Kia Sees Weak Yen as ‘Weapon’ for Japanese Automakers image

A senior executive at Kia said that the weakening yen becomes a ‘weapon’ for automakers in Japan, making them tougher competitors.

“The weakening yen reinforces the Japanese competitors, ” Kia Motors Corp. Vice President Lee Soon Nam told reporters today at the Seoul Motor Show. “The weakening yen will become the Japanese automaker’s weapon, they now have reinforcements.”

Over the past six months the yen has weakened 17% against the won, making South Korean exports cheaper compared with its Asian rival. Yen’s drop has increased since October 31st, due to Japan’s Prime Minister Shinzo Abe strategy to help the world’s third-largest economy.

Back in January, Hyundai’s CFO Lee Won Hee said that a weak yen gives Japanese automakers the possibility to aggressively expand in markets where the Korean automakers compete, such as Russia and Australia. If the yen continues to drop Hyundai’s profitability will be affected.

Toyota, which is the world’s largest automaker, sees auto demand in the US this year reaching 15.3 million vehicles, up 5.5% compared with 2012. Since 2008, Hyundai managed to increase sales in the US by 75%, expects 2013 to bring the lowest annual growth for the past five years as it confronts with limited plant capacity.