
Japans currency rose to a 14-year high against the dollar last week, prompting fears that the island nation’s exports could be dramatically affected. And no firm stands to lose as much Toyota, which had been operating under the highest assumed exchange rate of any of Japan’s auto exporters. Reuters reports that ToMoCo had pegged the rate at 90 yen to the dollar, some five yen higher than rivals Honda and Nissan. With the Yen trading at 86.29 to the dollar, that assumption could add up to big losses: Toyota reckons that for every one yen drop against the dollar, operating profits will decline some 30b Yen due to the fact that it exports over half of its Japanese-made automobiles, most of which head to market in the US. Aizawa Securities analyst Toshiro Yashinaga explains that Toyota, more than any other Japanese firm, is riding the razor’s edge.
Carmakers that issued big profit warnings last year have set cautious forex assumptions this time, so roughly speaking the current rates are within expectations. But there are views that the dollar could sink even further in 2010, to the 70s (yen), and in that sense Honda and Nissan, which are relatively strong in emerging markets, are in the winning camp
Japan’s government has thus far resisted calls to intervene in the Yen’s exchange rate. As if Toyota’s heavy exposure to the moribund US market weren’t bad enough, exchange rate uncertainty could make Toyota’s second-straight loss even worse than expected when the firm announces its fiscal year-end results in March.
Recent Comments
Scoutdude - Those Chinese bumpers will likely loose their chrome or start rusting like crazy in only a couple of years and even brand new it...
Landcrusher - No, I in no way even implied that. You could demilitarize DARPA, whatever. Besides...
86SN2001 - Warning, threat…….whichever works I guess.
porschespeed - Hokey smokes Batman, I may be an acerbic ass, but that I have no particular issues with JB nor grey market anything....
Luke42 - Do you really want American R&D to be an entirely military enterprise? The DARPA...
Compaq Deskpro - My Crown Vic gets better mileage.
doctor olds - @HDC- The Japanese market is essentially closed and the proof is that the largest selling import brand captures only a couple percent of the market. It is not just...
highdesertcat - Well, we can agree to disagree. My beliefs are hardly my own. The reason I made a comment on this thread is because I believe that GM’s stock price being...
highdesertcat - I lost part of my text — beyond my control. Nobody wanted to take GM as a whole entity and that’s why the government stepped in and bailed them out....
doctor olds - @HDC- Studying under a prof who himself is very unlikely to have any real world auto experience and reading about the sector does not change my assumption about...