Currency Shifts Are Changing the US Auto Market

Feb 10, 2015 06:30 PM EST | Jordan Ecarma

The strengthening American dollar could affect the auto industry in the long term, slowing down production in the United States, according to Automotive News.

When a weak U.S. dollar made bringing vehicles to America less profitable, car companies based in Japan and Germany built assembly plants in U.S. and were joined by auto suppliers.

Foreign auto brands in the U.S. market have increased their share from 25 percent in 1995 to 55 percent this year, Automotive News reported.

But as the dollar has risen in value against other currencies, the auto industry is starting to adjust as profits increase in Japan and automakers reconsider expanding production in North America.

The change could bring more European imports to the U.S. as the euro declines in value. The euro fell last week to $1.14, its lowest exchange rate in a decade.

"Listening to our OEM partners, I think there will be more cars being shifted this way," David Hult, COO of the dealership group Asbury Automotive Group Inc., told Automotive News.

A combination of a strong U.S. dollar and slowing sales in China and Russia is bringing about the shift, he said.

"A couple years ago, there was a big push to push it to Russia and China, and I think that's shifting a little bit now," Hult said.

In the last two decades, a weak dollar meant that German carmakers such as Audi and BMW made more profit by shipping German-made vehicles to China or Russia rather than the U.S., giving American dealers short supplies of European car brands.

"We haven't been told it's just the dollar," an executive in large dealership group told Automotive News, "but a combination of demand in other parts of the world has slowed and they will shift cars to the U.S. We know the dollar and the euro has a lot to do with it."

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