As the first high-volume Japanese car introduced since the U.S. dollar emerged from its coma, Camry provides Toyota with an enviable dilemma: lower the price and grab some market share or hold the line and pocket a little extra profit.

Jay N. Woodworth, a Summit, N.J.-based consultant, says the 35% increase in the yen (from a trough of [yen]80/$1 in May 1995 to [yen]108/$1 now) gives a huge competitive stimulus to every Japanese automaker. Mr. Woodworth says the Japanese transplants collectively will earn $1.5 billion on North American sales and manufacturing this year, the first year they have been in the black as a group. Toyota, which has at least broken even when the yen's strength inflated its costs, can either pass the savings on to consumers or invest more in future product and technology.

How much the currency scenario slashes from Toyota's cost on the new Camry is hard to pin down. American workers paid in dollars assemble the car. And Toyota and other Japanese automakers source more from North American suppliers than they once did.

Using U.S. Environmental Protection Agency methods, Toyota spokesman Jeremy Barnes says the domestic content of the '97 Camry will be about 73%, just below the 75% threshold that defines domestic car for purposes of calculating Corporate Average Fuel Economy.

That means roughly one quarter of the Kentucky-built cars' costs -- the imported parts and some engineering costs -- are denominated in yen. And remember, Toyota still plans to import 20% of the Camrys it sells here. Those will be substantially less expensive to produce because nearly all the parts come from Japanese suppliers.

Based on Mr. Woodworth's analysis, even a Japanese car with 80% North American content and assembled in the U.S. or Canada is about $700 less costly ($16,460 vs. $17,187) in today's dollar vs. a '95 average of [yen]96.5/$1. For a car produced entirely in Japan, the cost has dropped nearly $1,800 ($15,600 vs. $17,419).

The good news for Toyota shareholders and product planners may be bad news for American suppliers still knocking on transplant doors for business.

"Some Japanese automakers will revisit their strategic plans, which had called for more North American content and less reliance upon exports from Japan," says Mr. Woodworth.