In addition to huge sales declines and subsequent losses in Europe, Ford Motor Co. (NYSE:F) is now being pressed in Asia as well, notably Japan. In a television interview, CEO Alan Mulally said that he and the company are concerned about the depreciation of the Japanese yen, which has put increased pressure on competition here in the U.S.
“The most important thing that most countries around the world believe in is letting the markets determine the currency,” Mulally said today from Bangkok in reference to the Japanese currency, during an interview on Bloomberg Television’s “First Up with Susan Li.” “That’s just so important to all of us in the international trading system.”
The yen has depreciated about 15 percent since last November, when the then still-campaigning Prime Minister Shinzo Abe pledged to depreciate the nation’s currency to bolster Japan’s exports, which the country’s economy relies on for stability. Natural disasters and stagnant economic climates worldwide have dented Japan’s exporting abilities, and to compensate, it is turning to currency devaluation to pick up business. Shares of Toyota (NYSE:TM), Honda (NYSE:HMC), and Nissan have increased as a result.
By letting the yen’s value slope downward, the profit margins for export sales increase, and allow the companies to drop their prices for the end user, causing anxiety among companies competing in international markets. The American Automotive Policy Council, backed by Ford, General Motors Co. (NYSE:GM), and Chrysler Group LLC, estimates that the currency advantage equates to about $5,700 per vehicle, Bloomberg reports.
Although Japanese imports could pose problems for the domestic manufacturers, automakers from all over the world have their sights trained on China, now the world’s largest automotive market. Ford has been looking to the area for some relief from other regions like Europe, where the company is expected to post a $2 billion loss for 2013.
Mulally thinks Asia will probably generate about 40 percent of Ford’s sales by the end of the decade, with the Americas and Europe accounting for the rest. Sales in China alone surged 46 percent in the first couple of months of this year.
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