Japanese Automakers: Sayonara, Japan

Bertel Schmitt
by Bertel Schmitt

Japanese automakers will move their production elsewhere if the yen keeps rising. This is what Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, told The Nikkei [sub] in a very blunt interview. Shiga, who is also the COO of Nissan, said that power shortfalls and the strong yen are the biggest impediment to Japan’s most important industry.

The industry can work around the power shortages. Last weekend was the first when Japan’s automakers worked. They will instead take Thursday’s and Friday’s off, putting less strain on the grid. That system would work better if other industries would come to similar arrangements, but it works.

As far as the currency goes, the manufacturers can just watch and be sweat even more than what is caused by air-conditioning set to 82 F. Today, a dollar bought 80 yen. That won’t get you far in Japan. Not even to the next subway station.

Said the Chairman of Japan’s Automobile Manufacturers Association:

“It is strange that the government has allowed the yen to rise so high. Ever since automakers’ supply chain systems were damaged, the companies have been thinking about whether they should try to restore their supply chains to their pre-disaster conditions or instead turn to overseas suppliers.”

“It would not be surprising if some Japanese firms changed their procurement methods if things continue as they currently are.”

“No Japanese manufacturer can generate a profit from exports at an exchange rate of 80 yen to the dollar.”

“For years, Japanese carmakers collectively continued to turn out around 10 million vehicles domestically, and that did a lot to help keep the jobless rate from rising to the two-digit level. But people should not be so optimistic as to believe that automakers would never pull out of the home country.”

To make matters worse for the Japanese industry, a free-trade agreement between South Korea and the EU just took effect, helping Hyundai and Kia even more. The Japanese government could end its foot-dragging at least on that front.

As far as the currency goes, the governmental hands are pretty much tied. The oldest trick in the book is to lower interest rates. If Japanese interest rates would go any lower, you would have to pay the bank for taking your money. Quantitative easing? Japan invented quantitative easing, and look what that did to their currency.

Think about it: Here is a country that never recovered from the crash following the big 1990s bubble. It was hit by what some say was the force of a thousand times the power of all nuclear bombs on earth. Yet, people around the world are buying its currency. Makes you wonder about what’s going on around the world.

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  • Damon Thomas Adding to the POSITIVES... It's a pretty fun car to mod
  • GregLocock Two adjacent states in Australia have different attitudes to roadworthy inspections. In NSW they are annual. In Victoria they only occur at change of ownership. As you'd expect this leads to many people in Vic keeping their old car.So if the worrywarts are correct Victoria's roads would be full of beaten up cars and so have a high accident rate compared with NSW. Oh well, the stats don't agree.https://www.lhd.com.au/lhd-insights/australian-road-death-statistics/
  • Lorenzo In Massachusetts, they used to require an inspection every 6 months, checking your brake lights, turn signals, horn, and headlight alignment, for two bucks.Now I get an "inspection" every two years in California, and all they check is the smog. MAYBE they notice the tire tread, squeaky brakes, or steering when they drive it into the bay, but all they check is the smog equipment and tailpipe emissions.For all they would know, the headlights, horn, and turn signals might not work, and the car has a "speed wobble" at 45 mph. AFAIK, they don't even check EVs.
  • Not Tire shop mechanic tugging on my wheel after I complained of grinding noise didn’t catch that the ball joint was failing. Subsequently failed to prevent the catastrophic failure of the ball joint and separation of the steering knuckle from the car! I’ve never lived in a state that required annual inspection, but can’t say that having the requirement has any bearing on improving safety given my experience with mechanics…
  • Mike978 Wow 700 days even with the recent car shortages.