Dow Jones Newswires (Tokyo) - While praising the yen's recent weakening, top executives in Japan's auto industry say they think the yen is still a far cry from being where it needs to be to ease pressure on domestic production.
"The yen's strength is gradually softening" on the back of a pickup in U.S. consumption, the improving debt-crisis situation in Europe and the monetary easing by the Bank of Japan, Toshiyuki Shiga, the chairman of Japan Automobile Manufacturers Association, explained at a press conference Thursday.
But he said he still isn't satisfied. Using his own informal classification system, he called dollar/yen levels below Y80 "super, super strong," somewhere between Y80-Y89 "super strong" and Y90-Y99 as "strong."
"So it's just coming back to a super strong yen from super, super strong," Shiga, who is also Nissan Motor Co.'s (7201.TO) chief operating officer, said.
Spurred on by easing by the central bank and improving economic conditions abroad, the dollar hit Y84.00 earlier Thursday, its highest level since April 2011. The weakening yen helped the Nikkei Stock Average set a fresh eight-month high on the day.
Shiga added that he hopes the government and the BOJ will continue to take appropriate measures to ease the yen's strength.
Mazda Motor Corp.'s (7261.TO) top executive separately echoed the cautious approach toward the recent yen's moves.
"Though it depends on from what levels you see the current yen, we don't see it getting weak," Mazda president and chief executive, Takashi Yamanouchi said at a press conference Thursday.
The yen's appropriate levels should weaken further, he added.
For Mazda, the yen's levels are particularly crucial, as the company exports about 80% of vehicles it builds in Japan - the highest ratio among Japanese car makers.
But as Mazda continues pursuing more efficient vehicle development, trimming capital spending and tighter cost-control in other operations, it is now able to export its all-new CX-5 sport-utility vehicle model profitably with the dollar at Y77, the CEO said.
A strong yen makes made-in-Japan vehicles more expensive abroad and dents their price competitiveness against global rivals. When the dollar was at record lows of below Y80, there were a just few models that Japanese car makers could export profitably.
The situation has prompted Japanese car makers to increasingly look to ramp up output overseas to mitigate the yen's impact and to cut costs. A byproduct of this is for them to ramp up production capacity in emerging markets where demand is surging.
On Thursday, Honda Motor Co. (7267.TO) said it will build a new auto plant in Indonesia at a cost of Y27 billion. The new factory will triple its local annual output capacity in the country to 180,000 vehicles.
