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UK Faces Car Crisis by the "Pound"

5 July 2000

    London - Following on the heels of Nissan's rumored financial aid package 
from the British government, Toyota Motor Corporation announced on Tuesday it 
would also ask for aid to help cope with the pound's strength.

    The pound's high value versus the Euro and other European currencies has 
been making sourcing parts and building vehicles in the UK for export too 
expensive.  The UK has often been the country of choice in Europe to do both by 
many import brand carmakers.  However, Asian, European and US carmakers are 
strongly rethinking that position, and as in the Nissan and Toyota instances, 
Tony Blair may have to dish up some steep incentives and/or cold cash to 
maintain the status quo.

    Japan top automakers, Honda, Nissan and Toyota reported their European 
operations in the red during the business year ended in March and said they 
expected another money-losing year.  Blame is laid on the strong pound.

    Reuters reported that Toyota Executive VP Tadaaki Jagawa told them, 
"It is a severe situation and it is hard to do business when you don't 
know what is going to happen (whether the British will accept using the Euro)."  
Mr. Jagawa's statement was made after the Sunday Times newspaper claimed that 
the British government was preparing a $150 million aid package for Nissan 
to secure future investment in its Wearside plant, in Northeast England.

    Nissan executives declined to confirm or comment on the Sunday Times report.  
But, on Tuesday, the Times reported that the Britain's ambassador to Japan 
had warned Blair that Japanese companies would pull out of Britain unless they 
were assured it was on track to join the single currency.

    Land Rover is said to also be threatening a change in their British based 
sourcing and manufacturing.


MJR