A weak Japanese yen contributed to a significant 13.7 percent increase in exports from Japan during the first six months of 2007. Over 135,000 more cars came to the United States from Japan in the first half of ’07 than the same time period in ’06, while production of Japanese cars in the U.S. only increased by 2 percent.
Some high demand cars, like the Toyota Prius , are built in Japan, not the U.S, according to The Detroit News. The weak Japanese yen makes it very profitable for cars to be built in Japan and sold in the U.S. – more so than the cars that are built within U.S. borders.
Critics say that the Japanese carmakers are using the undervalued yen to their advantage, but Toyota , among others, has said that it is increasing its production of cars in the U.S. as well. A Toyota spokesman told The News that Toyota intends to build 600,000 more cars in the United States by 2010 than it is currently building. Toyota said that it doesn’t plan where it will build cars based on currency projections.
The Japanese government has repeatedly denied that it is intentionally manipulating the yen, which has traditionally been undervalued.
The low yen value increases the cost of importing a car into Japan for U.S., Korean and European automakers. But low currency values in China have helped U.S. automakers gain a significant foothold in the fast-growing auto-buying economy.
