GEORGETOWN, KY — (WWJ) Toyota says it’s going to start exporting U.S. made Camry sedans to South Korea. About six thousand will be shipped next year, after the new free trade agreement between the U.S. and South Korea takes effect January first.
Analysts say there are a number of factors at work, including the strong Japanese yen.
“The Japanese are really in a bit of a bind because of the appreciation of the yen,” says Aaron Bragman, an analyst with IHS Automotive. “It’s becoming very difficult to build anything in Japan and export it profitably.”
Toyota did not mention the currency issues in its press release announcing the move. Instead, the company focused on the success of the all new Camry, that is just starting to hit the market.
“The export of thousands of Camry vehicles to South Korea is an important development that builds on the great work of our talented U.S. team members as well as our extensive investments across North America to help maintain a strong, stable base of U.S. jobs,” said Yoshimi Inaba, president and COO of Toyota Motor North America, Inc. “We look forward to other opportunities to continue growing exports from our American operations.”
Toyota has been exporting vehicles from the U.S. to other parts of the world since 1988. These exports increased this year to 100 thousand units.
Toyota is not the only Japanese automaker looking to ship vehicles made in the U.S. to foreign markets. Automotive News reports that Honda is looking to increase production in North America, and sell those vehicles abroad.
Not all of that production will be in the United States. The Japanese manufacturers also have plants in Canada and Mexico. Because of their low cost, and the small cars they make, the Mexican plants could see their production increase significantly, to fuel exports.
IHS Analyst Aaron Bragman says the new trade agreement means more foreign brand vehicles will be made in the USA, but sold in South Korea.
“It’s eliminated a lot of tariffs for vehicles that are made in North America, going to South Korea. Ironically, the biggest benefactors of this new free trade agreement may actually be foreign automakers, building cars in the U.S. and sending them to South Korea.”
U.S. automakers don’t have the infrastructure in South Korea yet, says Bragman, who adds there is a lingering perception that American made vehicles are too big, or have worse quality. He says that perception is slowly changing.
“The Americans have to overcome some stigmas in the South Korean market,” he said. “That, I think, will happen now that they have some vehicles that do actually fit the South Korean idea of what a good car should be.”
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