International News: Weak Yen Hasn't Brought Higher Imports From Japan

The Big Three feared the rapidly falling yen would allow Japanese automakers to boost sales by slashing prices and importing more cars and trucks. So far that hasn't happened. Indeed, the Japanese automakers have lost market share in the United States so far this year. Eight Japanese companies

Imports are flat and it appears Japanese automakers haven't taken advantage of the weak yen to raise their market share in the U.S. However, the concern of the Big Three is that Japanese exports to Latin America, Europe and other Asian countries are beginning to hurt U.S. sales to those regions.

Further, U.S. car companies are now concerned that Japan's economy will not be growing for a long period. Japan is now in a recession and the yen continues to weaken. The yen was at 144 on June 15, up from 132 yen one week earlier and just 80 yen three years ago. So even if Japanese car companies didn't take immediate advantage in the U.S. of the weak yen, it should help them hold down price increases for the foreseeable future. That will put immense competitive pressure on Detroit automakers and their suppliers to cut costs and hold down price increases, too.

Recent U.S. government intervention helped the boost the price of the yen as TAR went to press. However the near-term outlook for Japan is still uncertain.

The Japanese government should repeal the consumption tax it adopted a year ago as domestic vehicle sales posted their 14th consecutive monthly decline, the American Automobile Manufacturers Association (AAMA) said. The tax hike has only made Japan's stagnant economy worse, it said. "Yet as vehicle sales fizzle at home, Japan continues to churn out cars and trucks for export to open markets worldwide," the AAMA said.

"The U.S. and other G8 member nations must insist that Japan take immediate action to deregulate and stimulate domestic demandled growth - in part by repealing the consumption tax increase - before an already seriously ill economy takes another turn for the worse," the AAMA said.