Japan's Auto Industry Unhappy With Its Government

Bertel Schmitt
by Bertel Schmitt
japan s auto industry unhappy with its government

On Monday, Japan’s prime minister Yoshihiko Noda presented a new and improved cabinet, tailcoats and all. Apparently, that cabinet has few friends in Japan’s auto industry.

Akio Toyoda, who took over the rotating chairmanship of the Japan Automobile Manufacturers Association last May, sent a surprisingly strongly worded address to his new leaders. Speaking on behalf of all JAMA members, Toyoda said:

“The automobile industry faces unprecedented sustained yen appreciation, a high corporate tax rate, a slowdown in trade liberalization, strict domestic labor regulations, stringent goals for reducing carbon dioxide emissions and a restricted electric power supply. The combined result is an extremely severe business environment for our sector.”

“Anxiety has also arisen over the territorial dispute with China, the impact of which is being felt by the Japanese automobile industry and the national economy even as it threatens livelihoods, impedes cultural exchanges and fuels other disturbing trends.”

Indeed, the hamfisted handling of the dispute over a few rocks in the East China Sea probably already triggered a third disaster for Japan’s auto industry, this time in China, as if the tsunami at home and the floods in Thailand weren’t bad enough.

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  • Juicy sushi Juicy sushi on Oct 04, 2012

    It's very easy to blame one administration for an issue when there is a collective culpability that everyone would rather not explore, especially when a variety of people involved have zero desire to behave responsibly or rationally about it.

  • Icemilkcoffee Icemilkcoffee on Oct 04, 2012

    Normally you would be right. But in this instance, Toyoda's missive is spot on. The japanese government is directly responsible for its monetary policy and its foreign policy. Even a giant corporation like Toyota is helpless to change these things.

    • Juicy sushi Juicy sushi on Oct 04, 2012

      Foreign policy yes, behaviour of previous governments and individual Japanese citizens, no. Nor can you control the actions of non-Japanese states or individuals. Also, although the Japanese government can control it's monetary policy, it does not control the market, despite strong efforts to the contrary, and since the market sets the value for the yen, the value of the yen is not something the government can control any longer. Unless they want to offend most of their citizens by starting to selectively default (which, if one reads the fine print, it turns out IS the long term plan). I'm not saying they've handled things well. They haven't. But nor has anyone else for the last few decades, so it's a bit late for blame when aggressive problem-solving is pretty much the only choice.

  • L'avventura L'avventura on Oct 04, 2012

    First, monetary policy in Japan, much like the US, is not directly controlled by politicians. Its controlled by the BOJ. Checks and balances are put in place so that politicians can't print money to appease voters. For their part, Noda, and DPJ have long pressured the BOJ to basically print more money and weaken the yen. Keep in mind, the Japanese invented QE. And they went through several stages of it starting in 2000. It helped profits of some Japanese multinationals but it didn't help Japan get out of its decade long slump. Secondly, the island spat. This is something long that is a long-time coming. It flared up in 2010 with the rare-earth export ban. China has been having head-on conflicts with countries in the South China Seas, and they have been butting heads with the US there as well. This island spat is just as much a fight between an assertive China versus an America this is refocusing their power into Asia.

  • L'avventura L'avventura on Oct 04, 2012

    On the subject of the strong yen: Recently, there have been new views on why Japan keeps the yen so strong instead of devaluing their currency like the Chinese or the S. Koreans (which have had their domestic brands thrive as a result). This is very different from Japan five years ago. Japan actually wants their currency strong (to a point). Japan is starting to see that a strong currency can help them. A strong yen allows Japanese companies to fund development and expansion overseas (particularly in the booming South East Asia)cheaply, this as investors pile into the yen as a reserve currency to escape from competitive devaluation that is happening elsewhere. This will allow foreign investors to actually fund Japan Inc expansion into the emerging world. There is also some futility in competing with the US and China in printing money. China, for instance, last week inject 365 billion yuan ($57.9 billion) to keep up with America's QE3 (China's largest in a single week). The yuan STILL strengthened. Peter Pham on the strong yen: "expect the Bank of Japan to continue to try and position the yen as an alternative regional reserve currency as other Asian nations like Thailand, Malaysia and Indonesia try to lessen their reliance on the U.S. economy. By keeping the yen strong versus the euro and the dollar, Japan can attract capital from overseas and use it to deploy it around Asia. There should be enough money sloshing around the region so that Asian nations can continue their trade with the West at current levels while also focusing more on regional growth." http://money.cnn.com/2012/09/26/investing/qe3-china-asia/index.html

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    • Type57SC Type57SC on Oct 08, 2012

      That's a nice theory but seems like you're trying to put some strategy and reason around actions (or inaction) that wasn't there in reality. I have no inside information at all, but it seems to me that most countries will care much more about jobs than about helping their corporate sector grow outside their borders. The Japanese carmakers have been threatening to move production out of japan for 2 years now. they are not saying, 'thanks for increasing the relative value of our cash balances, we can now open factories in china more cheaply'. But that's what they are doing or will do. That's not going to make the politicians very popular. I can see an argument that says the retirees want high purchasing power and to hell with the working generation, but I didn't hear that in the retorts.