2010 Toyota Yaris – Click above for high-res image gallery

Either the strength of the dollar has hit a new low or the Japanese yen has reached an unpredicted high. Regardless of how you look at it, the yen-to-dollar exchange rate has forced Toyota to reconsider exporting its fuel efficient, bargain-priced Yaris subcompact and Corolla compact to the U.S. with claims that the process would be unprofitable.

Luckily, Toyota has restarted construction at it Tupelo-area plant, with reports suggesting that the company will build the perennially hot-selling Corolla there starting late next year, but that still leaves us wondering about Toyota's immediate plans for both vehicles. Atsushi Niimi, Toyota's executive vice president for global manufacturing, told reporters that the company is looking into the feasibility of profitably building the Yaris in the U.S. Niimi said:
Given the current exchange-rate situation, it isn't feasible, in terms of a business model, for us to produce Corolla or Yaris in Japan and export them. We're working very hard to reduce costs to maintain the appeal of these cars.
So, it looks like Toyota is faced with a problem that has several possible solutions. The company could retool a U.S.-based plant to produce both models, it could increase the MSRP of its budget-priced vehicles, or just take a hit on each Yaris and Corolla sold, while making up for the loss with higher-priced offerings. Which path would you choose?

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