Last Thursday, the yen hit a seven-month high against the U.S. dollar. That wouldn’t be so bad if the country’s currency hadn’t strengthened so much, from under 120 yen per dollar five years ago to less than 78 at the end of last week.As a result, exports have become more expensive, thus limiting profits.

Japanese automakers have felt the strain for quite some time now. Add last year’s tsunami that seriously disrupted production and the high labor cost and corporate taxes and it is not difficult to see why the Japan Automobile Manufacturers Association (JAMA) decided to act.

According to Reuters, JAMA has asked both the Japanese government and the Bank of Japan, the country’s central bank, to implement measures that will counter the strong yen as soon as possible.

“The current foreign exchange level, which is far from the actual ability of the Japanese economy, goes much beyond the limits of what companies can do through efforts to cut costs”, said Akio Toyoda, Toyota’s president who also heads JAMA.

Toyota spokesperson Joichi Tachikawa said the company may raise its vehicles’ prices. “As part of making the business profitable again, our options include price hikes for cars we export from Japan”, he said, though he didn’t elaborate on the details of the possible price increases.

Japan’s biggest car manufacturer has recovered from last year’s crisis and was the world’s best-selling automaker in the first half of 2012. It remains committed to building at least 3 million vehicles annually in Japan, yet at the same time, it is also shifting production of the North American-market Yaris to its Valenciennes plant in France and the Lexus RX SUV to Canada.

Other Japanese car companies are adopting the same practice as a means to reduce their costs. Nissan, for example, will build the Rogue compact crossover, and probably the Murano SUV, at its Tennessee plant in the U.S. from the 2014 model year and Honda announced last year that it would reduce production at its Japanese plants by 50 percent over the next decade.

By Andrew Tsaousis

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