We talk a lot about global car makers seeing a lot of growth in China and other emerging markets. Toyota seems to be in the opposite position, thanks to the strong yen. For the first time since the global recession, the Japanese auto giant -- the biggest car company in the world by sales -- reports that its sales in China are down on a year-over-year basis, plunging 6% in October alone.
While Toyota TM still sells a healthy 61,600 cars into China (roughly split between Corolla and Camry models), its vehicles are still seen as relatively expensive there.
The strong yen is not helping. As the Japanese currency remains at the highest levels seen in decades, the country's exports naturally become more costly to yuan-based consumers, who will be more likely to buy locally produced products or foreign wares made in a weaker currency environment. Despite the currency wars, Toyota's Japanese rival Nissan NSANY remains committed to the China market.And Hyundai (thinly traded as HYMLF), which has battled a strong Korean won, is now selling a lot of cars across to China. In an environment like this, yen-based ETFs like YCL may be more lucrative for some investors than yen-denominated stocks.
Disclosure: no positions