Toyota and Hyundai: the pit-stop factor Does the weakening yen really justify the gap that has opened up between the two carmakers? Take two carmakers. Assume they will manage similarly moderate growth in terms of cars sold. One trades at a price, relative to expected earnings, of 13 times, the other at five. The two are Toyota and Hyundai. Does the weakening yen really justify the gap between the two? Trying to take the currency issues out of comparing the two is tough. Hyundai's expectation of its slowest sales growth in a decade, at 4 per cent, is based in part on the won's strength against the dollar as well as its plan to focus on consolidation, not expansion. Toyota, meanwhile, expects to sell only 3 per cent more cars, but analysts think revenues will jump about 12 per cent. By the bottom line, the difference is even more stark: Hyundai's net profit is expected to be virtually flat while Toyota's should rise more than 50 per cent. Hyundai's shares are off a 10th so far this year, even though sales have so far beaten expectations. Toyota has risen three-fifths. Still, Hyundai is not uniquely affected by currency woes. Korea's giants, from Samsung Electronics onwards, have been queueing up to warn of the won's profit-damping effect. Yet Hyundai's price/earnings ratio, relative to the exporter-heavy Kospi 200, has not been cheaper in nearly a decade, implying that it has been hit more than others by currency jitters that are themselves somewhat out of whack. Sure, the dollar has surged 25 per cent against the yen this year. But the won is not strengthening much. Over one year the dollar has lost 4 per cent but on the year to date it is up almost 6 per cent. There are signs, too, that Hyundai is already tired of its quiet consolidation mindset. This month the company said it was in fact considering "possibilities" overseas. If it does expand production, then Hyundai looks cheap. Toyota may not be overpriced either but, for potential beyond using stocks for currency bets, Hyundai is interesting.