety award from the government probably isn’t going to be as much of a factor in selecting a car as price, design and features are.

Option to owning

Wednesday, August 12th, 2009

Nikoniko Rentacar

Three years ago we sold our car because we rarely used it and the cost of keeping it seemed ridiculously high. However, that had been the situation for at least five years before that, so why did it take so long to come to a decision? Mainly because we thought we might need a car for emergencies, transporting something, or the occasional trip out-of-town. We didn’t see any alternative.

For instance, we thought car rentals in Japan were prohibitively expensive. Twenty years ago, they were prohibitely expensive. Only businesses rented cars, which made sense given Japan’s superior rail network. But rental charges have come down considerably in the past decade, and earlier this summer two nationwide car rental services opened that offer extremely low rates.

One's Rentacar

Nikoniko Rentacar keeps their operating expenses low by stocking used vehicles and tying up with struggling gas stations who can provide them with facilities for maintenance and storage. The cars are small and start at ¥2,525 for half a day. They now have 88 outlets throughout Japan and plan to open 31 more in the near future. And since they are always on the look out for franchisers, the network will grow bigger with each month. By 2011 they estimate they’ll have a thousand outlets.

Then there’s One’s Rentacar, which charges a little more, ¥2,625 for half a day. Associated with Gulliver, the used car juggernaut, One’s now boasts about 60 outlets but says it will have about 300 by the end of the year. They even offer one hour rentals (¥1,000), collision insurance (¥1,050), and optional car navigation systems (¥500).

Anyway, it’s one more excuse not to hang on to your car.

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