GM CEO Calls Japan's Efforts To Weaken Yen "Unfair"

SINGAPORE March 2, 2004; Dow Jones reported that General Motors Chief Executive Rick Wagoner has said Japan's efforts to weaken the yen have given it an "unfair" trade advantage, the British Broadcasting Corp. reported on its Web site Wednesday.

Wagoner told the BBC that repeated intervention by the Bank of Japan had left the yen "artificially" low against the dollar and euro.

He said the weak yen had put added pressure on U.S. and European carmakers, struggling against tepid demand. GM's European operations have been hit hard, with sales down 10% in January, the report said.

"The amount of intervention in the currency markets by the Japanese central bank is at record levels, " Wagoner said. "That is keeping their currency artificially weak against the dollar and the euro, and really reducing the competitive position of the manufacturers' base in Europe and the U.S.

"We think it's actually an unfair trade practice."

Wagoner's comments come as Japanese carmakers are making deep inroads into the U.S. market, with Toyota overtaking third-ranked Chrysler in terms of market share last year, the report said.

The car industry in the U.S. has responded by offering cheap financing deals, a tactic that has kept the showrooms busy at the expense of vastly reduced profit margins, the report said.

"Certainly the competitive situation in the U.S. is tough. I think the heavy level of incentives and other merchandising costs have affected profitability for all of us," Wagoner said.

"We're hoping as the economy picks up we'll see an easing of those incentives, but frankly we'll have to see how that plays out."

However, Wagoner said cheap financing deals had "helped hold up or grow market share during a tough period."

In Europe, Wagoner expects a range of new models, including the updated Vauxhall Astra, to help turn around GM's operations there this year.

He also said GM would continue to push into the booming Chinese car market, where the company recorded a 50% jump in sales last year.

"It's not without risk, but I think the balance of risk versus reward has been very much in favor of reward, so we remain very aggressive in our profile for China."