Weak Yen Gives Japanese Automakers an Advantage
According to a recent article in the Wall Street Journal, the automobile industry in Japan has a definite advantage over the U.S. and European market. The yen has hit a record low against the euro, and still does not compare to the U.S. dollar. This makes cars produced in Japan $4,000 to $10,000 cheaper than cars produced in the U.S. or in Europe. I believe that it is wrong for Japanese automakers to ask their trading partners-the U.S. and Europe- to pay for the difference considering that government subsidies are given to the Japanese. The article states that the Japanese have a 15%-20% cost advantage over American and European rivals. If the yen continues to depreciate, eventually everyone will be purchasing Japanese-made cars and that will be the only profitable automaker.
As we all know, the American automobile industry has been in a faltering state in the past few years. If the price gap between American-made cars and Japanese-made cars continues to grow, all of the automakers in the U.S. will be out of business. Although not everyone in the U.S. drives an American-made car, if the industry fails, millions of workers will be out of jobs. We have already seen the impact of the recent layoffs of Ford and GM. If that happens again, we will see a major downfall in the economy of the United States.
1 comment:
Its capitalism, if the American public chooses to buy cheaper cars from the Japanese, thats their decision. However, if this does happen this will force the United States to counter with lower prices and then maybe more Americans will start buying American made cars. This can only help American consumers out by lowering prices. With all this said, there are a good bit of people out there that will not buy foreign cars no matter what. So there is always going to be a market for United States cars. But to compete with Japan, maybe the United States automakers will have to lower prices, what a shame!
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