Hyundai and Toyota Are Wary of Blames on “Yellow Peril”

After the no. 1 and no. 2 auto manufacturers, General Motors and Ford, were downgraded below investment level, some are blaming rapidly growing Asian automobile manufacturers for difficulties in the U.S. Auto companies, citing a “Yellow Peril”

Mainly Japanese auto makers are targeted, but Korean ones are also preparing for any blow.

“Yellow Peril” Appears in the U.S.-

The Financial Times reported on May 7, “Regarding the stagnation in the car industry, the U.S. Congress is exerting pressure on Japan and Korea to increase the value of their currencies.”

On May 6, 47 representatives led by Congressman Mike Rogers representing Michigan, where GM factories are located, sent letters to President George W. Bush, saying, “The Japanese government is manipulating the exchange rate, and the country should be on the list of ‘currency manipulators’ along with China.”

On such opinion, Toyota with the largest market share in the U.S. among foreign auto companies reacted sensitively.

There are possibilities of another boycott movement as in the 1980s when Japanese car makers’ export increased and a restraints policy on import of the Japanese product.

A Motive behind Toyota’s Praise of Hyundai Motors-

Hyundai Motors is growing fast with its market share increasing from 3.3 percent in 2002 to 4.1 percent in 2004, which concerns the company that it might be targeted along with Japanese ones.

In particular, the Korean auto maker has sat up and noticed after Honorary Chairman Shoichiro Toyoda said recently that Hyundai Motor Company has a good chance of success with its low prices as well as excellent design and performance.

Hyundai Motors sees this remark as a tactic of throwing the company into the criticism of the American public.

The U.S. media describes Hyundai Motors as the “next Toyota” after it completed the construction of its factories in Alabama, U.S. on May 20.

Sensing a looming crisis, Choi Han-young, chief of Corporate Strategy Coordination Office (President) of Hyundai/Kia Group, held an unplanned press conference and humbly said, “It is too early to compare Hyundai cars with Toyota cars in terms of productivity and brand value.”

“No. 7 Hyundai will not be able to rise to no. 5 any time soon, and the company is anything but a threat to GM or Ford” said Choi, keeping guard over any overstatement of the company.

Joong-Hyun Park Sung-Won Joo sanjuck@donga.com swon@donga.com