Toyota to ramp up production in Europe to beat exchange rates

PUBLISHED : Wednesday, 06 March, 2013, 12:00am
UPDATED : Wednesday, 06 March, 2013, 5:44am

Toyota Motor said it planned to expand production in Europe to reduce currency risk.

The carmaker's goal is to produce 75 per cent of European sales in the region within two years, up from 63 per cent to 64 per cent. Its luxury Lexus brand is entirely produced in Japan.

Chief regional officer Didier Leroy said at the Geneva Motor Show: "We want to have a business model that completely frees us from the exchange notion."

The yen has fallen 6 per cent against the euro this year and 7 per cent against the US dollar. All the same, Toyota's impact from the exchange rate this financial year would be less than €10 million [HK$100 million], Leroy said.

"We're keeping in our forecast exchange rates at 105-110 even if it's currently at 121-123," Leroy said. "We don't want to slacken by saying, 'The exchange rate is perfect, we're in the best of all worlds'. We really want to have a cautious business model."

Toyota's European research and development chief, Masahisa Nagata, said yesterday that the yen was still too strong and an appropriate rate was 130 per euro.

Leroy said: "If the yen is low, your margin will be affected by the prices of the raw materials. But when the yen becomes strong, then you have more difficulty selling your cars."

The chief executive of Peugeot Citroen, Philippe Varin agreed, saying: "When you are a generalist carmaker, you have to be close to the markets that you serve, so that you are not exposed to currencies. The future will be more local exposure."