Ford and GM Shouldn't Fear the Bank of Japan

The Bank of Japan announced unprecedented moves overnight to try to pull the Japanese economy out of a slump that by many measure has lasted for nearly a quarter-century. As a result, Japanese automakers have seen their stocks rise sharply, with Toyota (NYSE: TM  ) up more than 4% and Honda (NYSE: HMC  ) climbing 5% as of 1:40 p.m. EDT.

But the big question U.S. investors are asking is whether the central bank's new policies will hurt U.S. automakers Ford (NYSE: F  ) and General Motors (NYSE: GM  ) , which have both seen strong share-price gains since mid-2012. If the Bank of Japan is successful, could Toyota and Honda get a leg up on their American competitors?

What the Bank of Japan did
The Japanese central bank took a page from Ben Bernanke and the Federal Reserve by announcing an asset purchase program similar to the multiple rounds of quantitative easing that the Fed has carried out in recent years. The BOJ will spend nearly $80 billion each month buying Japanese government bonds, doubling its current commitment, and it will also increase purchases of exchange-traded funds and real-estate investment trusts. In a further step, though, the central bank set explicit targets for expanding the country's monetary base to try to reverse deflationary pressures. The Bank of Japan's move had the intended effect of sending Japanese stocks higher, bond yields lower, and the yen's value sharply downward.

The BOJ's moves will give Toyota and Honda some advantages with their exports, as goods sold for U.S. dollars will translate into more yen when the automakers repatriate their profits. But it won't necessarily reverse troubling sales trends. Toyota's core division saw sales drop 0.5% in March, as its Camry and Prius models have seen sales slip.

Meanwhile, Ford hasn't let the already substantial declines in the yen affect its results. In March, U.S. auto sales for Ford rose a better-than-expected 6% thanks to sales of pickups and its new Escape SUV and Fusion sedan. GM saw a similar 6% rise, with the Cadillac ATS one of the highlights. Ford and GM are trading slightly lower today but don't appear to be suffering much from the BOJ move.

Don't count on huge gains for Japanese automakers
All in all, the big share-price gains for Honda and Toyota today won't last unless the automakers can capitalize on the falling yen. So far, they haven't, and further declines might not do much good anytime soon.

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