By on February 21, 2011

“Kyo no asa nikkei wo yomimashitaka?” – did you read this morning’s Nikkei?

Today, this is the most uttered sentence in the Japanese auto industry. Under the headline “fast action needed to revamp carmakers”, Japan’s leading business daily rips its own carmakers several new orifices. The editorial doesn’t mince words:

“Japanese automakers lack the momentum of their South Korean and German rivals and may find themselves losing out big on the global stage unless they rethink their strategies.”

As far as the Nikkei is concerned, Japanese carmakers messed up big-time. Let’s start where it counts, at the bottom line:

“Although Honda Motor Co. will likely turn in the top performance among Japanese automakers for the year through March, its net profit is expected to fall short of the fiscal 2007 level, before the “Lehman shock” hit. In contrast, 2010 net profit at Hyundai Motor Co. of South Korea was triple that of 2007, while German carmaker Volkswagen AG’s profit in the first nine months of 2010 was sharply higher than that for same period of 2007.”

Japanese carmakers don’t let a day go by without complaining about the strong yen, but “the weaker performance of Japanese automakers is not attributable to the yen’s appreciation alone,” says the Nikkei. “Even in emerging markets, they lag their rivals.”

“For example, Toyota Motor Corp. is the largest automaker in the world in terms of sales volume, but it has a market share of just 7 percent in China, the world’s biggest auto market. The share is half that of Volkswagen, the top player in China.”

And who is way ahead of Japan in the emerging markets? It’s those evil twins from Germany and Korea again.

Volkswagen says it aims to keep increasing sales in China and become the world’s biggest carmaker in 2018. It commands the second-largest share in Brazil, and it is strengthening its position in India by forming a capital and business alliance with Suzuki Motor Corp.

Hyundai, for its part, boosted its position to the second and third places in India and China, respectively, in 2010. It also sells as many cars as Nissan Motor Co. in the U.S., the bread-and-butter market for Japanese carmakers, and has already topped Toyota in Europe.

Having sufficiently shamed its Japanese readership into choking on their morning ochya (tea), the Nikkei writes what borders on sedition in a quality-obsessed (and Korea-adverse) Japan:

“In terms of quality, the difference between Japanese and South Korean vehicles is not large. Unless Japanese carmakers do something to shake up the status quo, they will likely find themselves under serious threat from South Korean manufacturers.”

Honto desuka? (WTF?) The land of Nippon convulses in a communal Maalox (or make that Cabagin) moment. So what’s Japan’s industry supposed to do? The Nikkei has some good advice that will trigger more acid reflux:

“It is the time for Japan’s automakers to review their strategies, taking into account changing market trends and technological advances at foreign rivals. They should seek to regain a position of superiority in terms of cost, quality and design by analyzing German and South Korean cars more closely.”

From Wolfsburg to Seoul, auto managers are putting away their dog-eared copies of Masaaki Imai’s Kaizen and of Jeffrey Liker’s Toyota Way and prepare for what they had not done since the 60s: Factory tours in Japanese.

The Nikkei, however, is not finished yet. While it is at it, it takes a roundhouse swing at the unloved DPJ government:

“The government needs to support Japanese automakers. With South Korea forming more and more free trade agreements with other countries, automakers there enjoy tariff-related benefits in markets for 41 million vehicles, or 60 percent of global auto sales. The ratio for Japanese carmakers is far lower than that. Japan should waste no time promoting FTAs so that Japanese automakers can compete on an equal footing with their rivals in South Korea.”

And that, dear reader, is most likely where the editorial is aimed. Unpopular Japanese Prime Minister Naoto Kan faces pressure to step down after having failed to compromise with the opposition on a budget. There are nationwide local elections in April. A snap general election is possible. The opposition LDP leads in the polls, but not by a wide margin. Every vote, and every small party counts. And this is where the Free Trade Agreements come in. Japanese rice farmers are near sacred, despite the fact that most farm rice as a hobby. Only 1 percent of all rice farmers make at least half their income from rice. The farm vote is bought with a whopping 788 percent tariff on rice imports. A free trade agreement that is good for the Japanese industry is reviled by the farm lobby, which holds the rest of the industry at ransom.

The auto industry and the rest of the Japanese export machine may perish, but no politician at either side of the rickety aisle dares to alienate the farm vote. The solution seems to sit it out.

“The average age of a rice farmer is 66, and not enough young people have expressed interest in becoming farmers,” says Japan Times. “Even if Japan doesn’t join the Trans Pacific Partnership, America and other exporters just have to wait five years or so. By then, there may not be any rice farmers left to protect.”

