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Will Japan's carmakers catch bailout fever?
Ian Rowley
November 06
Business Week

Yet more grim earnings news in Japan today. Toyota, the last of Japan’s automakers to post its half-year results, has slashed its operating profit outlook by over 70% to $6.1 billion for its fiscal year which ends in March. Given it made $5.9 billion in the six months through Sept. 30, that means it will likely make only around $200 million in the second half of the year. Toyota exec Mitsuo Kino****a said things were so bad that Toyota has formed an “Emergency Profit Improvement Committee,” headed by CEO Katsuaki Watanabe.

Honda, Nissan and others have already slashed forecasts, albeit by smaller margins, but citing similar problems. Among them: the U.S sales slump, high raw materials costs and, for the Japanese makers, the soaring yen.

Of course, with no one yet projecting losses, the problems aren’t in the U.S. Big Three’s league, as Ford and GM’s results on Nov. 7 will no doubt highlight. Still, that didn’t stop Honda chief Takeo Fukui calling for the Japanese authorities to intervene to weaken the yen earlier today. Speaking at a the launch of the Honda Life, a minicar for the Japanese market, Fukui told reporters the government should step in after the yen’s recent surge against the dollar and other currencies. “Of course (the government) should intervene,” Reuters reported Fukui as saying. Fukui’s comments were before Toyota’s weak forecasts.

To some extent, Fukui, who isn’t against the U.S. government aiding U.S. automakers, has a point. On Oct. 27, the yen surged to 90 to the dollar and is currently at 98. Back in 2003, when it was at a relatively weak 103, Japan stepped in to ease the pain. Against the euro and other currencies the rise has been even more pronounced. And there is little doubt the speed of the current surge is painful. In Toyota’s case, analysts say a one-yen appreciation of the Japanese currency against the dollar reduces earnings by around $450 million; a one yen appreciation against the euro costs $80 million. The numbers aren’t as brutal at smaller Honda but they still have a big impact.

SOURCE / Continued: http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2008/11/will_japans_car.html

 

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Would that be Yentervention?
 

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First the EU and now Japan. The Americans have no choice but to help hold up Detroit.

It's bad enough Detroit has a problem dealing with all kinds of issues many of their competitors don't. But this would just put the Big 3 at such a disadvantage it wouldn't even be funny.

Ironically, this is exactly the opposite of what countries did in the 30s, namely protectionism. Instead they're propping up core industries. So long as trade stays open, propping up industries is acceptable but very costly.

And all this shows is that the auto crisis is deeper than folks admit. Toyota's 0% is final proof that it's in crisis mode since not even almighty and perfect Toyota can move enough iron.
 

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Of course further weakening of the Yen would hurt the domestics. The Japanese aren't enjoying the astronomically huge cost differential they once were, it's still in their favor, just their margin is starting to hurt cause there's not as much separation between Yen and Dollar as there once was.

Americans should cry a river for Japan as their not pillaging as much from our country as they were previously.

This is much of the same protectionism of the Japanese international automotive industry that's been ongoing for years. American's to this point really haven't cared. Now the public acknowledgment of greed by the Japanese from the American market should finally put a nail in the coffin of people who thought the Japanese weren't actively involved in manipulating currency markets to vet the huge cost advantages against the American automakers. The US government continues to ignore this issue, now our market is on the verge of collapse and potential loss of millions of American jobs. Too bad our government doesn't represent the good will of our people.
 

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First the EU and now Japan. The Americans have no choice but to help hold up Detroit.

It's bad enough Detroit has a problem dealing with all kinds of issues many of their competitors don't. But this would just put the Big 3 at such a disadvantage it wouldn't even be funny.

Ironically, this is exactly the opposite of what countries did in the 30s, namely protectionism. Instead they're propping up core industries. So long as trade stays open, propping up industries is acceptable but very costly.

And all this shows is that the auto crisis is deeper than folks admit. Toyota's 0% is final proof that it's in crisis mode since not even almighty and perfect Toyota can move enough iron.
It may not be protectionism, per se, but it's still a trade battle. The US props up GM, so Japan would respond by propping up Honda/Toyota. It could still lead to escalation, especially if the US Administration gets protectionism fever from the union boss filth.
 

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First the EU and now Japan. The Americans have no choice but to help hold up Detroit.

It's bad enough Detroit has a problem dealing with all kinds of issues many of their competitors don't. But this would just put the Big 3 at such a disadvantage it wouldn't even be funny.

Ironically, this is exactly the opposite of what countries did in the 30s, namely protectionism. Instead they're propping up core industries. So long as trade stays open, propping up industries is acceptable but very costly.

And all this shows is that the auto crisis is deeper than folks admit. Toyota's 0% is final proof that it's in crisis mode since not even almighty and perfect Toyota can move enough iron.
Absolutely no one doubts that the auto sector is in trouble. However, it's pretty clear that some companies will weather this storm much better than others.

Interestingly, that Japan and Europe are helping out their industries tells me that the U.S. should find an alternative strategy. While others may be enamored with Japan and Europe, believing that their economies are the envy of the world, believing that their governments operate better than ours, I would place myself in the minority to say that there's little to envy about these nations. It's why our nation has succeeded in the long-term in a variety of ways that Japan and Europe simply cannot match.
 

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That's funny!
Toyota's Vice President, Mitsuo Kino****a, get's his name censored, but Honda's CEO, Takeo Fukui, well, that one's OK. Technology. Gotta love it.
 

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Speaking of Toyota and politics, did anyone see the video of John McCain driving out of a parking garage.....in a Sequoia I think or maybe it was a Highlander, either way it was a Toyota SUV. How can we expect the government to hold up the big 3 when people running for President are driving foreign cars. ugh.
 

