The High Yen Drives Japanese Automakers Out Of The Country

Bertel Schmitt
by Bertel Schmitt
the high yen drives japanese automakers out of the country

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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4 of 8 comments
  • Philadlj Philadlj on Jul 20, 2012

    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.

  • Billfrombuckhead Billfrombuckhead on Jul 20, 2012

    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.

    • See 1 previous
    • Inside Looking Out Inside Looking Out on Jul 21, 2012

      @unhittable curveball 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.

  • Teddyc73 A resounding NO. This has "Democrat" "Socialism" "liberalism" "Progressivism" and "Communism" written all over it.
  • Jeffrey An all electric entry level vehicle is needed and as a second car I'm interested. Though I will wait for it to be manufactured in the states with US components eligible for the EV credit.
  • Bob65688581 Small by American standards, this car is just right for Europe, and probably China, although I don't really know, there. Upscale small cars don't exist in the US because Americans associate size and luxury, so it will have a tough time in the States... but again Europe is used to such cars. Audi has been making "small, upscale" since forever. As usual, Americans will miss an opportunity. I'll buy one, though!Contrary to your text, the EX30 has nothing whatsoever to do with the XC40 or C40, being built on a dedicated chassis.
  • Tassos Chinese owned Vollvo-Geely must have the best PR department of all automakers. A TINY maker with only 0.5-0.8% market share in the US, it is in the news every day.I have lost count how many different models Volvo has, and it is shocking how FEW of each miserable one it sells in the US market.Approximately, it sells as many units (TOTAL) as is the total number of loser models it offers.
  • ToolGuy Seems pretty reasonable to me. (Sorry)