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.”

What ever happened to the fabled Japanese job security? Instead of kaizen (continuous improvement), there is continuous change. A week ago, The Nikkei [sub] predicted that Toyota will cut its sprawling board from 27 members down to a more manageable 10-15. The announcement will most likely come at a press conference on March 9. The announcement hasn’t even been made, and Honda is already following suit by reducing its number if suits.

Honda said today it will prune its board to 12 members from currently 20. The idea is to speed up decision-making, says Reuters.

The shake-ups will filter down to the ranks. Also on the 9th, it is expected that Toyota will announce that it will shift 100 of its roughly 1,000 domestic sales personnel to emerging market work.

The reassigned staffers “will work out of Japan for the time being, making trips to local markets as needed.” They are supposed to light a fire under emerging market sales.

“Toyota enjoys a nearly 50 percent market share in Japan but has lagged behind foreign rivals in emerging countries,” says a a finger-wagging Nikkei. “In Brazil, which overtook Germany to become the world’s fourth-largest auto market in 2010, its share amounts to just 3 percent. And in China, now the world’s biggest auto market, it has a share of 7 percent.”