Chief Executive Officer Carlos Ghosn at Nissan Motor Co. has been very vocal about his commitment to manufacture 1 million vehicles annually in Japan. The pledge intends to relieve Japan’s worries that the company as well as other exporters will close shop in the country due to the soaring yen. As a result, the jobs will move abroad.
However, a closer study of the situation reveals that there is still further reason to worry. For one, manufacturing a million vehicles annually in Japan would be a drop from today’s output, which is around 1.1 million units yearly.
This means that the pledge of Ghosn gives him some room to cut. In addition, Nissan intends to reduce into half the number of units exported from Japan by 2016, as reported by Nikkei business daily. By doing so, the company reduces its foreign currency exposure.
The reduction would slash at least 300,000 vehicles from last year's export total of 671,000.
The move alone brings the domestic output of Nissan below 1 million. The company might be able to preserve 1 million by increasing production of vehicles for sale in Japan. But it can’t be relied on.
With Japan's market on a declining trend for years, automakers would be fighting for steadily decreasing sales shares. Nissan said that it’s rising to the challenge and stated that it aims to boost its share in the domestic market.
Currently, it is shifting production of compact vehicles abroad for reimport to its home market. Just like any other Japanese vehicle manufacturer, Nissan is desperate to counter the yen's surge. Even if the goal of maintaining an annual output of 1 million units in Japan is achievable, it is still expected that more production will be moving offshore.