The decision by Toyota to pay its UK-based suppliers in euros rather than sterling will put added pressure on the company's suppliers to bear the exchange rate costs that have resulted from sterling's strength against the euro, says just-auto.com.

A number of car companies manufacturing in the UK have expressed concern at the decline of the euro against sterling since the currency's launch in 1999, including Ford, Nissan, Toyota, Honda and BMW (through its former subsidiary, Rover). The decline of the euro against sterling has hit the profitability of UK operations as UK-made cars have become more costly to build expressed in euros -- and margins have therefore been eroded. Exports to the eurozone of continental Europe are at the core of UK manufacturing strategies in the auto industry.

just-auto.com's Managing Editor, David Leggett, commented: "As far as future policy is concerned, the carmakers are putting pressure on the UK government for a more stable currency regime -- essentially they would like to see the UK join the single currency and avoid further wild swings that they claim wreck investment and manufacturing strategies."

Nissan's President, Mr. Ghosn, has questioned future investment at Nissan's UK plant -- the most efficient car plant in Europe -- in direct response to the currency issue. Read just-auto.com's analysis of the currency debate and the position of the UK Nissan plant at:

www.just-auto.com/features_detail.asp?art=222

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