TOKYO (Reuters) - Toyota Motor Corp (7203.T) (7203.T) President Akio Toyoda said on Tuesday prolonged strength in the yen was a big problem and could threaten the competitiveness of Japanese manufacturing.
Like many Japanese automakers, Toyota has set its dollar rate assumption at 90 yen -- about 10 yen weaker than current rates -- implying a 150 billion yen ($1.85 billion) currency loss in the October-March half if it assumed 80 yen instead.
Asked in an interview on Japanese TV whether Toyota intended to revise its currency assumption, Toyoda said: “Obviously there is a big discrepancy against current exchange rates, so we will revise the assumption at the appropriate time.”
Asked if the revision would be to somewhere between 80 and 89 yen, he said, “That’s probably fair.” Toyota, the world’s biggest automaker, is scheduled to announce its July-September second quarter results on November 5.
Japanese automakers are scrambling to cut costs and sell more cars to offset the damage from a stronger currency.
But Toyota is in a tougher spot than rivals Nissan Motor Co (7201.T) and Honda Motor Co (7267.T) because it builds a relatively high 40-45 percent of its vehicles in Japan, exporting about half of that.
But Toyoda, grandson of the automaker’s founder, said he was more worried about the future of Japanese manufacturing than the short-term impact on Toyota’s bottom line.
“Rather than the impact on our profits, the fact that this kind of (dollar-yen) level has lasted this long is a major crisis for Japanese ‘monozukuri’,” he said, referring to Japan’s culture of manufacturing that has been responsible for the success of the country’s auto industry.
”Toyota has grown strong and evolved by making cars for Japanese customers, who are some of the toughest customers in the world. That’s how we have expanded in the world.
“If this (foreign exchange) level continues, it is a big problem. It could threaten the very foundation (of monozukuri),” he said.
That echoed comments made earlier in the day by Nissan Chief Operating Officer Toshiyuki Shiga, who also heads Japan’s auto industry lobby.
Japan’s finance minister also warned on Tuesday the government would “act decisively” in markets if needed and expressed Tokyo’s irritation with the yen’s climb to another 15-year high.
Toyoda noted that Toyota builds about 3 million vehicles in Japan -- out of about 7 million units last year -- and that his company would have to find a way to protect that level of domestic production.
“For Toyota to be Toyota, we want to maintain a certain level of R&D and production in Japan. But the current reality is that conditions are very much working against us. I feel a huge sense of crisis about this.”
Reporting by Chang-Ran Kim; Editing by Michael Shields