The mighty dollar and what it means for the car business
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Final Assembly
    • China
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • This Week's Issue
    • Still no auto show, so Detroit tries car crawl
      Diess chose VW over CEO job at Tesla
      The special-edition GT-R Nismo goes on sale in North America this fall. It does not come with a Happy Meal.
      Nissan's 600-hp hamburger helper
      Prince Philip died April 9.
      Philip's custom Land Rover hearse gets called into duty
    • Shanghai Tesla protest
      Tesla apologizes as anxiety grows after driver protest
      Jaguar at Shanghai show.jpg
      Jaguar Land Rover expects luxury sales to grow in 2021
      Hyundai logo
      Hyundai Group to launch EVs every year starting in 2022
      The Ford Mustang Mach-E assembled at Ford's joint venture with Changan Automobile Co.
      Ford starts preorders for locally built Mustang Mach-E
    • Udelv CEO offers a historical perspective on high-tech goods delivery
      Q&A with BrightDrop CEO Travis Katz
      Automakers optimize manufacturing, customize products through digitization
      3D-printing a Porsche: Making concepts matter
    • Volvo Didi test car 2.jpg
      Volvo will provide XC90s for Didi's self-driving test fleet
      Hyundai logo
      Hyundai Motor Group names chief for new mobility division
      Tesla Autopilot web.jpg
      Tesla, ex-engineer settle lawsuit over Autopilot source code
      Cruise self-driving vehicle
      Cruise raises $2.75 billion from Walmart, others
    • Elon Musk interview
      Tesla’s Model Y, on sale since March, is a showcase of EV technologies competitors will benchmark.
      Technologies of Electrification
      Cadillac’s Lyriq EV will be unveiled Aug. 6.
      Future Product Pipeline
      A CALL TO ACTION
    • Lithia goes big on Michigan market
      Mercedes bypasses crossover route, enters EVs sedan-first
      Mercedes' new U.S chief: EVs won't kill profits
      Get even more Automotive News with our new app
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Retail Technology
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Talk From The Top
    • Leading Women Network
    • Guide to Economic Development
    • PACE Awards
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls-Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • McLaren
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Citroen
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Lancia
      • Maserati
      • Opel
      • Peugeot
      • Ram
      • Vauxhall
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Virtual reveals (Sponsored)
      • MITSUBISHI: 2022 Outlander
      • NISSAN: 2022 Pathfinder and 2022 Frontier
      • GENESIS: 2021 GV80
      • KIA: 2021 K5
      • LEXUS: 2021 IS
      • NISSAN: 2021 Rogue
      • TOYOTA: 2021 Venza and 2021 Sienna
    • Auto Shows
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • China Commentary
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • used car blog art 2010 Mini Cooper
      Used-car market sizzling for sellers, not so great for buyers
      It's time to rethink EV range
      Mercedes EQS mirrors web.jpg
      For the EQS, Mercedes likes what it sees in the mirror
      Mach-E
      For Ford, 3rd-party charging network must improve to reap Mustang Mach-E potential
    • EVs Arrived EVentually
      EVs Came, EVentually
      In case of supply chain woes, break glass
      Quick! The Biden phone
      VW's Joke Is On You
      Joke Is On You
      view gallery
      4 photos
      Leo Michael Cartoons - Q2 2021
    • Shifting gears away from the stick shift
      SEMA still a wonderful circus
      Penske still has plenty of races to win
      Ford's turn in the hot seat
    • April 20, 2021 | The future of working may be hybrid
      April 13, 2021 | GM shows it’s serious about electric
      April 6, 2021 | For Volkswagen, authenticity is the only path forward
      March 30, 2021 | Tesla “changes” car industry
    • Supreme Court must preserve system that has delivered huge reductions in emissions
      Dave Versical
      For Manheim head, fighting anti-Asian hate is personal
      Tom Roberts
      Will the auto industry rethink supply chain disruption now?
      GM lost a lot on EV1, but project pays dividends
    • Why Xiaomi holds promise of becoming formidable EV player
      Geely’s new EV push is decidedly new age
      Charging poles installed outside a Tesla store in downtown Shanghai.
      Unreliable public EV charging sites prompt automakers to take wheel
      VW Group's playbook to dominate EV market
    • Despite demise, EV1 was a risk worth taking
      A step in right direction for Nissan dealers
      ‘Voltswagen' April Fools' gag far from funny
      Less is more in lineups as well as on lots
    • Lunn was behind vehicles with impact
      ‘Voltswagen' was clever and fun
      With EVs, bias for traditional carmakers
      There goes VW recycling again
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
    • AutoNews Now: Ford extends downtime at F-150 plant, other N.A. factories
      AutoNews Now: Stellantis managers indicted on emissions fraud
      AutoNews Now: Toyota's Carter says EV portfolio will be varied
      AutoNews Now: Ram output said to be slowing as COVID cases surge
    • First Shift: Governors urge Biden to end gasoline-powered vehicle sales by 2035
      First Shift: Tesla's Musk: Autopilot not in use during deadly crash
      First Shift: GM: Market could alter 2035 EV goal
      First Shift: Indicted ex-Nissan exec Kelly 'blameless,' U.S. senator says
    • The life, death and legacy of GM's groundbreaking EV1
      Face-to-face with the General Motors EV1
      Toyota store's in-house training program retains more techs
      Virtual sales manager Jay Barger
      'Glued to a phone': Acura store's virtual sales boss lifts deliveries, efficiency
    • Why the pickup is the auto industry's 'battleground'
      Carlos Ghosn's quest to restore his reputation
      Why Ford must execute to avoid 'deep trouble'
      Why Honda is 'locked and loaded' for 2020
  • EVENTS & AWARDS
    • Events
    • Awards
    • Congress Conversations
    • Retail Forum: NADA
    • Canada Congress
    • Europe Congress Conversations
    • Fixed Ops Journal Forum
    • Shift: Mobility at a Crossroads
    • 100 Leading Women
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealerships To Work For
      • Register for the 2021 Best Dealership To Work For
    • PACE Program
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • AN Solutions
  • +MORE
    • Leading Women Network
    • Podcasts
    • Webinars
    • In the Driver's Seat
    • Publishing Partners
    • Classifieds
    • Companies on the Move
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • RSS Feeds
    • Shift: A Podcast About Mobility
    • Special Reports Podcasts
    • Daily Drive Podcasts
    • AAM
    • Cars.com
    • DealerPolicy
    • Gentex
    • IHS Markit
    • Remember Group
    • Reputation.com
    • Ricardo: Dave Shemmans
    • Ricardo: Marques McCammon
    • Allstate: Want more from your F&I?
    • Ally: Navigating the future of automotive retailing
    • Amazon Web Services: Any place, any time, any channel
    • Amazon Web Services: The power of the cloud
    • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
    • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
    • DealerSocket: 5 steps to modernizing the buyer's journey
    • Epic Games: Build stunning, real-time car configurators with Unreal Engine
    • Epic Games: Real-time tech is the next frontier of automotive
    • Epic Games: Transforming the auto industry with digital assets
    • FTI Consulting: Crisis as a catalyst for change
    • Google: 5 trends shaping the auto industry's approach to a new normal
    • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
    • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
    • IHS Markit: COVID-19: The future mobility delusion
    • Level5: 2020 Automotive E-Commerce Report
    • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
    • Naked Lime: Bring social reputation together as part of big-picture marketing
    • Ally: Do It Right
MENU
Breadcrumb
  1. Home
  2. Automakers & Suppliers
February 09, 2015 12:00 AM

