Autoblog

Nissan's Ghosn urges Japan's new PM to stabilize yen, patch things up with China

Jonathon Ramsey — Thu, 03 Jan 2013 18:32:00 EST

Filed under: China, Etc., Government/Legal, Japan, Plants/Manufacturing, Nissan, Earnings/Financials

Shinzo Abe was sworn in as Japan's new prime minister - its seventh in six years - barely a week ago. To count him as the seventh PM is a bit disingenuous, in fact, since he was the prime minister in 2006 and 2007 but had to retire due to medical issues. His return came after a campaign that stressed repairing the nation's economic issues - a platform that should give you an idea of the issues Japan has had at the top step of its government. Chief among the nation's woes? An economy still suffering from two decades of deflation and, more recently, a yen that is gaining so bullishly that it's tearing up the china shop.

Yet even before he took office, Renault-Nissan CEO Carlos Ghosn had a message for prime minister Abe: "Please bring [the yen] back to the neutral territory so that we can do our job without a handicap." By "neutral," Ghosn was referring to an exchange rate of one dollar to 100 yen, by "our job" he meant Nissan's ability to build cars for export on the island nation even though Bloomberg posits that it already produces 75 percent of its units outside of Japan.

Above that neutral territory, production in Japan begins to get massively more expensive with every incremental rise in the yen; right now the 100 yen is about $1.15 - and that's after a ten-percent drop over the course of 2012 - and Bloomberg calculates that every single-digit increase in the yen's value against the dollar robs Nissan of $232 million in yearly operating profit. Just down the coast in Toyota City it's even worse - Bloomberg figures each single-digit increase in the yen costs Toyota $402 million every year.

Nissan is one among all the Japanese makers monitoring tensions in China, too. A territorial dispute last year caused Chinese buyers to shun Japanese cars to such an extent that overall car sales fell in China and Japanese automakers cut production and sales forecasts in the world's largest auto market. Ghosn was less pointed in his comments on the matter, saying only that if the antagonism keeps up then "obviously we will have to reflect it in our long-term plans." It was Akio Toyoda's comments, however, that were probably a good reflection of the private wishes of the new prime minister: "I want it to be a peaceful year where nothing goes wrong."

Nissan's Ghosn urges Japan's new PM to stabilize yen, patch things up with China originally appeared on Autoblog on Thu, 03 Jan 2013 18:32:00 EST. Please see our terms for use of feeds.

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Ford developing way to make car parts from cash

Autoblog Staff — Mon, 23 Apr 2012 07:57:00 EST

Filed under: Technology, Ford

Ford is looking to put a new twist on the term "old money." The automaker may add old, shredded, out-of-circulation U.S paper currency to its list of recyclable materials that may be used for cushions, insulation and other components.

With about 10,000 pounds of paper money being shredded per day, Ford is exploring adding it to a list of recyclable or reclaimed materials that includes soybeans, denim and plastic bottles.

Ford has cut its petroleum use by about 5 million pounds a year by using soy-based material for foam that is installed in seat cushions and head restraints. And each Ford Fusion is built with the denim-equivalent of about two pairs of blue jeans that's used for sound-dampening purposes.

Ford started looking into using recycled materials about ten years ago as a way to cut use of petroleum in components that usually require plastic. At that time, oil cost about one-seventh of what it costs now.

In January, the company said it would use recycled plastic bottles from the North American Auto Show in Detroit and the Consumer Electronics Show in Las Vegas to create part of the polyester fiber used in the Ford Focus Electric's seats.

Continue reading Ford developing way to make car parts from cash

Ford developing way to make car parts from cash originally appeared on Autoblog on Mon, 23 Apr 2012 07:57:00 EST. Please see our terms for use of feeds.

