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What Fluctuations In Currency Mean For Car Interiors

ROBERT SIEGEL, HOST:

The U.S. dollar is stronger than it's been in a decade. Other major currencies like the euro and the yen have been falling. These currency fluctuations don't just affect travelers and multinational corporations. They also impact who gets hired and where and even the interiors of the cars we drive, as NPR's Sonari Glinton reports.

SONARI GLINTON, BYLINE: When you hear in the news that the dollar is up and the yen is down, it's kind of hard to know what that means, and I'm an economics reporter. A strong dollar means in a very basic way imports are cheaper, and our exports are more expensive, partially because it's hard to see the immediate effects. That's because executives try very hard to hide them from us.

CARLOS GHOSN: Yeah, I'm Carlos Ghosn, chairman and chief executive officer of Nissan Motors.

GLINTON: Ghosn knows a bunch about international currency policy. He's a French citizen born in Brazil but of Lebanese ancestry, and he runs Nissan and Renault.

GHOSN: We have been dealing with the volatility of currencies, particularly the yen - yen to the dollar, yen to the euro, yen to the rial, yen to the rupee - for a very long time.

GLINTON: What Nissan and other carmakers have done to combat that is called localization.

GHOSN: Because we pushed a lot of production in the United States, in China, in Russia, in Brazil in order to import less cars from Japan.

GLINTON: And long-term, that's a policy most automakers are following. Build cars as close to where you sell them as possible, and that protects the companies from big changes in exchange rates, but that's a long-term strategy. It takes years and billions of dollars to build plants. In the short term, it's all about cutting corners.

JOHN KRAFCIK: I'm John Krafcik, the president of TrueCar, and we're sitting now in what I would call a mid-premium Japanese luxury car.

GLINTON: Krafcik spent more than a decade at Hyundai, and before that he was at Ford. He points out how we can see the fluctuation in currencies on the inside of a car.

KRAFCIK: You can tell if times are good for an automaker with a couple of different clues. And one of them is - and I love this - the number of visible stitches you see.

GLINTON: So if you see a lot of stitching, times are good and the currency is going in favor of the carmaker.

KRAFCIK: And the contrary - during times when automakers are for whatever reason trying to reduce the cost of a car, that is one way and one of the first places that automakers go.

GLINTON: Because when a company's home currency is strong, the little extras are more expensive, and when it's weak, they can shove a lot of frills in for those overseas buyers. But they don't just stop at stitching

KRAFCIK: This sound that we hear...

(CAR DOOR CLOSING)

KRAFCIK: ...Is an engineered sound. There is probably within this door three to four dollars of materials that are strictly there to develop a perfect door closing sound.

GLINTON: So when your currency is not going your way, Krafcik says, executives try very hard to cut cost in ways you can't see or hear.

KRAFCIK: There would be discussions like this one with lots of little yellow Post-it notes - right? - saying, OK, here we can save 12 cents if we remove this pad print. We could go from a spray-painted glove box part to a molded in plastic black glove box part, and that would save $1.52.

GLINTON: Now, all those costs add up little by little, and carmakers have learned that the U.S. consumer is unwilling to tolerate a Camry or an Accord being $25,000 this month and $35,000 the next. So currency policy affects you. Even if you don't immediately feel it in your checkbook, you might notice it in the lining of your glove box. Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.

Sonari Glinton is a NPR Business Desk Correspondent based at our NPR West bureau. He covers the auto industry, consumer goods, and consumer behavior, as well as marketing and advertising for NPR and Planet Money.
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