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Reports are coming in that Japanese auto manufacturers are looking for ways to cut costs on vehicles being exported to the United States in order to squeeze profits due to the record high yen against the dollar. A prime example is the new GS 350 from Lexus, that has been highly anticipated and praised by the American media.
Though many of the cost-cutting measure will be unnoticeable to the average day consumer, knowing that certain things were done to a luxury sedan is disheartening. For example, Lexus used asphalt spray instead of laminate sheeting for noise suppression on the underbody and recycled plastic instead of virgin for the protective cover beneath the engine, in order to cut costs. That’s not all, as some technical decisions seem to have been impacted due to the surging yen, as we’ll be seeing Lexus’s old six-speed transmission rather than a new seven- or eight-speed that competitors are offering in their new luxury sedans.
Slightly reassuring though is that Yoshihiko Kanamori, chief engineer for the GS 350, did state that ”There were no items omitted that I would like to have, but with this exchange rate we will have to raise the price.” A compromise that Lexus found is offering all the bells and whistles in their F Sport variant which will undoubtedly be drastically different in price from the base GS 350.
[Source: Automotive News]
Honda announced today that they would use excess capacity at their Alabama plant following a $300 million investment in the facility. The investment will allow for a total of 340,000 units anually.
Rising exchange rates are forcing Honda to devote more resources to North American production while reducing exports. Honda will shift their Acura MDX luxury SUV to the plant from their Canadian factory in Ontario, and use their Ontario plant to produce the 2012 Honda CR-V crossover.
The rising yen is making exports from Japan increasingly unprofitable and Honda is looking to cut vehicle exports by 50 percent over the next 10 years as a response to the change in currency valuations.
Honda hopes to sell as much as 90 percent of its vehicles in markets that can use locally sourced vehicles. Honda operates a number of regional plants in Asia, Europe and the Americas to help limit exposure to currency fluctuations.
The Japanese automaker will rely on 660cc-minicars, known as kei cars, to help strengthen their market share position in Japan, where demand for traditional cars has been steadily contracting. Currently, Japanese exports make up 34 percent of Honda’s output, but the company hopes to reduce that to between 10 and 20 percent by 2021.
[Source: Automotive News]
Nissan CEO Carlos Ghosn said that the Japanese government’s effort to keep the yen’s value under control had failed and that Nissan was strongly considering moving production out of Japan and into foreign countries.
A weakened United States dollar has meant that the value of the greenback has shifted from 91 yen per dollar to 76 yen per dollar over the past two years. This unfavorable exchange range has led Nissan to examine other countries for vehicle production. ”We have to make investment decisions all the time,” Ghosn told Reuters. “This is one of the factors that we have to consider when we look at a project and say are we going to do it in Japan or are we going to do it in another country?”
Despite this, Ghosn said that he felt vehicle sales would rise in 2012 even in the face of another possible economic downturn. Ghosn also announced a new electric vehicle to be built in China for the Chinese market.
Mitsubishi is becoming much more aggressive regarding future EV sales in its home market of Japan. Currently Mitsubishi’s i-MiEV sells for 3.98 million yen which equals $49,200. Government subsidies bring the price down a million yen equalling $36,900. The i-MiEV’s chief rival, the Nissan Leaf costs 3.76 million yen which equals $46,500 before subsidies and is the more popular choice compared to the Mitsubishi.
However, Mitsubishi will slash a million yen off the i-MiEV’s retail price to improve sales, bringing down the price to around 2 million yen or $24,700. The big savings are coming from a smaller battery. The existing model was good for 160 km (100 miles) per battery charge whereas the new model can only travel 120 km (75 miles). The Leaf can achieve only 100 miles per charge.
Prices in the United States are much cheaper, with the 2012 i-MiEV selling for $27,990 before the Federal $7,500 EV tax credit and state incentives. California and Hawaii go a step further with rebates, and in EV can be picked up for as low as $15,500 in these locales.
[Source: The Truth About Cars]