The German automotive industry has raised concerns about the recent depreciation of the Japanese yen, which it says is damaging German competitiveness.

According to the German automotive industry publication, Automobilwoche, the industry has raised the alarm ahead of a meeting of G7 finance ministers in Essen that starts today (9 February). President of the VDA, the German automotive industry trade association, Bernd Gottschalk, spoke of a dramatic fall in the value of the yen in an interview with the Frankfurter Rundschau newspaper on Friday.

Dow Jones said that the yen recent touched more than four-year lows against the dollar and set record lows against the euro, leading to protests particularly in Europe that Japanese exporters are enjoying an unfair currency-related advantage over their competitors.

European policy makers have been very vocal on this issue and have called for it be top of the agenda at the G7 meeting. Finance ministers and central bankers from the US, Japan, Germany, the UK, Canada, France and Italy are attending.

Earlier this week, GM’s chief economist, Mustafa Mohatarem, told Dow Jones that US manufacturers suffer from a per-vehicle cost disadvantage ranging from $US4,000 for some smaller passenger cars built in Asia, to as much as $9,000 to $10,000 on upper end luxury cars. This cost disadvantage that is purely related to the yen’s current weakness.

A Dow Jones report suggested there is little that Japan can do to address the currency issue. It reflects low interest rates (of 0.25%) as the country emerges from a period of deflation and weak economic growth. The yen is also being pushed lower by a popular trading strategy called the ‘carry trade’, in which global investors borrow in yen to invest in higher-yielding currencies, such as the dollar.