Toyota Motor Corp. (7203), which last year overtook General Motors Co. (GM) to become the world’s largest automaker even as its profit margins lagged behind the industry, is riding a weakening yen that has Detroit executives concerned.
The yen has fallen 17 percent against the dollar since Oct. 31 as Shinzo Abe, who became Japan’s prime minister in December, advocated for the decline to improve his country’s economy. The currency’s slide gives Toyota and other Japanese automakers a financial gain on every car, which they can use to cut prices, boost ads and improve products. Morgan Stanley estimates the currency boost at $1,500 per car, while the Detroit automakers contend the figure is $5,700 per vehicle.
“We’re concerned about what the long-term ramifications are,” Joe Hinrichs, Ford (F) Motor Co.’s North American chief, said last month at a Cleveland engine factory the automaker is expanding. “Our workers and our businesses should not be disadvantaged by governments intervening in currencies.”
Source
Bloomberg News