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Toyota Devaluation Analysis

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Is it bad or good in case of Toyota? Devaluation means fall of the currency value, so you as a foreigner can buy Toyota Camry for cheaper price than you did it before, so Toyota can export more goods to other countries. But there are some negative effects of devaluation like import is more expensive. So it make overseas production more expensive for Toyota. Anyway, most of the Toyota production takes place in Japan. Despite the fact that Toyota shifted production abroad to be closer to their foreign customers, Toyota still makes two out of five of its cars in home country – of which more than half are exported – so every JPY 1 fall from its projection means a 2 % boost in operating profit. So Toyota Corp. exports more than imports. In economy it is called assuming demand (AD) = export – import, therefore Japan’s AD become higher, than it makes Real GDP higher. The other negative consequence is that increasing AD causing demand pull inflation rate up, so the price of Toyota cars for Japanese people is getting higher (Japan is already one of the most expensive countries in the world). In our opinion, Toyota has more advantages than disadvantages from weak …show more content…

Toyota is an example of positive effect of weaker yen on average wage.
Japanese workers at Toyota have got their first increase in base pay since 2008, a step is considered as a success of the Japanese government and “Abenomics” economic stimulus programme by Shinzo Abe.
Over 50,000 Toyota workers in Japan will see their monthly wages increase by an average of JPY 2,700 (or $26) and above increases related to the cost of living and pensions, this great news was announced by Toyota in the month of December this year. Last time when base wages rose at the Toyota company was in 2008, by an average of Y1,000 per month. The increase in Toyota’s base pay scale comes on top of the seasonal bonuses that account for a quarter to a third of many Japanese workers’ incomes. Toyota workers will receive bonuses of 2.44 million yen, equivalent of nearly seven months’ salary.
Fixed monthly salary for the typical Toyota worker will increase by Y10,000, including the cost-of-living and pension gains. This is the first time in past 20 years when Toyota worker will get a combined increase in their

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