However, in 5 years, there might be a few Japanese carmakers less unless there is “fast action.” If the Nikkei’s doomsday prognosis is correct.

PS: The U.S. car industry is never mentioned in the firebrand editorial.

Get the latest TTAC e-Newsletter!

33 Comments on “The Nikkei To Japanese Carmakers: Learn From Korea And Germany, Or Die...”


  • avatar
    OldandSlow

    It’s a bit late in the game to worry about foreign trade agreements. Success in the BRIC countries is going to won or lost by the sales of the vehicles made by assembly lines in each respective country rather than imports from Japan.
     
    With regards to the rice farmers, why rush the inevitable decline? It’s a tradition that will die hard, just like whaling in the Antarctic.

  • avatar
    Philosophil

    It is interesting, as Bertel notes, that there is no mention of the U.S. car industry here. This would suggest, of course, that the Nikkei doesn’t see the same threat from GM or Ford (or Chrysler) that it does from VW’s market strategies and Hyundai’s quality. Interesting stuff.
     
    As for the rice farmers, I can understand them wanting to retain those traditions if they have been essential to their sense of identity. Giving up traditional framing practices for cheap rice might be comparable to giving up the traditional tea ceremony for teabags and a cup. Of course the entire thing may be merely formal at this point, with such traditions no longer resonating with those who have already adopted a more ‘global’ sense of identity, but I can still appreciate the desire to preserve something that might be identified as traditionally ‘Japanese.’

    • 0 avatar

      I’m in Japan. I’m looking at a big box of teabags as I type this. Says “Day & Day Teabag” in English. The rest is Japanese.
      Tea ceremony? Last time I had one was in China, and it was a tourist ripoff

    • 0 avatar
      Philosophil

      Yeah, given the globalized nature of most such societies, I suspected as much. It’s pretty much the same in every place with the global market rules. The best thing to do, I suppose, is to try to forge a new sense of identity that somehow bows to the old without trying to fake its traditional authenticity. Tea bags it is, then…

    • 0 avatar
      OldandSlow

      Correct me, if I am wrong – but the last time I checked, the US domestic manufacturers circa 2011 were net importers of technology with regards to building their small car offerings in North America.

    • 0 avatar
      Signal11

      Bertel,
       
      Consider yourself lucky.  I have to sit through those stupid things every time I visit old teachers.  Knees just can’t take it anymore.

  • avatar
    obbop

    The USA has “make work” and my opinion is we need MORE!!!!!!!
    No hand-outs for welfare recipients (not that Nippon rice growers are anywhere near THAT category).
    Work for pay provides a sense of self-worth that may compel personal improvement. At least the taxpayer can “feel” a sense of truly assisting needy and/or down-and-out folks.
    And I include corporate welfare in with the above. A huger group in numbers (depending how you count the two groups) with the corporate crowd receiving HUGE amounts of wealth.
     
    The USA with our HUGE horde of unemployed could sure use a modern-day CCC.
    Watch the crime rate drop if a CCC is enacted.
    Let’s instill some pride in youth; especially needed in “deprived” areas with ULTRA-high poverty rates AND where jobs are and have been traditionally hard to find.
    Inner cities, some barrios, ghettos, my neighborhood and many other socio-economic-type areas where the poverty demographic occurs.
    Will the USA “lose” an entire generation of youth. Not enough room or desire to interpret “lose.”
    The ruling elites found BILLIONS of dollars to prop up the minute minority they FEEL is deserving.
    I will not debate nor discuss the “deserving” label and the POSSIBILITY the “system” was “saved” via assisting the “few, the proud, the few at the top of the socio-economic pyramid.”
    Japan has extremely restrictive immigration laws and I wonder if “outside barbarians,” especially the hirsute horde from the USA, would even be allowed to purchase or operate a rice farm.
    Doing so, even if allowed, may not be economically viable but, with the current economic woes within the USA…….  (does the USA need yet another gift shop, pizza or burger joint etc.)  the few with discretionary wealth to invest….. perhaps Japan holds an opportunity for buying and running a rice growing/selling operation!!!!!!!!!!
    Or a different ag-oriented operation.
    Just pondering.
    Despite propaganda observed via numerous media venues; local and nationally based, that as heard by The Postman in the outstanding flick “The Postman”……. “…things are getting better.” That “propaganda” is the same here in the real world in my never-humble-opinion (unless I specifically declare a certain opinion is, in actuality, is intended to be humble).
     
    Okay…. off I go.  Spreading discord and rancor elsewhere.
     

