Stop whining about yen, Honda exec tells Detroit 3
John Mendel: “This is a relatively minor correction.”
Photo credit: JOE WILSSENS
ORLANDO -- Tough talk from Detroit about the weakening yen giving Japanese automakers an unfair advantage in the United States "doesn't pass the sniff test," says American Honda's top sales executive.
"No one was saying, 'Gee, I hope they are OK' when the yen went from 115 to 75 and we were on our deathbed," John Mendel, American Honda Motor Co. executive vice president, said here. "This is a relatively minor correction."
U.S. carmakers have urged the Obama administration to fight Japanese efforts to weaken the yen to boost exports, saying the practice would hurt the U.S. job market.
Matt Blunt, president of the American Automotive Policy Council, the Washington lobbying arm of Chrysler Group, General Motors and Ford Motor Co., told Reuters last month that Japan was engaging in "currency manipulation," which he said "makes it more difficult to create jobs in the United States."
Mendel described Detroit's tactics as "using politics as a marketing tool."
"The current level of 90-plus yen to the dollar is [not] cause for alarm," Mendel said at the J.D. Power International Automotive Roundtable. "It's certainly not an unfair competitive advantage for Honda. No one is screaming about the [Korean] won, which has been at the same level for the past 10 years."
With most foreign automakers having high local production levels, exchange rates really don't come into play "unless I am importing 65 percent of my stuff," Mendel said.
Honda has built 80 percent of its U.S. sales units in North America for decades, hit 90 percent last year and will reach 95 percent when its Celaya, Mexico, plant opens in 2014. Toyota Motor Sales U.S.A. has been in the 70 to 75 percent domestic-production range, but smaller players such as Mazda and Mitsubishi import most or all of their vehicles.
"Like other global automakers, we have to manage our business with an eye on multiple currencies, not just the yen-dollar ratio, but factoring in volatile currencies in Europe, Asia and South America," Mendel said.
"We look at best sourcing and local sourcing. Southwest Michigan is a huge supplier for us. Alabama and Indiana are all built up and very mature," he said. "We don't see that changing. We look at having a net-exporter position in the next few years."
Mendel also said that Honda expects 2013 industry sales to have a good chance of topping 15 million units, "possibly heading to 16 million in 2014 for the first time since 2007."
Despite the industry growth and Honda eyeing its highest-ever volume years this year and next, Honda is not looking to add more dealerships.
"We are not expanding our sales by adding dealers," Mendel said. "The strength of our franchise is the throughput and profitability of our dealerships."
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