Automobile Industry Policy in UK and Japan - Case Study Example

Running Head: Automobile Industry Policy in UK and Japan Your name Course name Professors’ name Date 1.0 Introduction Businesses in Automobile industry have for a long time lead in several areas of manufacturing, purchasing, development of products and logistics. Investors from around the world have acted as a vital source of knowledge used to improve general vehicle manufacturing in the United Kingdom. Automobile has two distinct parts including manufacture of vehicle with its components, and trade of motor vehicle e. g retail and distribution. Automobile industry in United Kingdom is the most diverse and is recognized as the centre of excellence for the development and production of engines. This paper first seeks to address the policy of automobile in UK. The automotive policy in UK mainly focuses on protecting the environment with both direct and indirect measures. Standards of vehicle product have faced frequent improvement with cleaner vehicle technologies including electric hybrids, liquefied petroleum gas, and compressed natural gas. The second part of this essay discusses Japanese policy of automobile with its focus on safety, environment, and trade. Finally, similarities and differences in policies between Japan and UK will be addressed succinctly. The policy of automobile in UK Over 40 companies participate in manufacturing vehicles in United Kingdom (Datamonitor, 2007). Their areas of specialization include global volume car making, truck, and bus building. Automobile industry receives massive support from dynamic supply chain such as manufacturers of parts, technology providers, designers, and engineers. The automotive industry in UK has the characteristic of foreign direct investment and high exportation levels, which is equivalent to 13 percent of UK export market. In United Kingdom, vehicles are responsible for more than a quarter particulate emissions and approximately half of nitrogen dioxide emissions. The emissions have destroyed quality of air and health of the people. Vehicles are considered the leading contributors of greenhouse gases contributing an average of 22 percent of carbon dioxide (Bianka, 2010). Nonetheless, there have been substantial efforts to reduce the emissions by improving the engine and fuel. On the contrary, the efforts are offset by the perpetual increase in traffic. One priority policy area of automobile in the United Kingdom is on environment. Most environmental policy measures affecting automotive industry were developed at the European Union level. The policy has greater influence on design of the product, development of technology and additional costs. These policies affecting the automotive industry take the form of traditional standards. Moreover, voluntary agreements and fiscal measures are used to regulate carbon emissions but on limited scale (Clapp, 2005). The manufacturers of vehicles in the United Kingdom have taken substantial steps to avail cleaner vehicle technologies including electric hybrids, liquefied petroleum gas, and compressed natural gas. This is a policy of corporate social responsibility where a manufacturer pays attention to the nature of output such that it does not harm or rather destroy the surrounding. It also means that a manufacturer is answerable to any side effects caused by its activities (Clapp, 2005). In relation to efficiency, manufacturers agree that hydrogen is a fuel for the future since it can be made from renewable sources. This concept is however faced with a milestone of on-board vehicle hydrogen storage, deficiency of replenishing infrastructure, the price tag of fuel cell technology and the price of vehicles powered by the gas. 2.0 The policy of automobile in Japan While attempting to lead in development of technology, Japan is putting extra effort to create environmentally friendly technologies that can be utilized in all manufacturing process (Miyoshi, 2008). Aside from environment-friendly technologies, automotive industry in Japan is making substantial effort to reduce global warming following ozone depletion (Levy, 1997). This is possible by developing technologies that can be utilized in design and manufacturing of automobile, hydrogen fuel cells, and minimum hydrocarbon emissions. Additionally, the government of Japan is supporting the cooperative vehicle-highway systems with a view of lowering road accidents. Three major factors affect Japanese Automobile Industry. In the end, they influence the nature of policies formed. Briefly, these factors include environment, motor vehicle safety, and trade policy. The Kyoto Protocol supports utilization of low-emission environment-friendly vehicles (Böhringer, 2002). In response to this protocol, Japan is already preparing to assume the first phase. Now, Japanese government is offering tax incentives for low emissions and clean energy locomotives (Lehmann, 1992). The government has further set the targets on fuel economy to encourage use of clean energy vehicles. To improve fuel efficiency, the European Union established a structure that would actualize reduced emission of carbon dioxide from vehicles. This structured is based on three specific pillars. The first pillar is voluntary commitments by European, Korean, and Japanese manufacturers of motor vehicles (Falkner, 2003). In the 1998 negotiations, European Automobile Manufacturers made a commitment to reduce average carbon dioxide