General Motors’ Holden has blamed Japanese monetary policy for lagging car sales that have forced it to axe 500 jobs in Australia, with the plunging yen driving Japanese export costs down.
According to news agency AFP Holden chief Mike Devereux told ABC radio the yen had depreciated about 25% since October as the Bank of Japan renewed its assault on the deflation that has plagued the world’s third-largest economy for years.
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“That means a car that was A$20,000 five months ago costs around A$15,000 to bring into the country, so there’s a lot of price competition,” Devereux said.
The weaker yen – US$1 to JPY99.35 – gives Japanese auto-makers an edge in export markets, particularly in Australia where the local dollar continues to run strongly against the greenback.
The Mazda 3 is currently the top selling car there.
The BoJ said it would double the money supply and aggressively increase asset purchases in its first meeting under new governor Haruhiko Kuroda last Thursday, sending the yen tumbling 6% against the dollar, AFP noted.
Devereux said government assistance “comes in many forms” and “in Japan’s case they will viciously protect their auto industry”.
Holden itself has received over A$2bn in government assistance in the last 12 years.
The small car segment in Australia was the hardest hit, Devereux said, with Holden’s locally made Cruze struggling against rival Japanese makes. Slumping demand for the Cruze was one of the major factors in the job losses unveiled on Monday.
“That’s pretty much where we’re getting hurt the most by what the Bank of Japan is doing and frankly what prime minister (Shinzo) Abe has said in response to calls to Japanese car makers to weaken their currency,” said Devereux.
“We’d love to be selling more Cruzes – we think it’s a fantastic car – but we can’t chase the price down to counteract what the Bank of Japan is doing.”
