General Motors chairman and chief executive Rick Wagoner said on Tuesday that Japanese carmakers were unfairly benefiting in Europe from the Japanese government’s efforts to weaken the yen.
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“I’m absolutely amazed that everybody sits here in Europe and doesn’t complain about it,” Wagoner said at the Geneva motor show, according to Reuters.
“It’s a huge issue. It’s like giving the Japanese a carte blanche to come in and use their favourable currency position to grow their position in the market, which is already crowded and highly competitive.”
Reuters noted that GM, the world’s largest carmaker, has been struggling to turn around its European unit, which has been unprofitable for the past four years due to continued losses at Saab and Opel, growing pricing pressure and restructuring costs. Wagoner reportedly reiterated on Tuesday that the company hoped GM Europe would make a profit in 2004.
Meanwhile, Reuters added, Japanese competitors such as Toyota have taken a growing share of the European market, adding European production and building more models with the diesel engines that European customers prefer.
According to the report, Wagoner said that, while GM welcomed the competition, “it’s not clear to me why we should give them a 15% or 20% cost advantage because their government manipulates and holds their currency artificially weak.”
Reuters said that many of the concerns in Europe about currency over the past year have revolved around the euro’s strength against the dollar, which is cutting into the profits of several European carmakers, especially the largest, Volkswagen AG.
Wagoner, who has criticised the Japanese government in the past for holding the yen down against the dollar, reportedly said that over the past two months the Bank of Japan had spent 10 trillion yen to prop up the US currency, half of the 20 trillion they spent in 2003.
“They’re on the road to move up from a couple hundred billions dollars equivalent (in spending) to as much as $US500 billion,” he said, according to Reuters.
Reuters added that the dollar fell to nearly 105 yen in February before recovering in recent days, trading at around 109.50. Wagoner reportedly said GM thought a more realistic exchange rate for the dollar would be in the range of 90 to 100 yen.