emission to 140 g/km (Bianka, 2010). Secondly, the EU gave guiding principles on labelling and supply of information to the buyers, since customers are supposed to be informed on fuel-efficient passenger vehicles. The last pillar as provided by the EU is tax measures aimed at favouring light fuel requirement. This strategy should develop a direct correlation between carbon dioxide emitted and tax levels (Schreuers, 2003). The effect of this strategy is that buyers are motivated to purchase vehicles that meet the condition of minimum fuel consumption and carbon dioxide emission. Safety is another priority area in Japanese Automotive industry. This has seen the state set goals that facilitate reduction of accidents. In this regard, Japan has managed to increase the number of senior drivers. The change in number of experienced drivers has a direct influence on the demand for advanced in-vehicle safety systems and customized vehicles. Furthermore, there been advances in harmonization of standards and certifications, with a view of making sure that vehicles introduced in the market are fit for human usage. Trade policy in Japan aims at realizing benefits that accrues from entering bilateral trade accord with major trade partners. Japan has invested greatly in China and is further negotiating economic corporation with Association of South East Asian Nations. As a demonstration of expansive trade collaborations, Japan has partnership with Malaysia, Mexico, and Thailand. 3.0 Comparison In terms of policy, there exists great similarity between Japan and UK in preserving the environment. Environmental policies formulated in UK aims at reducing emission of greenhouse gasses. Some of the measures in UK and Japan affect vehicle manufacturers directly while others have indirect effects. Standardization of vehicle products covering on emission, performance, and design of a motor vehicle is a direct policy measure to protect the environment (Mason, 1994). Through the Kyoto Protocol Japanese, government is offering tax incentives for low emissions and clean energy locomotives. Similarly, UK has adopted road-tax system for carbon dioxide emissions. This Vehicle Excise Duty is based on carbon dioxide bands stretching from A to M. Green cars emitting less than 130 grams per kilometre carbon dioxide and A to D bands is exempted from VED tax in the first year. The showroom tax is meant to motivate people to purchase low-emission models and subsequently penalize those who opt for high carbon dioxide levels. Product development measures in UK and Japan have distinctive differences. In UK, the idea of product development revolves around needs and desires of the customer. This means that the customer drives the process of developing a product. In this case, quality may not occupy the top priority but the demand. On the contrary, quality is of fundamental nature in Japan with manufacturing companies striving to produce high-grade products that become an example to other companies. This set of mind in Japan led to emergence of Honda Accord, which is the longest lasting and high value vehicle in the world. It is essential therefore to note that automotive industry policies in Japan emphasize quality of locomotive introduced in the market. The vehicle in this sense should be friendly to the environment. In the same context of quality, Japanese Automotive Industry has made substantial effort to guarantee safety of human beings on the road. As opposed to British, safety in Japan is a priority area with well-set goals that facilitate reduced accidents. The number of senior drivers in Japan has increased which then expands demand for advanced in-vehicle safety systems and customized vehicles. Conclusion This paper gave an elaborate discussion on policies of automotive industry in Japan and UK. There is clear evidence that both nations are more concerned with environmental degradation and have taken extensive steps to reduce emission of green house gasses. Some of these policies assumed by both countries include tax incentives, standardization of vehicle products, and compliance with corporate social responsibility and accountability. Reference Bianka, D., & Leo, W. (2010). Environmental Policy and the European Automotive Industry. Environmental Economics, (1)1: 32-48. Böhringer, C. and Löschel, A., 2002. Assessing the Costs of Compliance: the Kyoto Protocol, European Environment, 12 (1): 1-16. Clapp, J. (2005). ‘Global environmental Governance for Corporate Responsibility and Accountability.’ Global Environmental Politics, 5(3): 23-34. Datamonitor. (2007). United Kingdom Country Profile. Datamonitor plc. Falkner, R. (2003). ‘Private environmental Governance and International Relations: Exploring the Links’, Global Environmental Politics 3(2): 72-87. Lehmann, J. (1992). France, Japan, Europe and industrial competition: the automotive case. International Affairs, 68 (1): 37-53. Levy, D. (1997). ‘Business and International Environmental Treaties: Ozone Depletion and Climate Change’, California Management Review, 39 (3): 54-71. Mason, M. (1994). Elements of consensus: Europe’s response to the Japanese automotive challenge. Journal of Common Market Studies, 32 (4): 433-453. Miyoshi, H., & Tanoshita, M. (2008).Technological Innovation in the Automobile Industry and Economic Welfare. Tokyo: Hakutoshobo. Schreuers, M. (2003). ‘Environmental Politics in Japan, Germany, and the United States.’ Oxford: Oxford University Press. Read More