Toyota Motor Corp. CEO Akio Toyoda said the strong yen, the European situation, and slowing automobile demand in the U.S. are among concerns facing Japan’s car industry.
“In the short run, the European economy and a possible slowdown in the recovery of the U.S. auto market is a concern,” though he’s optimistic on the outlook for the year, Toyoda, told reporters in Tokyo today. The yen is also a “major concern,” he said.
The strong yen is a troubling issue for Japan’s car makers since it erodes the value of profits earned overseas and reduces the price competitiveness of their export vehicles.
“Logically, the yen should weaken. If there was no exceptional circumstances, particularly [like those] happening in Europe or other countries of the world, we wouldn’t see the yen at 80 [against the dollar], it would probably be at 84 or 85″ to the dollar,” Nissan CEO Ghosn said.
The yen has climbed about 5 percent against the dollar from this year’s low in mid-March, weighing on export sales and profits for manufacturers as the government seeks to sustain a rebound in the world’s third-biggest economy.
Japan spent a record 8 trillion yen ($100.6 billion) in unilateral intervention in the currency market last Oct. 31, when the dollar hit a record low of 75.31 yen, and another 1 trillion yen in early November on undeclared forays into the market.
Authorities have stayed out of the market since then but are quick to express their discomfort when the yen starts rising, because it threatens Japan’s export-focused economy.
It takes about 78 yen to buy $1 today. In 1985, it took about 250 yen. That was the year the U.S., France, Germany, the U.K. and Japan met in New York and reached what became known as the Plaza Accord. The agreement was aimed at strengthening the yen and weakening the U.S. dollar as a way to curb Japan’s export juggernaut.