The Plaza Accord's Lasting Impact on American Car Manufacturing

On September 22, 1985, five finance ministers met at New York's Plaza Hotel and agreed to lower the value of the U.S. dollar. This decision would have a profound impact on the automotive industry, reshaping what Americans drive and where those cars are built.

The Plaza Accord led to a significant decrease in the value of the dollar against the Japanese yen, causing Japanese automakers to raise their prices and shift production to the United States. Within two years, the dollar lost about half its value against the yen, forcing Japanese carmakers to adapt.

Toyota's chairman Eiji Toyoda launched the flagship Lexus program in 1983, which would eventually become a luxury brand sold globally. Honda introduced Acura in 1986, and Nissan revealed Infiniti plans in 1987. These premium brands grew out of the need to reduce exports due to currency fluctuations.

Today, most mainstream Japanese nameplates sold in America are actually built locally, rather than imported from Japan. The strategy of localizing production was first employed by Japanese firms in the 1980s as a way to escape trade barriers and currency fluctuations. However, this approach has its limitations, as automakers can still be blocked from selling their cars due to political reasons.