Detroit News Declares Japanese Price War, Needs New Calculator

Yesterday, the Detroit News warned of a sneak attack by the Japanese on the U.S. auto market: "Nissan Motor Co.'s take-no-prisoners approach to gaining U.S. market share has the auto industry worried that a price war is brewing that will erode the profit progress made since the recession ravaged auto sales." According to the Detroit paper, Nissan's recent price reductions  are "the first sign of a Japanese automaker taking advantage of the weakening yen that Prime Minister Shinzo Abe has pushed down to improve Japan's economy. That currency's 15 percent swoon versus the dollar since Oct. 31 gives Japanese automakers an extra $1,500 per car they can use to cut prices or offer additional features while keeping prices even." It's only a sign if you are both blind and fact-resistant. Nissan lowered the price of its Altima by $580, and its sales "jumped 41 percent, surpassing Ford Motor Co.'s Fusion and closing in on Honda Motor Co.'s Accord," reports the DetN from the price war front. Joining the militaristic metaphors is Michelle Krebs of Edmunds. Nissan's price reductions "strike me as a scorched earth policy of going for market share and sales volume at seemingly all costs," Krebs said. What they all forget or simply don't mention is the fact that the Altima, along with  more than 70 percent of the cars sold by Nissan in the U.S. do not come from Japan. They are made in North America. They are completely decoupled from the yen.  "By 2015, Nissan  aims for 85 percent," says Nissan's Yokohama spokesman Chris Keeffe. "We build where we sell." Last week in Nagoya,  Toyota's America-Chief Jim Lentz said the same, and he flatly denied  that the cheaper yen has any influence "neither on price nor on the equipment level – we price to market, not to a currency rate." The fact that a car made in North America can't get cheaper just because the dollar buys more yen in Tokyo seems to be too complicated for the Detroit paper and its Detroit sources.  Or possibly, both simply bank on it that they can play the American public for a big fool. The DetN missed a scoop: The yen actually is nearly 20 percent cheaper than on Oct. 31, not 15 percent, but numbers are not the DetN's strong suit:  When Nissan shaves $580 off an Altima to get its formerly lackluster U.S. sales going, then that's a "price war."  When GM takes $5,000 off the price of a Volt, then "Detroit has implemented discounts on some models, such as the Chevrolet Volt plug-in hybrid, and offered promotions such as free oil changes," writes the Detroit News, reporting live from alternate reality . Ford especially has been pushing the tale of "the Japanese manipulate the yen"  for years, even when the yen was obscenely high. It always found journalists to go for the story. Just hours ago, Alan Mulally told Bloomberg that "Japan is "absolutely" manipulating its currency," and while he was at it, "that Japan is a closed market for U.S. automakers." While this inanity may play well in Idaho, neither the Detroit carmakers nor the Detroit News scribes are that stupid. Most likely, they set the scene for bigger discounts and smaller profits, while blaming it on the people they usually blame, the Japanese.   from The Truth About Cars http://www.thetruthaboutcars.com

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