Is This Currency Crash a Big Risk to U.S. Automakers?
Some U.S. automakers, researchers, and policymakers have argued that Japan’s “beggar thy neighbor” policies “distort trade by cheapening the value of the yen to promote economic growth in Japan at the expense of its trading partners.” Matt Blunt, president of the of the American Automotive Policy Council, which represents GM, Ford, and Chrysler, told Detroit News that “these types of policies have inflicted tremendous harm on the U.S. economy, and especially our manufacturing sector, in the past. We urge the Obama Administration to make it clear to Japan that such policies are unacceptable and will be met by reciprocal measures.”
The threat of the weak yen amplifies concerns about GM’s sales volume for 2013. Already bumped down to second-largest automaker in the world by Toyota, GM has cited weakness in Europe and more modest domestic sales as trends for this year. Presented with an advantage through the weakness of their currency, Japanese automakers would press the advantage and continue to take U.S. market share at the expense of American manufacturers. Understandably, Ford and GM want to avoid this. Japanese auto companies are urging their government to push for as much as 100 yen per dollar.
GM ended last week lower than it started, while Ford was essentially flat.
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