Strong yen causing crisis in Japan’s auto industry

Article by Christian A., on October 27, 2010

Nissan Motor Co.’s Chief Operating Officer Toshiyuki Shiga warned that as the yen hit a 15-year high and came near to a record peak against the dollar, the auto industry in Japan might encounter a crisis beyond near-term losses.

Shiga said that he senses “crisis over the strong yen," adding that it’s past the point of worrying about the yen's rapid appreciation.

Like other Japanese automakers, Nissan has assumed an average dollar rate of 90 yen for the business year to March 31, 2011. Shiga even still considers this to be too strong for the car industry.

However, the dollar dropped to a fresh 15-year low of 80.41 yen overnight and came within reach of a 79.75 record low. Shiga, who also heads Japan's auto lobby, said that Nissan is taking steps to offset near-term currency losses, including building cars exported from Japan at production sites overseas when possible.

He added that the strong yen's longer-term implications are dismal for Japan's world-leading manufacturing industry.

He believes that this could weaken the competitiveness of automakers and parts suppliers if they are compelled to move out of Japan.

Shiga said Nissan aimed to continue building lower-margin compact cars in Japan on top of value-added products such as hybrids and luxury models. He emphasized that he sought to maintain a domestic production level of about 1 million units annually. [via autonews - sub. required]

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