Saturday, October 30, 2010

Hyundai Motors and Kia Motors are Major Beneficiaries of the Strong Japanese Yen

Readers of the Seoul Gyopo Guide have known what has been coming out in the press at an increasingly rapid rate:  the rise in the JPY is hurting the most important Japanese industries.  Right on cue, the Japanese auto manufacturers are weighing in on the strong Yen:

Toyota: and

Of course, the world usually looks at the US dollar as the reference point.  Again, the thesis here by The Lost Seoul has been consistent:  Hyundai and Kia stand to gain as a result of the strong Yen.  Exactly as predicted here on the original post, Kia reported record results just yesterday and Hyundai also followed suit.

Hyundai Motors, in particular, has been benefitting.  The Kelley Blue Book has reported that Hyundai is the brand in which interest has increased the most.  As many know, Hyundai's 100,000/10 year guarantee, as well as the Hyundai Assurance plan, which allows purchasers to give the car back to Hyundai should the driver lose his/her job, has made Hyundai famous.

And while Korea has stayed "under the radar" during the currency skirmish occuring now, the Korean automakers will continue to take market share in the international marketplace.  Low interest rates are making things even worse, because now the Japanese have no flexibility to compete on price.  Unless cars begin to fly out of showrooms, this will not change for the foreseeable future. 

This story is nowhere near finished.  There are no easy answers for the Japanese Yen, unless there is a coordinated effort by the largest nations to simultaneously sell the Yen.  Perhaps this will occur naturally, but at this point, it does not seem very likely.  While it may be suggested that this is a process that should happen naturally, the political reality is that Japan's internal political unease will most likely continue to force the BOJ to continue alone, until there is a coordinated effort, which will need to include the Chinese.


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