Dollar’s Decline Harms Japanese Car Company

May 13, 2008

Toyota Motor, the major Japanese car company, was hurt recently by the decreasing value of the American dollar. According to its recent reports, Toyota’s profits for the latest fiscal quarter were only $3 billion. This is significantly lower–to be exact, 28% lower–than its profits for the same quarter last year. This is the first time the company has experienced a decrease in profits in three years.

Moreover, the car company pessimistically predicted that its profits for this upcoming year would go down by 27%, solely because of inadequate earnings in its American markets. In the stock exchange, Toyota suffered as well. As of today, Toyota’s shares are down to $100.56, a decrease of 4% over yesterday.

Tsuyoshi Mochimaru, a financial analyst specializing in the automotive markets stated that Toyota’s troubles are symptomatic of wider trends. “There is no mistake that things are seriously tough, even for Toyota,” he explained to CNNMoney.

Confronted by these setbacks, Toyota is presenting the public with a brave face. The company’s president, Katsuaki Watanabe said that even though his company is “facing a severe business environment,” it “considers this headwind as a valuable opportunity to turn it into a more flexible and stronger company.”

Lately, this optimistic spirit has been characteristic of the company. Possibly, Toyota’s don’t-back-down attitude in the face of tough market conditions makes the company a fearsome competitor.

In particular, Toyota could be a thorn in the side of the three major automotive companies based in America: General Motors, Ford, and Chrysler. Already, in the first quarter of 2008, Toyota’s sales across the globe, rather than only in America, are higher than those of General Motors.

If oil prices continue to rise as they have been lately, market conditions will only get tougher for all car companies, whether based in America, in Japan, or anywhere else in the world.

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