Toyota Pressuring Suppliers to Reduce Costs in Face of $4.5B US Loss

Years ago, in pre-recession America, the Big Three automakers pressured suppliers to lower their costs in an effort to better combat the lower valued Japanese Yen that was giving Toyota and Honda a serious leg up. They argued that the Yen was artificially devalued in order to bolster the Japanese economy, and the subsequent pressure put the automakers at odds with many of their suppliers.

However, now that the American Dollar has plummeted, the Yen’s comparatively higher value has been playing havoc with the Japanese automakers. For each Yen that the Japanese currency gains against the American Dollar, Toyota reportedly loses $343 Million US in profit, which leads one to surmise that Toyota could be facing a massive $4.5 Billion US loss in the face of a Yen that’s gained 13 Yen over the dollar in the past year alone. Not surprisingly, this huge loss has forced Toyota to borrow a page from the American automakers’ books, leading to the Japanese giant giving notice to 219 domestic suppliers that their costs must be cut, or they will be.