By on July 20, 2012

Less than a year ago, the Tokyo automotive press corps was summoned to Kyushu, the southernmost of the four main Japanese islands to visit a Nissan plant. Nobody knew why, until Nissan CEO Carlos Ghosn had one of his trademark impromptu outbursts. He called the exchange rate “abnormal,” several times, until everybody got it. He threatened several times that Nissan and most of the Japanese industry would pack up and leave, and delivered an ultimatum: “If six months down the road we are still in this situation, then this will provoke a rethinking of our industrial strategy.”

It is now ten months later, and the situation has not changed. At lest not on the currency charts. The yen is as deviant as it was when we were in Kyushu. Today, Carlos Ghosn is some 150 miles away from that Nissan plant. He is across the water in Busan, South Korea, where he announces a $160 million investment into Renault’s plant with Renault Samsung Motors (RSM). The money is used to install equipment to produce the Nissan Rogue in 2014 “with an annual capacity of 80,000 units.”

“Most of the Rogue SUVs built in Busan will be exported from 2014,” a Nissan spokesman told Dow Jones via The Nikkei [sub].

It is a logical choice. The plant across the water was underused, it even had to shut down for a few days. The South Korean Won remains steadily cheap against the dollar. South Korea has a free trade agreement with the U.S. and the EU,  and is negotiating deals with Canada and Mexico. It also is one of these cases where free trade agreements mean jobs.

In the meantime, the “hollowing out” of the Japanese industry continues.  Most Japanese automakers exported their growth elsewhere and are engaged in a holding action at home. Nissan is turning South Korea into the export base Japan used to be.

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8 Comments on “The High Yen Drives Japanese Automakers Out Of The Country...”


  • avatar
    schmitt trigger

    Another in a long string of press releases….the Japanese automotive environment leaving Japan.

    In the 80s, 90s and early this century, anyone even attempting to suggest that this could remotely happen, would have been wrestled to the ground, straitjacketed and immediately confined to a loony house.

  • avatar
    Chicago Dude

    A declining population means fewer jobs needed. Perhaps Japan knows what it is doing after all.

    • 0 avatar
      JCraig

      That’s a great point. Chronic labor shortage and anti immigration. Why not let the relatively low skill labor jobs involved with manufacturing go elsewhere?

  • avatar
    minneapolis_lakers

    What goes up must come down.

    What happens if the Yen weakens significantly in a few years?

  • avatar
    philadlj

    Sometimes I wonder if Nissan should just get rid of conventional press releases and instead send out galleries of Carlos Ghosn gesturing. Not only does he look related to Rowan Atkinson, he’s almost as expressive.

  • avatar
    billfrombuckhead

    The Japanese government has bought down the yen for half a century but with the nuclear disaster/tsunami/earthquake, the government can no longer afford this. Maybe the stronger yen will allow the Japanese consumer to buy more American products.

    • 0 avatar
      minneapolis_lakers

      Why can’t they?

      Japan issues its own sovereign fiat currency, so the Bank of Japan can create an infinite amount of Yen out of thin air at will.

      The problem is not technical but political — Washington will cry bloody murder if Japan engineers a massive Yen devaluation.

      • 0 avatar

        Washington does it all the time. Talk about endless stimulus programs and QEs in last 4 years. It is driven $ down vs yen not otherwise. I am sure Japanese government tries to weaken yen all the time but it cannot compete with irresponsible zeal of American government to devalue $ and impending demise of Euro.


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