Of all the factors that drove the global strategies of automakers in the past two decades, none may be more significant than the weak U.S. dollar.
As exports to the U.S. became less profitable, Japanese and German carmakers added and then expanded assembly plants in this country — certainly not put off by the fact that it was economical to invest here.
Their suppliers also rushed in. More recently, Volkswagen came up with a grand North American strategy. The U.S. share of foreign brands went from 25 percent in 1995 to 55 percent today. U.S. vehicle exports now top 2 million.
Meanwhile, Mexico will add half a dozen plants between 2013 and 2019.
All because of the weak dollar.
But the industry is set for a new phase.
Automakers insist they don’t make short-term decisions based on currency movements. But the weak dollar has been a long-term trend that effectively reshaped the global industry. Now — barring a dramatic shift in currencies — the trend is over.
It may take time for the industry to adjust, and the adjustments may be relatively modest — allocating more European and Japanese production for North American markets and slowing production expansion here, even as the likes of Volvo and Jaguar Land Rover are said to be considering U.S. factories.
Already, the increasing strength of the dollar against major currencies is starting to ripple through the global industry, pumping up profits in Japan, raising questions about production in North America and maybe even improving supplies of German cars for U.S. dealers.
Boosted by gains in the U.S. economy and weakness in other parts of the world, the greenback in just the last four months appreciated more than 15 percent against the Japanese yen. Last week the euro was selling for just $1.14, the lowest level in a decade.