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Eco cars go up in smoke

Tax cut to make fuel-efficient cars cheaper backfires due to loophole

by Philip Brasor

Preadolescent tarento (TV celebrities) tend to provoke my gag reflex. I can only tolerate preternatural cuteness if it’s presented without irony or intensification. Ten-year-old Nozomi Ohashi, who’s famous for singing the theme song to the animated movie “Ponyo,” has, according to her Wikipedia entry, appeared in 16 television commercials so far this year, and none of the ones I’ve seen have sent me scrambling for the remote.

Eight-year-old Seishiro Kato, on the other hand, gives me the creeps, and he’s 10 times more popular than Ohashi, initially owing to his appearance in the NHK yearlong historical drama “Tenchi-jin,” but mainly to his role as kodomo tencho (child-store manager) in a popular series of Toyota commercials, where he plays the manager of a car dealership. Kato’s sales pitches are smooth and professional, but the viewer is always reminded that he’s just a child by things like his mother interrupting and telling him he won’t get any dessert if he doesn’t eat his vegetables.

Precociousness is built into the commercials. The ad people who came up with this campaign wanted a kid whose adorability would prevent viewers from switching channels or fast-forwarding through the break and, over time, create a buzz in the media. They were successful. Kodomo tencho is a star, so in the end it doesn’t really matter what he says; and that’s important to Toyota because what he “sells” is at least partly a fraud.

Last April, the government introduced tax cuts (genzei) and subsidies (hojokin) for purchases of “eco cars.” Consumers who buy new electric, hybrid or clean diesel vehicles do not have to pay the automobile acquisition and weight taxes, and if they own a car that’s more than 13 years old and scrap it when purchasing a new one that fits certain criteria, they receive a subsidy of either ¥125,000 or ¥250,000, depending on the type of car being scrapped.

But even some new gasoline-powered cars qualify for 50 or 75 percent tax reductions if they adhere to certain fuel-efficiency standards. Kodomo tencho’s principal pitch involves the tax cuts and subsidies you can enjoy when you purchase a Toyota product — in one ad he translates the savings into an equivalent number of ice-cream bars.

Now, he always appears briefly at the end of any Toyota ad, even those that don’t feature him, pointing to the specific “eco savings” you can expect for that particular model.

According to a recent article in the Asahi Shimbun, however, the “eco” tag is misleading, since some of the less fuel-efficient models exploit loopholes in the law that make them more of a bargain than models with greater fuel efficiency. Asahi uses the Mark X sedan as an example of how the loophole works. The Mark X has a 2.5-liter engine, weighs 1,510 kg, and gets about 13 km per liter of gas. Under those criteria, it does not qualify for a tax cut, because a car of that weight class must get at least 15 km per liter.

However, if you add an optional feature, such as automatic seat adjustment, that pushes the vehicle into the next weight category, the car can qualify for a tax cut because the fuel-efficiency requirement is different. In that heavier weight category a car only needs to get 12.1 km per liter to qualify for a tax cut.

The inconsistency is easy to explain, though difficult to justify. The seat adjustment feature that adds enough weight to push the Mark X into the next category also adds another ¥52,000 to the price of the car. However, the tax cut it qualifies for amounts to ¥100,000, thus making it, in the end, cheaper than the more fuel-efficient Mark X without the seat adjustment option that doesn’t qualify for a tax cut. Since the tax cut is borne by the government (and, in turn, taxpayers) and not the car company, Toyota can sell higher-priced cars more easily and kodomo tencho can say, “Buy this luxury eco car for less money.” Obviously, people are going to purchase the Mark X with the seat-adjustment option, and Toyota will make more money.

Toyota isn’t the only car manufacturer that takes advantage of this loophole. Almost every manufacturer does it, because it’s perfectly legal. One Nissan representative told the Asahi that their salespeople would be dishonest if they didn’t recommend cars with more “merit” when those cars qualify for tax cuts since it means greater savings for the customers.

That may be true, but it sure ain’t “eco.” An unnamed executive of an unnamed car company admitted to the Asahi that the tax-cut system does not “fulfill its purpose,” but that’s assuming the intended purpose really was to promote the sale of more fuel-efficient cars and thus reduce emissions. It seems obvious that the real purpose of the tax cuts is to sell more cars regardless of their fuel efficiency and thus stimulate the economy. That purpose is being fulfilled. Car sales have gone up since the tax cuts were introduced, though they aren’t nearly as high as the car companies want them to be. An official for the land ministry told Asahi that the weight categories were created to “respond to the needs of various users.”

Other countries also support their automobile industries with subsidies and tax cuts that encourage purchases of fuel-efficient models. The United States and Germany recently ended programs that paid people to junk their old cars if they bought new ones. France offers a tax-saving plan on fuel-efficient cars that is easy to understand: the lighter the car, the less your tax, and if a company sells a car whose fuel efficiency is below a certain level, the government slaps a penalty on it.

If Japan’s system is less straightforward, it’s probably because here the word “eco” means whatever the speaker wants it to mean. In that regard, kodomo tencho is the perfect salesman for eco cars, since kids, particularly cute ones, aren’t expected to know what they’re talking about.