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Toyota urges suppliers to slash prices or be left behind

Chris Shunk — Mon, 10 Oct 2011 16:31:00 EST

Filed under: Government/Legal, Japan, Honda, Nissan, Toyota, Earnings/Financials

For years, Detroit automakers would argue that the Japanese yen was artificially devalued, and that the value of the currency was a big competitive advantage to the likes of Toyota and Honda. To erase this gap, The Detroit Three pressured suppliers to lower costs in any way possible, which caused ill-will within their supply bases. In fact, Japanese automakers routinely scored higher in supplier relation studies, while General Motors, Ford and Chrysler hovered at the bottom of the list.

One massive global recession and a fast-rising yen later, it appears that the shoe is on the other foot. Automotive News reports that Toyota has made it clear to its 219 largest domestic suppliers that costs must be cut or business will be lost to countries with cheaper labor.

Toyota reportedly loses $343 million in profit for every one yen the currency rises against the dollar. Given that the Japanese currency has risen by 13 versus the dollar over the past year, Toyota could be looking at a staggering $4.5 billion in losses. For perspective, that's more than half of Toyota's total research and development spending for any given year. Ouch.

And Toyota isn't alone in looking for ways to combat the rising yen. Honda recently announced that it was going to build more vehicles outside of Japan. Nissan CEO Carlos Ghosn recently asked the Japanese government to adjust the issue of the rising yen, or risk losing a great deal of the country's industrial base.

Given its currency conundrum, we can't blame Toyota for looking for more cost-effective ways to build vehicles. But when GM, Ford and Chrysler were in the same predicament, corners were cut and many vehicles were less competitive than they could and should have been. As a result, The Detroit Three had to add heavy incentives just to move product and their reputations suffered. Here's hoping history doesn't repeat itself.

Toyota urges suppliers to slash prices or be left behind originally appeared on Autoblog on Mon, 10 Oct 2011 16:31:00 EST. Please see our terms for use of feeds.

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GM's Wagoner joins chorus blaming weak yen

Eric Bryant — Thu, 08 Jun 2006 08:59:00 EST

Filed under: Government/Legal, Japan, Earnings/Financials

General Motors CEO used the bully pulpit at GM's annual shareholders' meeting to repeat a complaint that has been made several times in the past few decades (and will likely will be heard many times again) - the Japanese government is artificially holding the value of the yen low relative to the dollar to help its exporters. The same complaint was recently issued by Chrysler's Tom LaSorda as well. A lower value for the yen makes it easier to stick a lower price tag on an auto that's imported from Japan; or, alternatively, it makes the sale of that vehicle more profitable at the same price.

The yen has experienced two significant slides in value relative to the dollar twice in the past ten years, but at this time it is close to trading near its strongest position over the same time period. While the Big Three do not enjoy the same relationship with their government as the Japanese automakers, it's unclear whether the Hill's financial policy of large federal and trade deficits would allow any significant manipulation of the dollar's value, even if the feds wanted to help the automakers.

[Source: Forbes]

GM's Wagoner joins chorus blaming weak yen originally appeared on Autoblog on Thu, 08 Jun 2006 08:59:00 EST. Please see our terms for use of feeds.

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Yen rate gives Japanese automakers unfair advantage, Chrysler's LaSorda says

Erin Mays — Sat, 03 Jun 2006 15:04:00 EST

Filed under: Trends, Government/Legal, Japan, Chrysler, Earnings/Financials

At the Mackinac Policy Conference in Michigan on Thursday, Chrysler president and CEO Tom LaSorda said he plans to call on George W. Bush to confront Japan about an artificially low yen rate that he maintains unfairly allows Japanese automakers up to a $3,000 advantage per vehicle over their American counterparts. LaSorda said that he, Rick Wagoner and Bill Ford plan to raise this topic, along with health care and energy policy, with President Bush in a meeting scheduled for later this month.

LaSorda drew attention to the 1.8 million Japanese vehicles that are still being imported into the United States, and although this number has decreased since years past, parts imported from Japan continue to exacerbate the issue.

[Source: Reuters]

Yen rate gives Japanese automakers unfair advantage, Chrysler's LaSorda says originally appeared on Autoblog on Sat, 03 Jun 2006 15:04:00 EST. Please see our terms for use of feeds.

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