Strong yen puts cloud over Tokyo auto show
Source: Agencies |
December 1, 2011, Thursday
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Print Edition
Print Edition
JAPANESE automakers unveiled futuristic concepts, such as car-powered houses and rechargeable sports cars, at the Tokyo Motor Show, but the stubbornly strong yen cast a pall over the industry, threatening their chances of keeping the lead in next-generation technology.
The biennial show, which this week, showcased the usual array of green cars, such as electric and fuel-cell vehicles, while top Japanese brands went further to depict how cars could eventually return stored energy to the grid.
The idea of capturing solar power or unused and cheaper night-time electricity in cars to power households has gained traction in Japan after the March earthquake and tsunami cut power to millions of households and triggered a nuclear power crisis.
But the strength of the yen, at about 78 to the dollar now, has eroded profits in Japanese automakers' domestic market, damaging global competition against rivals such as South Korea's Hyundai and Germany's Volkswagen.
Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets, said: "The biggest worry I have right now is, yes, Japanese automakers have a lot of excellence in technology and manufacturing, but will they keep that excellence?
"Building new technology requires money. If you are cash starved, your global competitors are not going to cut you any slack. If (Japanese automakers) do not change, there is going to be a slow erosion of competitive advantage they can ill afford."
Japanese manufacturers are wrapping up a year of unprecedented challenges, including the disasters at home and disruption from floods in Thailand, but the yen's appreciation against virtually all other currencies has posed the biggest headache.
Japan is known for its manufacturing expertise and is also a breeding ground for high-tech parts, especially in electronics from makers such as Denso Corp.
But executives have warned that without a reversal in exchange rates, they could be forced to reduce exports from Japan, which would then slash overall production because the sliding domestic market cannot make up the difference.
Nissan chief executive Carlos Ghosn said: "Our base and our roots are in Japan, and our strengths are in Japan. So we have absolutely no interest in moving out. That is why we are talking to the government. We are saying, 'Help us stop this'."
The biennial show, which this week, showcased the usual array of green cars, such as electric and fuel-cell vehicles, while top Japanese brands went further to depict how cars could eventually return stored energy to the grid.
The idea of capturing solar power or unused and cheaper night-time electricity in cars to power households has gained traction in Japan after the March earthquake and tsunami cut power to millions of households and triggered a nuclear power crisis.
But the strength of the yen, at about 78 to the dollar now, has eroded profits in Japanese automakers' domestic market, damaging global competition against rivals such as South Korea's Hyundai and Germany's Volkswagen.
Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets, said: "The biggest worry I have right now is, yes, Japanese automakers have a lot of excellence in technology and manufacturing, but will they keep that excellence?
"Building new technology requires money. If you are cash starved, your global competitors are not going to cut you any slack. If (Japanese automakers) do not change, there is going to be a slow erosion of competitive advantage they can ill afford."
Japanese manufacturers are wrapping up a year of unprecedented challenges, including the disasters at home and disruption from floods in Thailand, but the yen's appreciation against virtually all other currencies has posed the biggest headache.
Japan is known for its manufacturing expertise and is also a breeding ground for high-tech parts, especially in electronics from makers such as Denso Corp.
But executives have warned that without a reversal in exchange rates, they could be forced to reduce exports from Japan, which would then slash overall production because the sliding domestic market cannot make up the difference.
Nissan chief executive Carlos Ghosn said: "Our base and our roots are in Japan, and our strengths are in Japan. So we have absolutely no interest in moving out. That is why we are talking to the government. We are saying, 'Help us stop this'."
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