Nissan's Ghosn Worried About Power. The Power Of The Yen

nissan s ghosn worried about power the power of the yen

With the closure of Japan’s last operating nuclear power plant hitting the news over the weekend, people asked me what that means for Japan’s auto industry. My answer: Nothing. The shutdown of the first nukes on March 11 a year ago was much more dangerous than the long scheduled downing of the last. Nissan’s Carlos Ghosn sees a much bigger danger: the power of the yen. The high yen at the currency exchange. And higher yen numbers on the electricity bill.

The sudden loss of electricity generating capacity following the March 11 earthquake and tsunami last year was a shock. Japan and its auto industry rode it out without a blackout.

The work-week was rearranged to smooth out demand. Carmakers built private power plants. Rigorous saving regimes were enacted. When financial results for fiscal 2011 will be announced this week, top brass of Japan’s automakers will leave their ties at home. Signified by open collars, a new “Super Cool Biz” season starts, with thermostats turned to barely bearable, and with hallways dimmer than a Kabukicho cocktail bar.

One year after the quake, Japan’s luckless TEPCO utility is looking at a power surplus. It has added new gas turbine facilities and is increasing capacity by bringing closed thermal plants back online. In the Osaka area, served by Kansai Electric, outages are more likely than in TEPCO’s service area.

In general, Japan’s automakers are far less concerned of running out of power than a year ago. They are much more worried about the extra cost of power. Nissan CEO Carlos Ghosn writes today in a blog in The Nikkei [sub]:

Tokyo Electric Power (TEPCO), operator of Fukushima Daiichi and the largest energy supplier in Japan, began on April 1 to raise electricity rates for industrial and other large contract customers by an average 17%, the first such hike in three decades, which it attributed to some 830 billion yen in additional fuel costs.

Let me raise some figures. At Nissan, electricity accounts for about 10,000 yen of each car’s assembly cost. This increase will mean an additional 2,000 to 3,500 yen in additional production expense at some factories, which does not include the impact on our parts suppliers.”

2,000 to 3,500 yen per car are about $25 to $44 per unit. This may not sound like a big number, but with razor-thin margins, every yen counts. Ghosn and his Japanese colleagues are more concerned about the power of the runaway yen. After a short respite in March, the dollar has fallen below the 80 yen mark, and the trend points to a further strengthening.

While Ford’s Steve Biegun counts on an ignorant audience when he claims that the Japanese government keeps the yen low, just the opposite happens. A powerless government watches a rising yen destroy the remainder of Japan’s export machine.

Says Carlos Ghosn:

“I have been consistent in my call for urgent action to normalize the value of the Yen. The challenge now faced by industry over the stability and pricing of energy must be taken as seriously.”

Maybe Ghosn and the Japanese government should ask Ford how to manipulate the yen. Ford seems to be the only one who claims to know how it’s done.

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  • Timotheus980 Timotheus980 on May 08, 2012

    I still haven't figured out how Mr Bean got to run a car company. Does the hilarity ensure at Nissan HQ?

  • Timotheus980 Timotheus980 on May 08, 2012

    Is that Baldrick sitting to his left? Notice the expression on Baldrick's face in pic 7. Now that's a looks that says: "I can't believe he actually said something that stupid here."

  • Daniel J Also, the additional 20K is spread out over a loan, which could end up closer to 24K.
  • Wolfwagen When will GM and Dodge/Ram come out with a BOF 2 door sport utility? Im not one that jumps on the first year new vehicle bandwagon, but for a new Ramcharger, I'd sleep out in front of a dealership for days to be first in line for preordering (or infront of my computer for hours)
  • Wolfwagen Is it me or does the front end look like a smaller silverado?
  • MQHokie Who decided moving all headlight control to the touchscreen was a good idea? I assume this means no manual high beam control anymore, so you're at the mercy of the automatic system that gets fooled by street lights, porch lights, sign reflections etc. Not to mention a good software bug or a light sensor failure might render the lights inoperable. With all the restrictions the NHTSA has placed on USA headlight design over the years, it amazes me that this is even legal.
  • Teddyc73 The Bronco just doesn't have enough editions and models.