  • avatar
    PenguinBoy

    I figure it’s a mistake for the Japanese to write off the US automakers as a serious threat.

    Ford is in a pretty good position these days, GM is strong in emerging markets, and there are even some signs of life at Chrysler.  With the declining US dollar, and in some cases legacy costs wiped out by bankruptcies, the US automakers now have a competitive cost structure.

    There are also some longstanding historical rivalries that hold back acceptance of Japanese products in some markets – “Wouldn’t you really rather have a Buick?” probably makes more sense now than it did then.  Of course the US has its fair share of enemies, so this one cuts both ways.

    On the other hand, the Japanese seem to be more or less where the US automakers were 30 years ago: coasting on reputations built on the excellence of their past work, while building bloated, lower quality, and increasingly irrelevant products.  The Japanese would be well served to study the decline of the American automakers very carefully, to try and avoid making the same mistakes.

  • avatar
    jimboy

    Until the ‘American’ manufacturers come to some kind of understanding of the Japanese home market, they will never sell more than a miniscule amount of vehicles there. They simply have zero concept of the lack of living space in that tiny island. A Honda Civic is considered too large to drive in urban areas, so unless you’re a wealthy executive, almost any American vehicle would be considered monstrous. Coupled with a reputation for middling quality, and high import duties, there you go.

    • 0 avatar

      What high import duty? The Japanese import duty on cars is exactly ZERO.
      What size? If a Toyota Crown or a BMW 5 and 7 series fit, an American car would fit just fine.
      I actually saw one today in our neighborhood, an 80s vintage Dodge Caravan, complete with faux wood. Granted, the streets are narrow, but the cars fit. A few days ago, I saw a Ford Expedition. No scratches on the sides.
      I hear these attempts on false logic again and again. Don’t try to apply lack of space or imagined customs duty to the lack of success of American cars in Japan. It’s simple: Nobody wants them. Except for a bunch of dedicated Americana nuts, as documented here. A wealthy executive would not get caught dead in an American car. It’s for people with tattoos.
      Let me put it this way: I’m one of two gaijin (foreigners) in our little town in the burbs of Tokyo, and I’m being tolerated. If I would show up with an American car, people would talk.

    • 0 avatar

      And if you show with Korean car, they’ll lynch you?

    • 0 avatar

      This won’t come up. Hyundai abandoned Japan. No customers.

    • 0 avatar
      jimboy

      @bertel. My bad on the ‘high import duties’. I fell victim to the not doing my homework syndrome.

    • 0 avatar
      Signal11

      What Bertel said, plus I’ve always had the feeling that a lot of those older American(a) cars were ones that were left behind by American servicemembers.  How else do you explain the real oddball vehicles such as an 82 Ford LTD station wagon that show up at these things that aren’t owned by the tattoed crowd?

    • 0 avatar
      bd2

      “Let me put it this way: I’m one of two gaijin (foreigners) in our little town in the burbs of Tokyo, and I’m being tolerated. If I would show up with an American car, people would talk.”

      - Count yourself lucky that you aren’t black, arab/desi or an East Asian of another ethnicity (Korea, Thai, Viet, Chinese, etc.)

    • 0 avatar
      Signal11

      bd2, let’s be fair here.  In the grand scheme of Japanese racism, Southeast Asians (Thai, Viet, etc) are even lower on the totem pole than the Koreans.
       
      Have you seen those commercials with black celebrities like Bob Sapp?  They’re jaw dropping.

  • avatar
    PenguinBoy

    I don’t think that the article referenced was about the JDM, but rather about success in “export” markets – particularly emerging markets.  Agreed that American cars aren’t likely to amount to more than a niche in the JDM.

    Even the wealthy executive types drive small cars in Japan – I was talking to one fellow who was pretty high up in his company, his commute to work car was a Vitz.  Most folks in his position in North America would most likely drive a large sedan or SUV.  The Japanese executive is in North America now, commuting in a G35 because he always liked the exhaust note of the Skyline.  So given ample parking and cheap fuel, it looks like at least some people will opt for a larger car given the choice.

  • avatar
    HoldenSSVSE

    Woo hoo!  The Japanese have completely written off Ford, GM and Chrysler (well Fiat) as competitors.  Mistake number 237 in the long road to decline, underestimate the competition.
     
    I am excited to see the Japanese press telling their auto industry to wake up; look at the overall groans about the latest offerings from Honda and Toyota, concerns about the direction of Subaru, and the slipping ground underneath Mazda.  These were all great car companies that built at least a modicum of excitement in bullet proof reliable packages with great fuel economy and attractive, if not a bit vanilla industrial design.
     
