Japanese carmakers shift more production to the US and other locations, as yen rises

Article by Christian Andrei, on February 8, 2011

Due to the rising yen, Japanese automakers, long protective of their domestic manufacturing base, are shifting more production to the United States and other overseas locations or are seriously talking about doing so.

Some of these carmakers include Nissan, Honda, Mazda, Mitsubishi, and even Japan’s flag-bearer – Toyota.

The rising yen weakens the value of profits repatriated from overseas and pressures Japanese automakers to raise prices on their exports, a move which makes their products less competitive. The yen, since May 2010, has climbed 14 percent against the dollar.

In early May 2010, each dollar taken in from the sale of a vehicle exported to the United States meant about JPY94 in revenue to a Japanese automaker. Nowadays, that same dollar equates to just JPY81 in revenue, but the automaker's costs, in yen, to build a car in Japan have not changed.

In March 2010, Nissan Motor Co. (among the first to act) moved production of its March subcompact car overseas. For decades, Nissan has built the car in England for European markets, where it is known as the Micra.

However, the 2010 move means the March sold in Japan is imported from a Nissan plant in Thailand - a dramatic shift in strategy. Tatsuo Yoshida, an auto analyst with UBS Securities Japan, said that with the yen at such rates, it's almost “suicidal” to make small cars in Japan and export them. [via autonews - sub. required]

Topics: japan, united states

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