**5. Conclusions and Policy Implications**

This study estimated the CAFEs and CAFE targets of seven Japanese automobile manufacturers, and identified the manufacturers that met their CAFE targets and those that did not. It was clearly observed that the manufacturers that met their CAFE targets were of two distinct types: a company that offered a wide range of vehicle models with good fuel economy (Honda) and a company that focused on selling vehicle models with exceptionally good fuel economy (Toyota).

This study further proposed an optimization problem with an objective function of maximizing the profit under constraints with respect to both car sales and CAFE standards, and addressed the question of how the optimized car sales of each company differ from the actual car sales and what the effect of meeting the CAFE standards would have on reduction in lifecycle CO2 emissions under the optimized car sales.

Our main findings were as follows:


Toyota published an environmental report [30] concluding that "In the United States, Toyota's model year 2013 fleet achieved the required U.S. Corporate Average Fuel Economy (CAFE) standards and Toyota met the required greenhouse gas standards in both the United States and Canada". Although it is important to communicate environmental outcomes to the public, it seems that the relationship between CAFE and GHG emissions is still unclear, because the GHG emissions reported

by Toyota took into consideration only CO2 emissions generated by fuel consumption in a defined distance; the 2013 report did not assess how a strategy to achieve the CAFE standards would affect the overall CO2 emissions through the automobile lifecycle.

Although one of the objectives of the Japanese CAFE standards is to promote more flexible motor vehicle sales by companies [5], the standard ignores an important aspect of life cycle CO2 emissions. This paper suggests that automakers should pay more attention to the corporate life cycle CO2 emissions and publish a more comprehensive sustainability report including answers to the questions of how meeting the CAFE standards would affect the corporate lifecycle CO2 emissions, and what strategy can be effective for reducing the corporate lifecycle CO2 emissions under the CAFE standards. This study demonstrates that the CAFE analysis framework proposed in this paper is powerful for addressing the above questions. In addition, the results reveal that Japanese automakers can significantly reduce CO2 emissions under the CAFE standards.

It is also important to note that automobile manufactures that violate the CAFE standards in Japan will be fined one million Japanese yen after implementation of the CAFE standards, thus the fine under the Japanese CAFE standards will be much less than those in the U.S.A. and European countries [5]. To strengthen these currently weak regulations, the Japanese governmen<sup>t</sup> should monitor the achievement status of all automobile manufactures and obligate the Japanese automobile manufactures to submit comprehensive sustainability reports as described above to the government. Such sustainability reports including the results estimated using the analysis framework proposed in this study can be practically useful for policy makers in arguing how the CAFE standards can contribute to reducing societal CO2 emissions, and what might be a more effective policy centered around automobile lifecycle managemen<sup>t</sup> under the CAFE standards.

**Supplementary Materials:** The following are available online at http://www.mdpi.com/1996-1073/12/4/677/ s1.

**Funding:** This research received no external funding.

**Acknowledgments:** The author gratefully acknowledges the helpful comments of Shigemi Kagawa, Keisuke Nansai, Shogo Eguchi, Shunichi Hienuki, and two anonymous referees.

**Conflicts of Interest:** The author declares no conflict of interest.