    Honda S2000
    AE-86 Toyota Corolla
    Corolla FX/16
    Toyota Supra
    Toyota Celica
    Toyota MR2
    Honda CRX Si
    Acura Integra Type-R
    Mazda RX-7 Turbo
     
    What has replaced this great legacy is absolute blandmobiles, painted in neon beige, zero excitement, no longer class leading fuel economy, no longer class leading performance, no longer with class leading engines and transmissions, numb steering, soft brakes, and a decline, incremental, but no less a decline in quality.
     
    Meanwhile in Korea, to a lesser extent in the United States and Europe, the other guys are getting a lot right.  In the C segment there is no question, Ford and General Motors have the best iron followed very very closely by the Koreans. Compare a 2012 Honda Civic or 2011 Toyota Corolla to a Elantra, Focus, or Cruze and the only compelling reason to buy one is the legacy of the brand. That’s it. They don’t lead in fuel economy. They don’t lead in interior quality. They don’t lead in styling. They don’t lead in performance. They don’t lead in the X factor of the driving experience. They don’t have world leading engines and transmissions; but instead have ancient boat anchors with rapidly becoming inferior performance and fuel economy. And careful before you declare the virtues of the ye’ old 1.8 with a 4-speed slush box attached; GM fanboys were saying the same thing about the GM W-bodies with a 3.8 and a 4-speed (in Gen I or Gen III configurations). Yes there is something to be said about proven/reliable – but one must advance, or the rest of the industry will run you over. Just ask the Germans and Americans about THAT.
     
    I keep hoping to see some form of live form Toyota and Honda – they would be well advised to follow the opinion of their local press; I for one agree.

    • 0 avatar

      I bought a 4-speed auto last year, new from factory, for $32k. So there. Jeez, enthusiasts.

    • 0 avatar
      HoldenSSVSE

      @Pete
       
      Five-speed and six-speed automatics is not an issue of enthusiasts, those extra cogs give you better MPG. In certain enthusiast circles not only is a 4-speed desirable, it is preferred.

    • 0 avatar
      ixim

      Well, Japanese cars, right now, are cheaper here in the US. Lotsa $$ on those Toyota hoods these days. Reminds me of GM about 10 years ago.

    • 0 avatar
      Acubra

      @HoldenSSVSE
      Your list can grow several times if you start adding all those JDM-only exotics.
      Twin-turbo Mark II, Soarer and Aristo (Lexus SC and GS), Nissan-Cima and Leopard (I-6 with Turbo and 4WD), R32 Skyline, Twin Turbo/Twin Rotor Mazda Cosmo, GT-B Legacy, etc, etc…
      JDM positively rocked from late 80-s till 2000 or a bit later.
      Now they are obsessed with city cubes, EVs, hybrids and other PC-friendly stuff.

  • avatar
    blowfish

    Nippon is slowly becoming a basket case, 1) they dont have enuf young population, didnt want to have immigrants as it will dilute their Eugenics tradition.
    2) The gap is getting too close with Korea Automobile industries, I ain’t no economist i bet the wage difference is still enuf between Korean & Nippon auto workers. Thus Korea car build same ca, quality for lesser bucks. So what is the incentive of paying higher price ( Nippon cars ) versus Korea cars for less money when quality , workmanship remain constant plus some Korea cars have 10 yrs W.
    3) Only way it will work is if Japan auto manufacturers make their cars in a cheaper wage country such as some Asian country, but the quality control could be suffering though.
    Already building some cars in US for US consumption.
     
    All in all is becoming to sound like  the phrase coming out of a Middle Kingdom’s Kung F Master ” if your apprentice/ disciples are taught with all u know, then the master shall be redundant. So they rarely pass on the best knowledge to their underlings, much rather take them to their graves with them ”
    30-40 yrs ago Nippon helped Korea to set up their auto biz, selling them engines, technologies , lock, stock & barrel, now look what happened. And only 70-80 yrs ago the Bloke from Old Blighty did that to help Nippon too. The early japanese carbs were either a true Su or somewhat modified. Even the Rotary engines were from fatherland too, only Mazda could made them spin much longer.
    Wonder how long it took the japanese bloke to figure out a Lucas Electrical system was going to crash & burn?
    During the 80s even RR had to ditch Lucas and switch to Nippon-Denso & Bosch for reliability.
    Or else RR mind as well name their new model a RR Nova.

    • 0 avatar
      bd2

      Otoh, Japanese automakers like Toyota have increasingly relied upon “temporary” workers for which they have to pay significantly less in wages and benefits.

