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To: benwood who wrote (149337)	2/6/2002 3:47:09 PM
From: Haim R. Branisteanu	Respond to of 436258

GM cites weak yen, fuel standards as major threat Wednesday February 6, 1:53 PM EST By Michael Ellis CHICAGO, Feb 6 (Reuters) - General Motors Corp. (GM) on Wednesday called the weak Japanese yen and U.S. fuel economy regulations a "major threat" to the health of the automotive industry that must be addressed if the U.S. economic recovery is to continue. In a speech at the Chicago Auto Show, Gary Cowger, president of GM North America, said Japan's government has purposely weakened the yen over the past few years to give its country's automakers a 30 percent cost advantage over their U.S. competitors. "General Motors and the rest of the domestic auto industry have made it clear that we think our own government should put the pressure on Japan's government to stop doing it," he said. "It's a tough job to offset the 30 percent cost advantage that our Japanese competitors have gained over the past three years from the artificially low yen." However, executives from two Japanese automakers disputed GM's assertions. "To say that there's a 30 percent advantage, it does not exist for Subaru," said Fred Adcock, executive vice president of Subaru of America. GM has a 20 percent stake in Subaru parent Fuji Heavy Industries Ltd. (7270). "It's the product, not the yen," said Donald Esmond, senior vice president with the Toyota division of Toyota's U.S. unit. "That's old thinking. We should stop fighting and start competing." GM officials said the weak yen allows Japanese automakers to garner a higher return on their new cars and trucks sold in the United States. Since the value of the South Korean won closely tracks the yen, Korean automakers also benefit on the cars and trucks they sell in the United States, they said. GM, Ford Motor Co. (F) and other manufacturers have been lobbying the Bush administration to pressure the Japanese government not to intervene in the currency markets to weaken the yen, officials with the automakers said. The U.S. dollar has risen sharply against the yen, the euro and the Canadian dollar in recent months. However, U.S. Treasury Secretary Paul O'Neill said last Thursday he has no sympathy for U.S. manufacturers who complain about the dollar's strength. "The good ones don't live and die on exchange rates," he said in an interview with Reuters. Stephen Collins, president of the Automotive Trade Policy Council, which represents the three major U.S. automakers, said his group is pressing its case about the weak yen directly with the White House. "We are communicating regularly with the White House about this issue," he said in an interview on Wednesday. Another threat to the industry, Cowger said, is the corporate average fuel economy, or CAFE, standards that require automakers to build their new cars and trucks with a certain average level of fuel efficiency. "We just don't see the wisdom of a policy mechanism that limits customer choice and gives some manufacturers an unfair advantage over others, which is exactly what CAFE does," Cowger said. "We hope the U.S. Senate keeps the market realities in mind in the current debate." The U.S. Senate Commerce Committee is expected to vote next week on raising the mileage requirements for light trucks, including sport utility vehicles, minivans and pickups. Senators John Kerry, a Massachusetts Democrat, and John McCain, an Arizona Republican, are trying to work out language that would significantly boost the CAFE standards, which currently require passenger cars to average 27.5 miles per gallon (mpg) and light trucks to get 20.7 mpg. The current standards were adopted by Congress in the mid 1970s after the Arab oil embargo and allowed light trucks to have lower mileage requirements because at the time they were mainly used by farmers and businesses. Now light trucks, which include gas-guzzling SUVs, account for half the vehicles sold in the United States. ©2001 Reuters Limited