Editor’s note: While our erstwhile Editor-in-Chief, Edward Niedermeyer, is on sabbatical, he will continue to weigh in on automotive issues in a (hopefully) weekly column entitled Blind Spot. This is the first installment.

Back in 2008, as the worlds of automobiles and politics headed towards a dramatic collision, the founder of this site and I had a series of conversations about political perspectives on automobiles. Though these conversations were wide-ranging, I kept coming back to the same conclusion: for all of the talk about guns as “tools of freedom,” it seemed to me that cars were even more worthy of the title. After all, most people use an automobile in the pursuit of freedom and mobility every day, whereas guns are (relatively) rarely used to secure individual rights.

But embracing the car’s role as a tool of freedom raises a number of troubling questions, most of them inherent to the very cause of liberty. Though cars make us more free as individuals, we must recognize that it comes at the cost of (among other things) dependence on gasoline, an “addiction” that many now seek freedom from. As new energy sources and mobility concepts become available, citizens will have to navigate a complex thicket of issues as they seek to maximize the freedom that personal mobility offers.

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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.

Ever get the feeling that the car game is dealing with some malaise? Dieter Zetsche sure seems to. “The definition of luxury will be somewhat different,” Doctor Z tells the Wall Street Journal. “It will be fewer CO2 emissions and more modesty in appearance.” And this from the company that sells cars on the back of a brand dripping with immodesty and ostentation. But no matter, the decision has been made: Zetsche wants to chase what the WSJ terms “Americans’ growing interest in downsized models that offer upscale features and finishes.” Wait, growing interest? The MINI sells decently, but the A3 (fewer than 3k units sold year-to-date) and 1 Series (fewer than 10k units year-to-date) are hardly setting the luxury segment on fire. Damn the torpedoes, people want green modesty, and Zetsche’s going to give it to them with four compact models planned for the US sometime after 2011.

For sure, there will be another B-class, which will be pretty similar, address the same customer as the B-class today. The three other body styles clearly intend to target additional and different segments from the one that we can target today, including gender barriers.

Smaller, greener and more identity-politics-y. That sounds like just what the luxury market has been begging for! And we haven’t even started in on the cost-cutting yet.

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