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Nissan to Make More Cars in Japan, Boost Exports Next Year
From the Wall Street Journal of Sun, 21 Dec 2014 22:53:25 EST
Workers assembled a Nissan in Yokosuka, Japan, in September.
Workers assembled a Nissan in Yokosuka, Japan, in September. Agence France-Presse/Getty Images

YOKOHAMA, Japan— Nissan Motor Co. plans to make more cars in Japan and boost exports next year, Chief Executive Carlos Ghosn said Friday, stepping up measures to benefit from a weakening yen that boosts profitability for exporters.

Mr. Ghosn’s strategy is a sign of how some Japanese auto makers are tiptoeing back into domestic production, which for decades had been in decline.

The yen has been declining since late 2012, around the time Shinzo Abe was re-elected prime minister on a pro-growth platform. One of his key policies was weakening the yen, which he has since relied upon to increase exports and investment at home.

But most Japanese auto makers have been wary of significantly raising domestic production. Overall export volumes across all industries have been largely flat over the past two years, while capital expenditures have slowed since April, when Japan raised its sales tax to 8% from 5%, government data show.

Executives from Japanese auto makers including Toyota Motor Corp. and Honda Motor Co. have repeatedly said their strategy is to make cars close to the markets where they are sold to limit exposure to currency swings.

The auto makers also say that changing production locations isn’t easy because of the big, costly infrastructure involved, and production planning begins years before vehicles are actually made.

Nissan is also sticking to a general strategy of localizing production, Mr. Ghosn said, but he added that there will always be room to tweak and optimize production plans, and that is where Japan will play a bigger role.

“The yen is not any more handicapped. It’s not even in neutral territory but it comes in favorable territory, encouraging companies and particularly Nissan to bring more workload to the Japanese plant and to source more markets from Japan,” Mr. Ghosn told reporters at Nissan’s headquarters in Yokohama, near Tokyo.

Two years ago, the yen was trading at around ¥80 to the dollar. Now it is trading at around ¥119 against the dollar, making exports cheaper.

Mr. Ghosn’s statement follows similar moves by Nissan and its Japanese rivals. Honda is considering bringing some production of motorcycles intended for the Japanese market back to Japan from China and Southeast Asia, instead of importing the bikes from those regions, Operating Officer Shinji Aoyama said last month.

Nissan, which was considering shifting some engine production from its Iwaki plant in Fukushima, Japan, to a plant in Decherd, Tenn., decided in recent months to keep producing at Iwaki, a Nissan representative said—a move Mr. Abe praised in a speech last month.

Some economists say the Bank of Japan ’s move in late October to flood the economy with more money is prompting these decisions. Since then, the dollar has hit seven-year highs against the yen several times.

“The key in deciding whether to bring production back to Japan is whether companies can believe the yen will continue to gradually weaken,” said Takashi Shiono, an economist at Credit Suisse in Tokyo.

Mr. Ghosn has repeatedly said that Nissan should continue making one million vehicles in Japan each year. But it looks unlikely to hit that target this year—in January-October, Nissan made 742,820 vehicles in Japan, down 7% from the year-earlier period, as domestic sales declined after the April sales tax rise.

One vehicle that Nissan could make more of in Japan is the Rogue Crossover sport-utility vehicle, Mr. Ghosn said. The Rogue is in high demand in the U.S., where sales of the vehicle jumped 25% in January-November.

When the Rogue was redesigned in late 2013, Nissan shifted production to its plant in Smyrna, Tenn., from its plant in southern Japan. The Rogue is now also being manufactured at a Renault Samsung Motors plant in Busan, South Korea. French auto maker Renault, also headed by Mr. Ghosn, is an alliance partner of Nissan’s.

In the fiscal year ended March 2014, Japan accounted for around 20% of Nissan’s global production. It exported 55% of the cars it made in Japan. Five years ago, in the fiscal year ended March 2009, Nissan made around 36% of its world-wide production in Japan and exported some 59% of that.

Write to Yoko Kubota at

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