Strong Yen Spells Big Trouble For Toyota
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.
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The weaker the dollar less it buys. That $200 Blu-Ray player now costs $240 (or stays at $200 rather than dropping to $160). A weak US dollar means reduced buying power
STEVEN02, here is the link for Toyota's october sales. That's where the 34% comes from: http://pressroom.toyota.com/pr/tms/document/October_2009_Sales_Chart.pdf Also, once the ongoing Tacoma project is completed in Texas, that plant is going to have to run overtime to satisfy the demand for Tundras and Tacomas.
Sorry Pete, Unless you are buying anything made with petro-chemicals or made outside the US. I picked a Blu-Ray player as it is most certainly going to be manufactured and imported from the east. Would you prefer toaster? Car? TV? Steel? Etc.