Is This Currency Crash a Big Risk to U.S. Automakers?
Every one yen drop against the U.S. dollar boosts Toyota’s (NYSE:TM) operating profit by $391 million dollars, reports Bloomberg. That bottom-line bump allows them to offer buyer incentives at a tremendous advantage to its American auto counterparts — a.k.a the Detroit Three. With that in mind, the value of the yen has fallen tremendously over the past few months, with the dollar trading for 78 yen in July, and 90 yen in January.
The situation understandably has American manufacturers against a wall. General Motors (NYSE:GM) and Ford (NYSE:F) both saw their market shares shrink last year as the overall market grew at a healthy rate around it. GM fell from 19.6 percent of the U.S. market in 2011, to 17.9 percent in 2012, while Ford fell from 16.8 percent to 15.5 percent. Chrysler increased its share from 10.7 to 11.1 percent.
Meanwhile, Toyota grew its market share from 12.9 to 14.4 percent, and Honda (NYSE:HMC) grew from 9.0 to 9.8 percent of the market. Nissan’s market share fell from 8.2 to 7.9. Concerned that the weak yen is handicapping their competitiveness, the Detroit Three have asked that the Obama administration to intervene…