Toyota profit rises to record on lower Yen and Asian demand of Camry and Corolla but something is cooking against the company in North America
Alan Hershey
Feb. 6, 2007

Something is cooking against the company in North America that can change the financial picture of the second largest automaker of the world. In late eighties, conservative US President Ronal Reagan created a quota system for Japanese Auto makers to save American jobs. The Japanese Auto makers were allowed to establish plants in America assemble cars and sell the same in America. Reagan took the step after the America auto makers called for help from Whitehouse.

Something similar is cooking behind the scene. Somehow the legacy cost of GM and Ford will have to be shared by the foreign automakers. It can be a special tax on the vehicle they manufacture and sell for the American market. It will be fair because then GM and Ford can compete with them fairly.

There are some talks of imposing a new tax on Asian goods and services from the countries that depress their currencies artificially. India, Chin and Japan are well known to adopt such practices. The Europeans are eager to take that route in the Euro Zone to cope up with lower Yen and Yuan.

All these can be catastrophic for Toyota. Net income of Toyota rose 7.3 percent to 426.8 billion yen ($3.55 billion), or 133.13 yen a share, for the three months ended Dec. 31, compared with 397.6 billion yen, or 122.17 yen a share, a year earlier.

The question of the future however has little uncertainty.

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