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Japan auto exports soar; critics blame weak yen

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Japan auto exports soar; critics blame weak yen

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Japanese auto exports to the United States rose 13.7 percent during the first six months of 2007, giving fresh ammunition to Detroit automakers who claim their Asian rivals are benefiting from the weak Japanese currency.

Japanese imports increased by 135,498 vehicles through June 30, while sales of U.S.-built vehicles from Japanese manufacturers rose only 2 percent.

One reason for the increase in imports is that Japanese automakers don't make some models here, including popular vehicles like the Toyota Prius hybrid.

"This is a huge disadvantage for American automakers and costing a lot of Michigan auto jobs," said U.S. Rep. Joe Knollenberg, R-Troy, who is sending his constituents a government-paid mailing that features pictures of Japanese autos stamped with the words "Unfair Yen Subsidy."

A weak yen makes Japanese exports to the United States less expensive and U.S. imports to Japan more expensive. Domestic automakers say it amounts to a $4,000 to $10,000 subsidy on Japanese vehicles sold here.

"The yen is clearly undervalued and that is certainly having an impact on where Japanese automakers choose to build some of their vehicles," said Peter Morici, a professor of business at the University of Maryland.

The Japanese government denies it is manipulating the value of the yen, and Japanese automakers say they are committed to building vehicles in the United States. Honda Motor Co. and Toyota Motor Corp. have new U.S. plants in the works.

"No one is increasing production in the United States as fast as we are," said Martha Voss, a Toyota spokeswoman. The company is increasing production capacity by 600,000 vehicles by 2010. Toyota doesn't make decisions on where to build its vehicles based on currency values, she said.

At Honda, 76.3 percent of its U.S. sales through June were vehicles built in North America, down about 1 percent over the same period last year.

"We don't make production decisions based on the valuation of the yen," said Edward Cohen, Honda's vice president for government and industry relations. He said the automaker is building a factory in Indiana that will boost Honda's U.S. production by 200,000 vehicles.

Two-thirds of the country's $88 billion trade deficit with Japan in 2006 was auto-related, in large part because of the 2.4 million vehicles imported. Imports could reach a nearly 20-year-high this year, based in part on stronger demand for Japanese vehicles here, according to estimates by U.S. automakers and lawmakers.

The Detroit automakers' share of the U.S. car and truck market dropped to just over 50 percent in June, while Japanese automakers continue to post increases.

There's growing anger among automakers and Michigan members of Congress who attribute at least part of the Japanese makers' gains to currency issues.

The CEOs of Detroit's automakers have raised the issue in meetings with President Bush, members of Congress and Cabinet officials with little progress.

In the last few weeks, bills have been introduced in Congress, while lawmakers have had several hearings on currency issues involving Japan, China and Korea.

The bills -- including separate legislation by Sen. Debbie Stabenow, D-Lansing and Knollenberg -- would require the Treasury Department and the Council of Economic Advisers to work with Japan to facilitate the "proper" alignment of the yen to the dollar.

U.S. Rep. John Dingell, D-Dearborn, chairman of the House Energy and Commerce committee, said that while Japan stopped direct currency intervention in 2004, it has engaged in "verbal interventions" to keep the value down and has encouraged banks and pension funds to buy great numbers of U.S. treasury bonds.

In April, Detroit automakers launched a Web site, autoyensubsidy.org, to tout their efforts, and formed the Automotive Trade Policy Council. The automakers argue that Japan's central bank has spent over $400 billion since 2001 to weaken the yen and boost the economy through greater exports.

"With today's artificially weak yen, Japanese automakers are boosting plant capacity back home even as domestic auto sales in Japan continue to bottom out," Stephen J. Collins, the council's president, said Wednesday. "Patience in the U.S. with Japan's mercantilist approach to solving its economic problems is wearing thin."

The U.S. Treasury Department's position is that Japan is not manipulating the yen. President Bush didn't raise the issue when he met with the Japanese premier in April.

Honda's Cohen noted that domestic automakers have been silent on China's currency, while "telling their suppliers to build in China and profiting."

Morici said that is a fair point. "The Detroit Three are clearly benefiting from low currency values in China," he said, arguing that they've lost credibility on Capitol Hill for not supporting efforts to prod China to boost the value of its currency faster.

General Motors Corp. has told its suppliers it should have operations in China, and it is the largest automaker in China. Last October, Ford Motor Co. Executive Chairman Bill Ford Jr. said the Dearborn automaker would buy between $2.5 billion and $3 billion in auto parts in China, up from $1.6 billion.

Knollenberg said there's a difference between China and Japan. "China lets the domestic manufacturers produce and sell in China," he said. "Japan is essentially a closed market."



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I doubt this is going to amount to a hill of beans. Japan Inc will just spin it away.

China lets the domestic manufacturers produce and sell in China," he said. "Japan is essentially a closed market." THIS IS EXACTLY THE POINT I HAVE BEEN HARPING ABOUT.

Sure, they open a few plants over here to make it look good - but they do just enough to keep the debate going. Just enough. Nothing more.

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this country has gone to hell the last 3-4 years. the US, anyways. the current administration doesn't care about this.

its going to suck even more until about jan 2009. and i say that knowing full well that our next president could be hilary or a guy with no qualifications (obama).

at least there might be enough change for someone to start to fix this.

let's outsource our government, wall street, and big business ceo's.

gas has nearly doubled in the last 18 months or so. that's only part of the $h!tiness. we don't care. we buy camry's like its chicken soup on sale at the store.

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