Nissan CEO: Yen pushing production overseas

The common denominator between both moves: Building production and customer base outside the Japanese market, as export-driven companies have been hammered by the high value of the yen.

Nissan produces about 20% of its cars in Japan, but CEO Carlos Ghosn would like to see that reduced.

“We’re going to continue to do that (offshore production), obviously, because how can you compete with the yen at 80 yen to the dollar when the historic level has been 110 (yen to the dollar)?” Ghosn told CNN’s Andrew Stevens. “We cannot compete against Korean makes or other competitors.”

The yen hit record high of 75.93 yen to the U.S. dollar in October and remains stubbornly strong, hovering around the 79.45 yen to the dollar this week.

“I’m still not happy because of the strength of the yen. The strength of the yen is a penalty for Japan,” Ghosn said. “I don’t think it’s so much a penalty for companies, because large companies have the possibility to off-shore production.”

Despite the ongoing travails in Europe, Ghosn predicts 2012 will be a record year for the automotive industry. “Last year the industry produced and sold about 76 million cars — we are on a trend this year to sell 79 million,” he said.

“I think in 2012 we’re going to have a recession in Europe, that’s obvious,” he added.

“Yes, Europe is going to be a problem … but Japan’s going to be better than last year,” Ghosn said, as the world’s third largest economy recovers from the March 2011 earthquake and tsunami, and the subsequent energy problems, as the nation’s nuclear plants went off line following the Fukushima nuclear disaster.

“The U.S. is in recovery more (and will sell) 1 million additional cars compared to last year,” Ghosn said. “China, even though the growth has slowed down, there is still growth — 5% to 6% growth of 17 million or 18 million cars sold there is still an additional million cars worth of growth.

“Brazil is growing well, India is growing well, Russia is growing well, the Middle East is coming back,” he added.

The move of Infiniti’s headquarters to China is designed to help Nissan capture the luxury car market, a segment which has seen “20% to 25% growth on a yearly basis,” Ghosn said.

Nissan announced earlier this year the return of the Datsun brand after 30 years. The company plans to introduce the low-cost car in several emerging markets in 2014.

The Datsun brand first emerged in Japan in 1923 but was phased out in the 1980s as the company focused on mid-market buyers and its upscale Infiniti brand, launched in 1989.

The company also plans to invest $400 million in Indonesia production, adding 3,300 jobs and producing 250,000 vehicles by 2014.



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