Despite the riproaring profit numbers, there is trouble in Toyota City. The ever appreciating yen is gobbling up ToMoCo’s profits. Message from Toyota to the Japanese government: “Do something, or we leave.”
Reports The Nikkei [sub]: “In comments that appeared to be aimed at Japanese currency authorities, Satoshi Ozawa, Toyota’s chief financial officer, said the carmaker might move more production outside Japan if profits in the six months to March declined further than expected.”
Translation: Bring the stronger and stronger yen in check, or you’ll be writing unemployment checks instead. Koji Endo, an automotive analyst at Advanced Research Japan already says that Toyota’s carmaking business is losing money, while their financing business is bringing in the bacon.
According to The Nikkei, “the warning, delivered at a quarterly earnings briefing in Friday, will add to pressure on the government over the yen’s ascent toward a 15-year high against the dollar. Akio Toyoda, Toyota’s president, last month called the surge a “big problem” that threatened all of Japanese industry.”
Now before the contingent that hasn’t passed currencies 101 yells “currency manipulation,” here a short primer. There is “currency manipulation,” there is “quantitative easing,” and there is “central bank intervention.” Just like with terrorists and freedom fighters, it depends on which side you are on. Maybe the Japanese should ask Bernanke on how to weaken a currency. He’s quite good at it at the moment. Recently, the stronger yen was a function of the weaker dollar.