Unless competitive barriers such as the strong yen and high corporate tax are eased as soon as possible, the nation’s automakers may not be able to keep building cars in Japan, newly appointed Japan Automobile Manufacturers Association Chairman Akio Toyoda said Monday.
“It is not just about exchange rates, but if we continue to face these critical barriers, Japan’s manufacturing industry will collapse,” said Toyoda, president of Toyota Motor Corp, who was appointed JAMA chief on May 17.
He cited what has come to be known as the “six barriers” — the strong yen, the high corporate tax, slow progress in concluding free-trade agreements with other nations, strict regulations in the domestic labor market, stringent goals for reducing carbon dioxide emissions and the possibility of electricity shortages.
“In theory, it is unrealistic to operate business under such circumstances,” Toyoda said at the headquarters of JAMA, a lobby group for the auto industry.
But if the automakers were for instance to shift production of a million vehicles overseas, it would throw thousands of people in Japan out of work, so the makers are trying to stick with domestic production to protect jobs, he said.
As for the outlook of the global auto market, Toyoda said there are some short-term concerns, such as the financial crisis in Europe and the sluggish U.S. economy, but he remains optimistic.
“I have a positive outlook for this fiscal year overall as well as the medium to long term,” he said.
Demand in emerging countries will expand, and the Chinese market, where more middle-class people are purchasing vehicles, will continue to grow, he said.
“In Japan, people say that the auto market has matured, but it’s a complete misunderstanding,” he said, adding that the market has been increasing about 4 percent on average over the past 20 years and growth will continue.
On the likely power shortages this summer, Toyoda said the auto industry isn’t planning to shift holidays to help reduce peak demand on weekdays, like it did last year.
The auto industry took Thursdays and Fridays off and worked Saturdays and Sundays last summer, but this placed a lot of burdens on employees, business partners and customers, he said.
In addition, Toyoda said JAMA will keep promoting Japan’s participation in the U.S.-backed Trans-Pacific Partnership, while also planning to urge the government to abolish automobile acquisition and weight taxes to reduce the cost of owning a car.
Honda’s Indonesia plant
Honda Motor Co. held a groundbreaking ceremony for a new vehicle plant on the outskirts of Jakarta on Monday, eyeing the start of operations in 2014 to triple its annual production capacity in the country.
The company is investing 3.1 trillion rupiah, or roughly ¥25 billion, in the Karawang plant, as other Japanese automakers are similarly expanding production in the emerging economy.
As Indonesia’s middle class expands, the country has become the largest auto market among the Association of Southeast Asian Nations and in 2011 new car sales there totaled 890,000 units, more than what was sold in Thailand.
Suzuki India investment
Suzuki Motor Corp. says it will spend 40 billion rupees to build its third plant in India to meet growing demand.
The car plant in the northwestern state of Gujarat will have an annual output capacity of 250,000 units and start operating by 2016, according to Suzuki.
Suzuki currently has two plants in the country, with an annual auto production capacity of 1.5 million units. One of the two will boost its capacity by 250,000 units by the middle of next year.