      Also, a lot of the “wage gap” has more to do w/ the diff. valuation of the yen and won compared to the dollar.

      And let’s not forget SKorea’s uber-militant auto unions which go on strike seemingly every 6 months.

    • 0 avatar
      Signal11

      Public demonstrations are something of a way of life in Korea.  It’s crazy.  Just takes one dude to drop a hint that they’re being oppressed and suddenly everyone’s in on it, lickety-split.
       
      There are Koreans out there who go to college for a few years, then put in for their mandatory military service, get drafted into the Korean National Police Riot unit, beat up on protesters, leave the Riot Police after their 2-3 years service, then go right back to protesting the next big thing.  They’re nuts.

  • avatar
    akatsuki

    The rice farmer vote is one problem. But most of Japan’s problems have to do with an aging population that has turned inwards. Sure they want reform, but they aren’t clamoring for it, and the smaller youth generation is politically impotent to change the future and generally has little hope.

  • avatar

    I (modestly) suggest that the Japanese look at my auto safety invention.
    http://www.safersmallcars.com

  • avatar
    Dynasty

    I see this as good news for Japan.
     
    Japan has always squashed Korea and China militaristicly, but since that is not really a viable option anymore, having Korea (and eventually China) as a formidable enemy in the auto business (among many industries) might be just what it takes to waken up the Japanese spirit that has been sleeping for the past decade or two.
     
    Few people realize it, but Japan, is one of the few countries in the world that was actually able to conquer the world. But they did it economically in the 80s.  I think that may be why they have their malaise going on now.  Once you climb the highest mountain peak… what is there left to do?  I guess wait around until your historic arch rival neighboring countries catch up, and hope your national spirit realigns and ignites the nation.
     
    I doubt Japan would have much car success in China though.  I think the Chinese are probably more bitter about Japanese aggression than the Koreans.   That might just be one market they have to forfeit.
     
    At any rate… Why didn’t Wall Street write a similar editorial in the 70s, and the 80s, the 90s, early 2000s, and late 2000s about the sad state of the Big Three?   That’s the real story here.
     
     

    • 0 avatar
      Signal11

      Oh please.  Japan’s efforts to militarily conquer anything outside of Japan went nowhere until their one decade of success in the second world war.  The only reason Japan itself wasn’t conquered in two consecutive attempts from the mainland were sheer dumb luck via natural disaster.
       
      The Japanese myth of historical martial superiority is just that.  A myth.
       
      As for economically “conquering the world,” I don’t recall Japan ever being anything other than second place to the US.  By less than a half, no less.
       
      The Japanese didn’t develop their malaise because they beat everyone (they didn’t).  It’s because they were lying to themselves the entire time about how strong their self inflated claims were.

    • 0 avatar
      bd2

      Yep – Japan was only able to conquer a part of East Asia (for a short-while at least) due to technology transfer from the West.

      Prior to that Japanese attempts at a greater empire failed (even w/ the help of Portugese firearms/technology).

  • avatar
    Acubra

    Kyo no asa = Dame!
    Kesa = Yosh!
     
    @Berterl: Aside from the size you should remember about
    a) engine cc and OD-based taxes (anything past 1700 mm in width and/or 2000cc is “cho:-takai”) and
    b) sticker price difference:
    http://www.carsensor.net/newcar/calist.php?STID=CS110500&BLST=%83Z%83_%83%93
    Just run a comparison between E-Klasse and Mark II, for example.

  • avatar
    blowfish

     

    smallcars
    February 21st, 2011 at 5:52 pm

    I (modestly) suggest that the Japanese look at my auto safety invention.
    http://www.safersmallcars.com
     
    if there’re no semi trailers, dump trucks on the road, one can feel super safe even riding a tricycle

    or spend a few hours at a pool hall see how balls hitting each other and see how they react.
    We as human beings can only take so much shock, not sure how many Gs before succumb to internal bleeding. If it were a major component IE Aorta we can go in mins, a fractured spleen can do a lot of harm too.
    If it were sideways, the impact can be much lighter before something bad can happen.

  • avatar
    i_godzuki

    japan does okay in China. Most people couldn’t care less about the war when it comes to buying a car, I’d wager. Nissan actually outsold Toyota, Honda and Hyundai last year. Toyota and Honda lagged a long way behind GM and VW, but half of GM’s cars are $4000 Wuling trucks with wafer thing margins. Toyota’s mainstay is the Camry, which isn’t cheap in China, while Honda’s best seller is the Accord.
    The ranking is something like GM, VW, Nissan, with Hyundai, Toyota and Honda battling it out for 4th.
     


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India