Honda doesn’t agree that stronger yen gives Japanese carmakers an unfair advantage in the U.S.

Article by Christian A., on February 11, 2013

The Obama administration is facing pressure from U.S. automakers to oppose Japanese efforts to weaken the yen in order to give exports a boost. The companies are saying that this practice will damage the job market in the U.S. At the National Automobile Dealers Association convention, John Mendel, an American Honda executive vice president, remarked that the Detroit automakers’ claim that the stronger yen gives Japanese car companies an unfair advantage in the U.S. market "doesn't pass the sniff test."

He said that when the yen went from 115 to 75 and the Japanese automakers were on their “deathbed,” no one asked about their wellbeing. So he says that now, this is only a “relatively minor correction." According to a Reuters report last month, Matt Blunt, president of the American Automotive Policy Council, the Washington lobbying arm of Chrysler, General Motors and Ford, said that Japan is manipulating the currency and that this move makes it harder to add jobs in the U.S.

Mendel said that what Detroit is doing is treating politics as a “marketing tool.” At the J.D. Power International Automotive Roundtable, Mendel said that there’s no need to be alarmed about the present level of 90-plus yen to the dollar. He explained that Honda doesn’t get an unfair competitive advantage. He also cited that there are no complaints about the Korean won, which stayed at the same level for the last decade. He said that exchange rates don’t become a factor since majority of foreign automakers have high local production levels.

It only becomes an issue if the automaker exports 65% of its products. For many decades, Honda has produced 80% of the vehicles it sells in the U.S. in North America. Last year, this figure reached 90%. It will hit 95% when its Celaya, Mexico, factory opens in 2014.

The domestic-production range of Toyota Motor Sales U.S.A. has remained in the 70 to 75% range. However, smaller automakers like Mazda and Mitsubishi import all or majority of their vehicles. Mendel said that like other global automakers, the company had to handle its business while keeping track of numerous currencies, not only the yen-dollar ration but also the unpredictable currencies in Europe, Asia and South America

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