The US dollar has been dropping relative to other currencies including the Euro and the Yen, hitting a historically low level compared to the last 30 years. This means that imported goods of all kinds, including automobiles, are now more expensive in the States. However, on the other hand, the weak dollar has made US exports cheaper and therefore more competitive in the rest of the world.

This is especially good news for US car manufactures notes Edmunds.com analyst Michelle Krebs: “The weak dollar is good for manufacturers in the US, whether they’re the Big Three of German or whatever, because they can export at an advantage”.

Therefore, the trend of manufacturing cars abroad due to lower costs may be reversed and the companies will start building more cars in the US –something some of them are already considering.

Now that’s something no one had predicted: “Well, I think it surprises that the US is a good manufacturing base” Krebs agrees. “Look at all the industries that we have lost. But the automobile manufacturing base is strong – we’re even attracting automakers from around the world”.

Indeed, many automakers such as Mercedes-Benz, BMW, Toyota and Honda are already increasing their investments in US production facilities, while VW last summer opened a new plant at Chattanooga for the car formerly known as the NMS (New Midsize Sedan), aka the 2012 Passat.

Companies are not only expanding their operations for their local sales, but they are also exporting their US-made cars.

Gregory Daco, an economist at HIS Global Insight, comments: “The lower the dollar, the lower the buying power for US consumers”.

On the other hand, Daco agrees with Krebs that American-made products are becoming more competitive abroad, especially in booming markets such as China, Russia and India. “This is helping the US economy because it’s providing further sources of demand and revenues”.

The bottom line is that the weak dollar is profiting the US economy since it increases its companies’ exports and revenues, attracts foreign investors and creates more jobs for Americans.

Story source: NPR

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