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Strong yen vs. dollar is boon for automakers
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More from CarsBy Joe Guy Collier, Detroit Free Press
DETROIT — U.S. automakers should benefit as the value of the yen continues to rise compared with the dollar, slowly erasing a competitive advantage for the Japanese companies, industry officials said recently.
A weak yen boosts profits for Japanese cars sold in the United States. Toyota Motor Corp. reported earlier this month that favorable exchange rates increased its income by about $1.3 billion for April through September.
U.S. automakers contend that the Japanese government has manipulated the yen to keep its value down, helping its companies sell more cars and make more money in U.S. exports.
General Motors Corp.'s chief economist, Mustafa Mohatarem, said the recent strengthening of the yen relative to the dollar was positive for Detroit.
"I think overall from the U.S. manufacturing perspective, the U.S. industry perspective, this is a welcome move and long-due move," Mohatarem said.
An artificially low yen gives Japanese companies an edge over competitors, he said. "They have a profit advantage, which they can use however they choose," Mohatarem said.
The concern for U.S. automakers going forward is that the Japanese government will take actions to lower the yen's value, said Stephen Collins, president of the Automotive Trade Policy Council, Washington, D.C.-based trade association representing GM, Ford Motor Co. and Chrysler LLC.
Japanese Prime Minister Yasuo Fukuda told the Financial Times last week that he believed the yen was rising too fast, hinting that action could be taken.
Intervention by the Japanese government could reverse the current trend and leave Detroit on the short end again, Collins said.
"The economic fundamentals are beginning to work as the yen strengthens," he said. "That's our message to the Japanese government. Let the market do its job."
(Distributed by McClatchy-Tribune Information Services.)
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