Currency exchange rates and how they move are not to be taken lightly in the automotive business if you are trading – either in parts or vehicles – across the world. They can provide a tailwind that makes your firm look better than it really is, or they can provide a headwind that undoes your good work.
Two recent stories we have published illustrate their importance. Daihatsu – majority-owned by Toyota and a specialist in small cars – is taking a hammering in Europe due to the strength of the yen. Margins on small cars are tight to begin with, but the strong yen has clearly wiped out any prospect of profitability on the brand’s models being shipped from Japan to Europe. It has now decided to give up.
One thing that would have helped Daihatsu (besides better and more exciting models, a clearer brand image, maybe keeping the Charade model name and not replacing with Sirion) would have been an assembly facility in Europe, preferably low-cost, perhaps somewhere like Bulgaria or Turkey where local demand could have been supplemented by substantial shipments to the EU.
I can’t help thinking that Daihatsu is a brand that has under-achieved under Toyota. It has basically been left to get on with mainly supplying the Japanese domestic market with midget cars. An overseas product and selling strategy was there, but surely it could have been better? The impression I have is that Daihatsu and Toyota have never been as close/integrated as they might have been.
