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In addition, the Energy Tax Act of 1978 imposes a “gas guzzler” tax on automobiles with a fuel economy rating below specified levels.
European Standards
The European Union has signed the Kyoto Protocol and agreed to reduce carbon dioxide emissions by 8% during the years 2008 to 2012, as
measured from the 1990 base year. In early 1999, the European Commission and the European Automotive Manufacturers Association (ACEA)
agreed on a voluntary engagement which establishes an average emissions target of 140 grams of carbon dioxide per kilometer for new cars sold in
the European Union. The Japan Automobile Manufacturers Association and the Korean Automobile Manufacturers Association have also agreed
on a voluntary engagement, similar to that entered into by the European Commission, with the year 2009 as a target year. In December 2007, the
European Commission issued a proposal to further regulate vehicle carbon dioxide from 2012 at a fleet average of 130 grams of carbon dioxide per
kilometer, using a sliding scale based on vehicle weight. This provides different targets for each manufacturer based on their respective fleets of
vehicles, weight and carbon dioxide output. For manufacturers failing to meet their targets, a penalty system is proposed of €20 per each gram of
carbon dioxide per kilometer shortfall in 2012, rising to €95 in 2015. Manufacturers would be permitted to use pooling agreements to share the
compliance burden. This proposal is likely to be finalized by the European Parliament in 2008 or 2009.
The European Commission is also considering setting binding carbon targets for vans not registered as passenger cars or so-called “N-1
vehicles.” The European Commission has also proposed a review of labeling rules as well as a voluntary “code of practice” on car marketing and
advertising in order to raise consumer awareness. Some European Union member states have begun to revise their car tax laws to take into account
carbon dioxide emission levels. This trend is expected to continue.
Vehicle Safety
Japanese Standards
In March 2005, regulations applicable to compressed hydrogen gas powered fuel cell vehicles were introduced. The regulations involve
technology standards such as those relating to collision, prevention of hydrogen leaks and protection from high-voltage.
Regulations relating to pedestrian protection are applicable to all new models manufactured after September 2005 with certain exceptions and
vehicles manufactured after September 2010. Frontal offset collision will be required for all new passenger vehicle models manufactured after
September 2007 and for all passenger vehicles manufactured after September 2009, and the installation of seat belt reminders is required for driver’s
seats of new models manufactured after September 2005 and for all vehicles manufactured after September 2008. In addition, for the purpose of
harmonizing with the international standards, driving visibility standards, seatbelt anchorage and seatbelt standards are also expected to be
combined with the Economic Commission for Europe (“ECE”) and all cars manufactured after July 2012 are required to meet these standards. All
Toyota motor vehicles currently sold in Japan meet or exceed applicable Japanese safety standards.
U.S. Standards
The U.S. National Traffic and Motor Vehicle Safety Act of 1966, or Safety Act, requires vehicles and equipment sold in the United States to
meet various safety standards issued by the National Highway Traffic Safety Administration. The Safety Act also authorizes the National Highway
Traffic Safety Administration to investigate complaints relating to vehicle safety and to order manufacturers to recall and repair vehicles found to
have safety-related defects. The cost of these recalls can be substantial depending on the nature of the repair and the number of vehicles affected.
The Transportation Recall Enhancement, Accountability and Documentation Act was enacted in the United States on November 1, 2000. This
Act required the National Highway Traffic Safety Administration to regulate
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