The 6 big hurdles facing Japan's automakers

TOKYO -- Time was when "endaka" -- the Japanese term for the yen's export-scalping appreciation against the dollar -- was the biggest boogeyman facing this country's automakers.

But there is a new buzzword on the lips of every executive these days -- and one more fitting of the turbulent times: Rokujyuku (pronounced "row-koo-joo-koo").

Roughly translated as the "six big hardships," it encapsulates all that's wrong in the economic funk facing Japan and its automakers in particular.

Not surprisingly, endaka tops the vexing sextet. But as painful as the yen may be, it is hardly the only problem burdening Japanese car companies. Rounding out the list:

  • High corporate tax rates that eat into profits.
  • Electricity shortages following the March 11 earthquake.
  • Japan's lack of bilateral free-trade agreements, in contrast with rival South Korea.
  • An inflexible job market that keeps wages high and jobs secure.
  • The government's goal of cutting carbon dioxide emissions 25 percent by 2020.

With all these "headwinds," it is little wonder auto executives bemoan the challenge of getting back on track after the quake and competing full-strength against a resurgent Detroit 3 and Hyundai-Kia juggernaut, not to mention Volkswagen's designs on being the global No. 1.

Nissan COO Toshiyuki Shiga, who also serves as head of the Japan Automobile Manufacturers Association, best summed the spiraling angst at a recent press conference.

At the time, a key cause for unease was South Korea's new free-trade agreement with the European Union. It took effect July 1, while Japan's efforts to ink similar deals have fallen flat.

"In addition to the stronger yen, the start of the FTA will make the uphill battle even harder," Shiga said. "It feels really frustrating to see Japanese manufacturers with a handicap in areas that are not essential factors for competition, such as the quality of vehicles."

Japan's six economic hurdles unquestionably cast a chill on business sentiment here.

But whether the country's sclerotic, revolving door government -- which just tapped its sixth prime minister in five years -- has the stomach to broach reform is another question entirely.

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