Strong yen forces Nissan to cut capacity at home

Auto & Audio June 21, 2012 00:00

By The Nation

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Nissan Motor Co, Japan's second- largest carmaker, will cut domestic capacity 14 per cent to improve efficiency as the yen holds near its postwar high versus the dollar, according to Bloomberg.


The news agency reported that Nissan will shut one of two production lines starting next month at its Oppama plant in Kanagawa Prefecture, trimming capacity to 240,000 units a year from 430,000. Quoting Chris Keeffe, a spokesman for the Yokohama-based company, Bloomberg said that Keeffe declined to confirm an earlier Nikkei newspaper report saying the company would shift some of the capacity to Thailand.
  President Carlos Ghosn has said the company will make at least 1 million cars a year in Japan, where capacity before the cuts confirmed today was for 1.35 million units. 
  Nissan produced 28 per cent of vehicles at home last financial year, compared with Toyota Motor Corp's 53 per cent. The suspension of the line means Nissan will no longer produce its Note, Tiida, Tiida Latio and Sylphy models in Japan. Keeffe declined to comment on where the models are going to be produced.
While in Thailand, Ghosn announced big plans for the market. Nissan Motor Thailand is to introduce 10 new models within 5 years from now. The company is also wooing for applications for dealership. 
The sharp appreciation of Japanese yen is now a key driver, pushing more Japanese firms to invest elsewhere. Japan remains Thailand's biggest foreign investor.
  The yen gained to a postwar high of 75.35 yen to the dollar in October last year and has traded at an average of 78.66 yen over the past 12 months. A strengthening yen reduces the value of overseas earnings and leaves less room for the cars made in Japan to compete on price against rivals from countries with weaker currencies.