By on September 14, 2012

The strong yen is putting a major crimp on auto maker profits, and now, Japan’s auto lobby is asking the government to do something about it.

Akio Toyoda, head of both Toyota and the Japanese Auto Manufacturers Association (the lobby group in question), released a statement on behalf of JAMA members, stating

“The current foreign exchange level, which is far from the actual ability of the Japanese economy, goes much beyond the limits of what companies can do through efforts to cut costs.┬áJapan’s manufacturing is facing a great crisis again, and if things remain this way it could have a further impact on employment,”

TTAC readers know that the current manufacturing climate in Japan is defined by a word letter word/acronym: GTFO. Nissan and Honda are looking to move their export production out of Japan, preferably yesterday. Toyota has committed to building 3 million vehicles in Japan annually, but that hasn’t stopped them from moving production of the Lexus RX and Toyota Yaris to other locales. Even Subaru is able to assemble vehicles at their Indiana plant, while Mazda, which designs their vehicles to be profitable at unfavorable exchange rates, is setting up shop in Mexico.

As if kuruma banare wasn’t bad enough.

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21 Comments on “Japanese Auto Lobby Wants Yen Intervention...”


  • avatar
    mike978

    How does “Mazda, which designs their vehicles to be profitable at unfavorable exchange rates” ? If they can do, why don`t the other major Japanese companies do it?

    Also shouldn`t the market decide whether “The current foreign exchange level, which is far from the actual ability of the Japanese economy”. The market seems to think it is acceptable. If companies in other countries wanted their Governments to intervene you would hear complaints on TTAC (by the B&B as well as some editors) that we should leave it to the market.

    • 0 avatar
      danio3834

      Agree completely. You may hear other agruments as you sometimes do in Canada, “well other countries do it, so should we”. Of course 2 wrongs don’t make a right and will only end up hurting other groups while benefiting a few special interests. Stay out of it.

    • 0 avatar
      DC Bruce

      More to the point, with a large economy such as Japan’s how successful is market intervention, in the long term? It would seem rather that an examination of fiscal and/or monetary policy would be in order because those, especially monetary policy, have a great effect on exchange rates. High US interest rates (engineered by the Federal Reserve to get inflation out of the market) in the first part of the 1980s made the U.S. dollar very “strong” which helped Japan penetrate US markets.

    • 0 avatar
      rnc

      designing your cars to be profitable at unfavorable exchange rates might have something to do with Mazda’s recent sales history (if I recall correctly, last time Mazda turned a positive Operating Income was when fields was the CEO).

  • avatar
    APaGttH

    US auto industry asks for policy change to improve business = bad

    [INSERT COUNTRY OF CHOICE OTHER THAN US] asks for policy change to improve business = a short blurb

    Last I heard Honda and Toyota were making record profits, strong Yen and all, nothing to see here people, keep moving along.

    Let the feast of a thousand popcorns begin!

    • 0 avatar
      el scotto

      @ APaGttH Let the feast of a thousand popcorns begin!You need to trademark that.

    • 0 avatar
      KixStart

      Devaluing the dollar is nothing new…

      http://www.motherjones.com/kevin-drum/2011/10/ronald-reagans-legacy

    • 0 avatar
      challenger2012

      It seems that GM and Chrysler are not alone in asking for government help. But when GM and Chrysler asked, they actually needed it. How it is that the Japanese government, with the Number 1 Auto Maker in the world, Toyota, is being asked for financial assistance? And where are the American Right Wingers on this? Where is the outrage? GM and Chrysler were on their death bed, yet we were told to give them the death penalty. Japan Inc, with Toyota #1 asking for government intervention, not a peep from the GOP.

  • avatar

    Certainly, Honda and Toyota will go on to make record profits, although not necessarily in Japan.

  • avatar
    nickeled&dimed

    Bertel, have you copyrighted “Yen-tervention” yet? Should be tag line on all Yen policy related posts.

  • avatar
    L'avventura

    The reason the Japanese are asking their government for yen intervention is because both the US and China have announced massive stimulus plans that would weaken their respective currency.

    The US announced QE3 (printing money/increase in money supply=weaker dollar) and China announced a 1 trillion RMB stimulus plan in face of fragile Chinese market.

    The thing is, like the US, politicians cannot directly intervene in the yen. Checks and balances are in place to temper the federal reserve from merely writing politicians a blank check. The DPJ in Japan have had a rough time getting the BOJ to increase money supply even in the wake of the 3/11 earthquake/tsunami.

    Right now though, Japan needs to bail on Japanese production. Its good for Japanese companies, even if its not good for Japanese jobs.

    As they’ve done this, Japanese companies have gotten incredibly competitive in the last couple years. Finally, we’re seeing competitive products again from Japanese brands as they’ve made a production exodus from domestic factories.

  • avatar
    L'avventura

    It looks likely Japan that will intervene in the yen according to the WSJ:
    http://online.wsj.com/article/SB10000872396390444709004577650632272233176.html

  • avatar
    jz78817

    “while Mazda, which designs their vehicles to be profitable at unfavorable exchange rates,”

    are we talking about the same Mazda which hasn’t been profitable since 2007?

  • avatar
    84Cressida

    Would the Yen being more manageable mean that Toyota and Honda could actually start putting good interiors and features in their non Lexus/Acura cars again without losing their shirts?

  • avatar
    John

    Wow. The lack of economic and historical/cultural knowledge on this board is staggering. Ascribing a quotation of Chairman Mao to the Japanese – really!

    It’s called “A race to the bottom”, folks.

  • avatar
    RobertRyan

    Similar problem to what the Australian car industry is facing. The High Australian Dollar is creasting havoc.

  • avatar
    burgersandbeer

    “Mazda, which designs their vehicles to be profitable at unfavorable exchange rates,…”

    Is this a euphemism for taking cost-cutting shortcuts everywhere imaginable?

  • avatar
    Detroit-X

    Okay.

    Well… to Hell with the Japanese Auto Lobby.

  • avatar
    doctor olds

    Conversely, the non-German caused weak Euro is benefiting the strong German economy.


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