The mighty dollar and what it means for the car business

Hans Greimel
Neal E. Boudette
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    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.

    Loosening of supplies?

    For U.S. dealers of European brands, the strong dollar could bring some relief to a problem they have faced for several years: tight vehicle supplies. When the dollar was weaker, BMW, Mercedes-Benz and Audi could make more money by sending vehicles made in Germany to China or Russia instead of the U.S.

    “Listening to our OEM partners, I think there will be more cars being shifted this way,” said David Hult, COO of Asbury Automotive Group Inc., the nation’s seventh-largest dealership group.

    He attributed that shift to the strong dollar and to changes in markets such as China, where growth has slowed, and Russia, where sales have declined.

    “A couple years ago, there was a big push to push it to Russia and China, and I think that’s shifting a little bit now,” Hult said.

    Mercedes-Benz USA CEO Steve Cannon says the strong dollar is one factor that makes sales in the U.S. more attractive.

    “The flow of cars will increase,” he said.

    An executive in another large dealership group said his group heard the same from BMW about increased allocation.

    “We haven’t been told it’s just the dollar,” the executive said, “but a combination of demand in other parts of the world has slowed and they will shift cars to the U.S. We know the dollar and the euro has a lot to do with it.”

    The shift in currencies has been welcome news at Toyota Motor Corp. Its earnings in the U.S. translate into more yen when profits are booked at home, and the effect was clear in the quarter that ended Dec. 31. Operating profit jumped 27 percent, to ¥762.88 billion ($6.36 billion). Favorable exchange gains accounted for 90 percent of the gain.

    Windfalls from the weak yen also propelled profits for the maker of Subaru vehicles, Fuji Heavy Industries, and helped Honda and Mazda offset other troubles they are facing. Likewise, Daimler AG is predicting a gain of more than 1 billion euros this year because of the strong dollar.

    Just five years ago, when the yen was as much as 50 percent stronger against the dollar, Japanese car companies were losing money on many of the vehicles they exported to the U.S. A decade ago, thanks largely to the euro’s strength, Volkswagen AG was losing nearly a $1 billion a year in North America.

    But Honda expanded production capacity at its U.S. plants and added a plant in Mexico to build the Fit. Toyota took similar steps. Volkswagen built its plant in Chattanooga and is nearing the completion of a second Mexico plant. Likewise, BMW and Daimler have expanded output at their U.S. plants.

    The build-up of production here has given those manufacturers a much greater natural hedge against exchange rates.

    Nevertheless, the current situation may prompt some companies to tweak production plans.

