An executive from the world's largest automaker says the Japanese yen poses a threat to the U.S. auto industry. General Motors and officials from other U.S. carmakers want President Bush to discuss the weak yen when he visits Japan this month.
Speaking to reporters at the Chicago Auto Show, the president of GM's North American operations, Gary Cowger, said the yen's lower value against the U.S. dollar gives Japanese carmakers a huge cost advantage. Mr. Cowger said, "General Motors has made huge investments in new products and facilities and we have made tremendous improvements in productivity and cost-effectiveness, but it is tough to offset a 30 percent cost advantage that our competitors have gained over the past three years from the artificially low Yen."
Mr. Cowger says the Bank of Japan has spent more than $100 billion in recent years to keep the yen weak. The yen recently closed at a three-year low against the dollar.
General Motors has been joined by Ford and the Chrysler group in asking President Bush to appeal to the Japanese government to stop weakening the yen. Mr. Bush will visit Japan in about a week during a trip to several Asian countries.
Ford division president Jim O'Connor would also like to see a stronger yen. "We think it is worth at least $1,000 in improved profits or improved value or incentives to both the Koreans and the Japanese. That is a big factor," he said.
A weaker yen has the effect of lowering the cost of Japanese exports. General Motors says the benefit to Japanese carmakers is about $3,000 on a $20,000 vehicle. But officials from Japanese automakers say those figures are probably high.
Charlie Hughes is the president of Mazda's North American division. He said, "I don't think that is a very accurate statement because most of the Japanese car companies build cars in the United States, which does a great job of balancing the risk of currency [fluctuations], but takes away the opportunity to have a windfall if the exchange rates change dramatically."
The Bush administration has not yet responded to the U.S. automakers' request, but the administration will meet with domestic auto industry officials before the president leaves for Asia.