Auto manufacturers react to exchange rate fluctuations

At a recent automobile show in New York, auto manufacturers were talking about more than just the new models they planned to unveil- they also talked about how changes in the exchange rate were affecting business. American manufacturers have been the largest beneficiaries of the USD depreciation. In fact, many are beginning to export American-made cars to Europe, something which has been done only on a very limited basis in the past. Some foreign manufacturers are shifting production of cars sold in the US, to the US. Mitsubishi and Toyota are two examples of such companies. While clearly upset at the current situation, other foreign manufactures are using the poor exchange rate as an excuse to become more efficient and drive down costs. In the early 1990's, Toyota adopted many changes in response to a Strong Yen. After the Yen stabilized, Toyota was left with a vastly improved workforce and streamlined operations, and became even more profitable than it had been prior to the Yen's rally. Forbes.com reports:

Automakers outside the United States have born the brunt of the exchange-rate damage, but they shrugged off the currency effects in interviews this week. That's because most remember that last time the dollar was weak, their factories were mainly overseas. Since then, many have opened factories in the U.S.

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