24 August 2000 | David Arminas
Suppliers to Toyota are keeping a close eye on the exchange rate that the car manufacturer will use when it begins talks over invoicing them in euros.
"We don't know what the exchange rate will be," said Edward Roberts, chairman and chief executive of Peterson Springs, a second-tier supplier to Toyota. Suppliers are concerned that the rate will be pegged below the official euro exchange rate, creating a de facto price cut and squeezing their margins.
Toyota announced this month that it will be asking suppliers to trade with it in euros, but said in a statement that only "selected" suppliers would be asked to make the switch.
Toyota makes more than 175,000 cars - the Corolla and Avensis - in Burnaston, near Derby, and engines on Deeside in North Wales. Around 70 per cent of cars are exported to Europe and 10 per cent to the rest of the world.
The Toyota move comes after Nissan warned earlier in the summer that the strength of the pound against the euro might force it to move car production to the continent. Rover, which began moving suppliers to invoicing in euros last autumn, is continuing with adoption of the euro, said a spokesperson.
Both of their announcements have fuelled the political row over whether the UK should sign up for the euro. A report from business information group Dun & Bradstreet found that the number of foreign-owned businesses in Britain rose by 11.5 per cent in the past year, suggesting that the UK is still attracting inward investment despite not being in the euro zone.