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It may not be protectionism, per se, but it's still a trade battle. The US props up GM, so Japan would respond by propping up Honda/Toyota. It could still lead to escalation, especially if the US Administration gets protectionism fever from the union boss filth.
I believe that the yen intervention is not a result of our actions: this has been a deliberate practice for decades upon decades. Japan has long kept interest rates low to build up their export industries-- this keeps the value of the yen low versus the dollar to make it easier to sell cars in the US at a profit. And they were able to do this starting in the 1990's without inflation driving costs up because Japan has been in a recession/deflationary spiral for years. Where is the Nikkei Dow? 7,000? It used to be 40,000 plus in 1990.

Japan is in recession and in demographic decline, and they are at least the highest per-capita debtor in history. They need to sell in the US (as do the Europeans and Chinese) or else they are screwed.


Also ask yourself whether the Japanese car makers pay for retiree pensions and healthcare, or whether it is the taxpayer. As much as I respect free markets, fair markets are hard to find.
 

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That's funny!
Toyota's Vice President, Mitsuo Kino****a, get's his name censored, but Honda's CEO, Takeo Fukui, well, that one's OK. Technology. Gotta love it.
That's just the forum software. It looks for any words you have typed in and replaces them with what you want it to. There's nothing obscene in the name of Honda's CEO.
 

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It may not be protectionism, per se, but it's still a trade battle. The US props up GM, so Japan would respond by propping up Honda/Toyota. It could still lead to escalation, especially if the US Administration gets protectionism fever from the union boss filth.
You think the Japanese market is open today? You think the manipulation of the yen hasn't been going on for decades? Do you think Toyota needs propping up? Please!

Mark
 

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Speaking of Toyota and politics, did anyone see the video of John McCain driving out of a parking garage.....in a Sequoia I think or maybe it was a Highlander, either way it was a Toyota SUV. How can we expect the government to hold up the big 3 when people running for President are driving foreign cars. ugh.
It is a gold Sequoia.
 

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You think the Japanese market is open today? You think the manipulation of the yen hasn't been going on for decades? Do you think Toyota needs propping up? Please!

Mark
Do we have fair trade with Japan? No. But please explain to me what we can do about it.

If we do ANYTHING to create barriers, Japan will respond. This is my point. A decline in trade with Japan would have a FAR MORE CATASTROPHIC effect than any temporary benefit we derive from it.

Explain to me what we should do, and I'll tell you how, as Japan's Economy Czar, I would respond.
 

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Do we have fair trade with Japan? No. But please explain to me what we can do about it.

If we do ANYTHING to create barriers, Japan will respond. This is my point. A decline in trade with Japan would have a FAR MORE CATASTROPHIC effect than any temporary benefit we derive from it.

Explain to me what we should do, and I'll tell you how, as Japan's Economy Czar, I would respond.
I do agree with you on the dangers of protectionism: this was cited as one of the causes/enablers of the Great Depression. In fact we should pick up a book in the history of the Great Depression. FDR did not get us out of it, WW2
did.
 

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I do agree with you on the dangers of protectionism: this was cited as one of the causes/enablers of the Great Depression. In fact we should pick up a book in the history of the Great Depression. FDR did not get us out of it, WW2
did.
Well, there ya go. Start WW3 and we're home free for a few more decades. :)
 

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Speaking of Toyota and politics, did anyone see the video of John McCain driving out of a parking garage.....in a Sequoia I think or maybe it was a Highlander, either way it was a Toyota SUV. How can we expect the government to hold up the big 3 when people running for President are driving foreign cars. ugh.
We're pretty stupid aren't we!!!! Much like the $40B contract to Airbus for the next Air Force tanker project. Our own US tax dollars headed out of the country, nice. Least that one got some attention and pulled for rebid. But yea generally speaking there's not much America in America. It's more I, Me, My and of which these people just happen to reside in the US. Far from being true to America and our country. Being American and free isn't free $$$$ folks.
 

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The dollar is falling, so other currencies need to fall too. Now with the bailout, the dollar will fall further, as the gov't prints money to give to the banks.

With US built Corolla, Civic, Accord, Camry and several others ...this is really a small or non-issue.
No it is an issue for the import manufacturers. As the dollar gets weaker so does the import manufacturers position on margin, thus a weaker dollar chews away at their cash cow from the US, thus hurts their revenue and profit.

Biggest impact would be the 1.5 million so vehicles that say Toyota imports each year to the North American market. This is going to hurt their revenues. Thus why they are crying to their government for help.
 

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Anyway these bailouts don't look like 100% protectionist actions. In the current situation, big three would go down even without competition. High fixed costs + 40% lower sales + gas prices uncertanties are enough to sentence them. Other manufacturers don't have so huge problems, so they can make it with less gov intervention.

Japan depends on exports in general (cars, electronics and so on) for survival since they have no natural resources, no food, no oil.
For them the most simple solution looks like manipulating currency instead of dealing with each industry separately.
 

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Speaking of Toyota and politics, did anyone see the video of John McCain driving out of a parking garage.....in a Sequoia I think or maybe it was a Highlander, either way it was a Toyota SUV. How can we expect the government to hold up the big 3 when people running for President are driving foreign cars. ugh.
Your not serious right? I am a big buy US quality when I can guy and I never buy Japanese cars. However, one sequoia driving with McCain in it when you have both the left coast and the east cost 80% foreign....give me a break. It is your progressives that hate american companies and won't step into an American dealership, I wonder what will happen when volts and other GM cars hit the dealerships?
 
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