The Great Currency Debate

In his first major speech as president of General Motors Corp.-North America, Gary Cowger criticizes the Japanese government for driving down the value of the yen.

Speaking at a Chicago Auto Show breakfast, Cowger says Japanese auto makers have enjoyed a 30% cost advantage in the U.S. over the last three years because of an artificially low yen.

“We are especially concerned that the government of Japan is causing the yen to go downward to create a competitive advantage for its industry during a protracted recession at home,” Cowger says, adding that GM and other domestic producers will continue lobbying the U.S. government to pressure Japan's government to stop doing it.

At least two Japanese competitors question Cowger's assertion about the 30% cost advantage.

Donald Esmond, group vice president of Toyota Motor Sales USA Inc., says two-thirds of the vehicles Toyota sells in North America are produced here, and that 85% of the content on the new Camry is produced in North America.

Toyota had a great 2001 in North America, selling more than 1.5 million vehicles, with truck sales up 29%, he says. “Why? Because we have a brand new Highlander, a full year of Sequoia, and Tundra's doing well.” Esmond tips his hat to GM for having a “great truck year” in 2001 because “they had great product in the marketplace. It's the product, not the yen. That's old thinking. We should stop fighting and start competing,” he says.

Fred Adcock, executive vice president of Subaru of America Inc., agrees that the 30% cost advantage does not exist. He says Subaru doesn't resort to “buying market share” because its products stand on their own with the attractive feature of all-wheel drive.