Toyota: Low Yen A mixed Blessing
TOKYO, Dec 25 Reuters reported that Toyota Motor Corp President Fujio Cho said on Tuesday that the yen's current malaise was likely to continue for several months, but was not necessarily good for the giant exporter's business.
The Japanese currency marked Christmas by falling to new three-year lows at 130.95 per dollar and has slid some nine yen again the dollar since the middle of last month.
A weaker yen is normally a boon for Japanese automakers like Toyota, not only making exports cheaper but also boosting profits by inflating the yen value of income earned abroad when it is repatriated home.
But speaking at a launch of two sedans for the domestic market, Cho said the yen's weakness was also a worry because of its implications for stock prices and its potential to raise procurement costs.
``We're not really waving our arms with joy about this,'' he told reporters, noting that Japan's car industry had long said an exchange rate of 110-120 yen to the dollar was appropriate.
He put the yen's lack of strength down to continued restructuring by Japanese companies and the need for structural reform.
Other Toyota executives have said they are more worried about what a weak yen implied for the long-term prospects for Japan's economy rather than any short-term benefits for the nation's largest automaker.
Cho added that most of Toyota's cars sold in major overseas markets like the United States were now made locally and that the yen's weakness now only affected lower volume models that were manufactured mainly in Japan.
Toyota has forecast a 10 percent fall in group exports to 1.57 million vehicles in 2002 due to a greater shift of production offshore, but some analysts say the automaker deliberately underestimates the politically-sensitive number.
It remains to be seen whether the rapid softening of the yen will evoke greater cries of unfair price advantage fom U.S. automakers as they head into a extremely tough year in which sales are expected to plunge with the end of zero-interest financing campaigns.
Two months ago at the Tokyo Motor Show, Rick Wagoner, chief executive of General Motors Corp, said that although he was more worried about a weak euro and weak won which helps German and South Korean automakers, he was not pleased with intervention by Japan that had helped lower the yen.
At that time, the yen was trading at 122 yen to the dollar, It is now trading at about 124 yen to the buck..
Aiming to strengthen its already strong grip on Japan's sedan market, Toyota launched two remodelled medium-sized sedans -- the Premio, formerly known as the Corolla Premio and the Allion, formerly called the Carina.
It aims to take its market share of the medium-sized sedan segment to 55 percent from 45 percent.
Sales targets were set at 3,500 vehicles per month for each vehicle, with the Premio listed from 1.62 million yen ($12,390) and the Allion from 1.59 million yen.