    Honda, for example, made a big bet on North American production. Last year its exports from Japan were down 75 percent, and it shipped just 10,582 vehicles to North America.

    Executive Vice President Tetsuo Iwamura said Honda won’t bring large-scale production back to Japan from overseas but is looking at moving some output to different production hubs in response to favorable or unfavorable exchange rates.

    Challenges for Detroit

    For the Detroit manufacturers, the dollar’s strength presents some challenges: The money they make elsewhere translates into fewer dollars when they book earnings at home.

    General Motors CFO Chuck Stevens said that was a “significant headwind” in 2014, and the company is trying to offset the impact through pricing and cost-saving measures. The company isn’t changing its upbeat outlook for the year, however.

    In effect, the dramatic shift in the yen and euro rates highlights how global automakers have in the last decade largely eliminated the manufacturing imbalances that left them hurting when currencies fluctuated in the past.

    As a result, the dollar’s current strength “isn’t creating a crisis for anyone,” said Jim Press, a former Chrysler and Toyota executive who led Toyota in the U.S. when the yen was much stronger and his company was rapidly building plants here.

    While the dollar is a hot topic right now, Press said, “companies face a lot bigger issues than currency.”

    Mike Colias, Christiaan Hetzner, Diana T. Kurylko and Amy Wilson contributed to this report. 

    RECOMMENDED FOR YOU
    Daimler will put up to 18,500 workers on short-time work due to chip shortage
    Letter
    to the
    Editor

     

     

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Daimler will put up to 18,500 workers on short-time work due to chip shortage
    Daimler will put up to 18,500 workers on short-time work due to chip shortage
    Doctor named as one of victims in fatal Tesla crash in Texas
    Doctor named as one of victims in fatal Tesla crash in Texas
    GM launches ‘Work Appropriately' flexible work standard
    GM launches ‘Work Appropriately' flexible work standard
    Sponsored Content: Case Study: Switching from Reynolds’ DMS to DealerBuilt
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    See more newsletter options at autonews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Digital Edition
    Automotive News 4-19-21
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Fixed Ops Journal 4-12-21
    Read the issue
    See our archive
    BREAKING NEWS ALERTS: Sign up and be the first to know when big news breaks.
    WEEKLY NEWSLETTER: Sign up to start your week with the top stories from the latest issue of Automotive News, delivered to your inbox first thing each Monday morning.
    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    Subscribe Now
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Automotive News
    ISSN 0005-1551 (print)
    ISSN 1557-7686 (online)

    Fixed Ops Journal
    ISSN 2576-1064 (print)
    ISSN 2576-1072 (online)

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Retail Technology
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Talk From The Top
        • Leading Women Network
        • Guide to Economic Development
        • PACE Awards
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls-Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • McLaren
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Citroen
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Lancia
          • Maserati
          • Opel
          • Peugeot
          • Ram
          • Vauxhall
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Virtual reveals (Sponsored)
          • MITSUBISHI: 2022 Outlander
          • NISSAN: 2022 Pathfinder and 2022 Frontier
          • GENESIS: 2021 GV80
          • KIA: 2021 K5
          • LEXUS: 2021 IS
          • NISSAN: 2021 Rogue
          • TOYOTA: 2021 Venza and 2021 Sienna
        • Auto Shows
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Final Assembly
      • China
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
      • This Week's Issue
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • China Commentary
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • Congress Conversations
        • Retail Forum: NADA
        • Canada Congress
        • Europe Congress Conversations
        • Fixed Ops Journal Forum
        • Shift: Mobility at a Crossroads
      • Awards
        • 100 Leading Women
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealerships To Work For
          • Register for the 2021 Best Dealership To Work For
        • PACE Program
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • AN Solutions
    • +MORE
      • Leading Women Network
      • Podcasts
        • Shift: A Podcast About Mobility
        • Special Reports Podcasts
        • Daily Drive Podcasts
      • Webinars
      • In the Driver's Seat
        • AAM
        • Cars.com
        • DealerPolicy
        • Gentex
        • IHS Markit
        • Remember Group
        • Reputation.com
        • Ricardo: Dave Shemmans
        • Ricardo: Marques McCammon
      • Publishing Partners
        • Allstate: Want more from your F&I?
        • Ally: Navigating the future of automotive retailing
        • Amazon Web Services: Any place, any time, any channel
        • Amazon Web Services: The power of the cloud
        • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
        • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
        • DealerSocket: 5 steps to modernizing the buyer's journey
        • Epic Games: Build stunning, real-time car configurators with Unreal Engine
        • Epic Games: Real-time tech is the next frontier of automotive
        • Epic Games: Transforming the auto industry with digital assets
        • FTI Consulting: Crisis as a catalyst for change
        • Google: 5 trends shaping the auto industry's approach to a new normal
        • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
        • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
        • IHS Markit: COVID-19: The future mobility delusion
        • Level5: 2020 Automotive E-Commerce Report
        • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
        • Naked Lime: Bring social reputation together as part of big-picture marketing
        • Ally: Do It Right
      • Classifieds
      • Companies on the Move
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit
      • RSS Feeds