Ford’s CEO Calls Japan Currency Manipulator Amid Weaker YenBloomberg News
Ford Motor Co. Chief Executive Officer Alan Mulally called Japan a currency manipulator that’s giving local exporters an unfair edge as the weaker yen threatens to undermine U.S. automakers’ profits.
Japan is “absolutely” manipulating its currency, the CEO of the second-biggest U.S. automaker said in a Bloomberg TV interview today. “With the currency manipulation, we just have to get back to the place where the currencies are set by the markets and the free trade agreements really are free trade agreements.”
Mulally, who’s expressed concerns about the yen throughout this year, illustrates how the currency-led boon for Japanese exporters is drawing mounting international criticism. Bank of Korea Governor Kim Choong Soo this week urged Asian countries to work together to defend themselves against the side-effects of Prime Minister Shinzo Abe’s reflation campaign.
“Mulally is one of the harshest critics on the yen,” said John Zeng, a shanghai-based analyst at LMC automotive. “A weaker yen puts them in a disadvantageous position.”
The yen has fallen against every major currency since mid-November, including 18 percent versus the dollar, bolstering the value of overseas sales at Japanese exporters from Toyota Motor Corp. to Sony Corp. Japan’s benchmark Topix index last month climbed to the highest in almost five years and exports in Japan in May increased the most since 2010.
Ford fell 3.3 percent to $14.82 at the close in New York. The shares have gained 14 percent this year through yesterday, compared with an 11 percent climb for the Standard & Poor’s 500 Index.
Mulally reiterated his concerns that Japan is a closed market for U.S. automakers, who’ve hired lobbyists to oppose Japan’s bid to join negotiations aimed at creating the Trans-Pacific Partnership, a regional free-trade agreement. Japanese carmakers account for more than 90 percent of sales in their home market.
“It’s just the most closed market in the world,” Mulally said today.
Representative Sander Levin of Michigan, joined by 46 other Democrats, said in a letter to President Barack Obama in March that the automobile import market in Japan is unfairly closed to U.S.-made vehicles, and letting the nation join the regional trade deal would hurt rather than help address that imbalance.
It’s “not true” that Japan is a closed market, Sho Minekawa, a senior managing officer at Honda Motor Co., said at a company event in Tokyo today when asked about foreign carmakers’ criticism that Japan is a closed market.
Nissan Motor Co. CEO Carlos Ghosn has countered criticism over the yen, saying such calls ignore history. Ghosn has said as recently as late March that the yen is only “neutral” when it trades at 100 to the dollar and that the Japanese currency had averaged at about 110 in the past 10 to 15 years.
Among the first signs of a Japanese carmaker taking advantage of the yen, Nissan has cut prices on seven models and boosted incentives, helping its U.S. sales surge 25 percent in May, triple the industrywide gain. Sales of its Altima family sedan, which had a $580 price cut, jumped 41 percent, surpassing Ford’s Fusion and closing in on Honda’s Accord.
In China, where Mulally is currently visiting to open a factory in the southeastern city of Nanchang at one of Ford’s Chinese partners, the CEO said the U.S. automaker’s sales have been rising faster than “we all expected.” He signaled China may eventually become an export hub for Ford, though the company’s current focus is on meeting Chinese demand.
“I think it’s just a matter of time,” he said when asked about Ford exporting from China. “Over time, all of our facilities are positioned so we can support all the markets around the world from any location.”
Dearborn, Michigan-based Ford is on track for its $4.9 billion spending plan in China and is thinking of the next phase of investment in the country, Mulally said. The automaker aims to take 6 percent of China’s market by 2015, David Schoch, Ford’s group vice president who runs Asia Pacific operations, said in April.
On the Lincoln, Mulally said he expects Chinese consumers to take to the luxury brand when it goes on sale in the country next year given its history and design.
“China is a terrific market both for the volume market but also for the luxury market,” he said. “The Chinese have wonderful taste.”
— With assistance by Tian Ying