Even while the rapid decline in the value of the yen has raised questions about Japan Inc.'s capacity to control volatility, Nissan Motor Co. Ltd.'s chief operating officer stated on Thursday that the company does not base its longer-term choices on currency swings. The remarks made by Ashwani Gupta also show how the yen is no longer a simple problem for many Japanese manufacturers.
Unlike decades before, when a weak yen was an undeniable benefit since it made Japanese products more competitive in international markets and increased earnings when they were brought home, more companies are now outsourcing their manufacturing nowadays.
The rate of the yen's slide this year, though, has alarmed authorities in Tokyo. The currency is currently trading at its lowest level against the dollar in 24 years. Authorities gave their most definite indication yet on Wednesday that they were getting uncomfortable with the recent rapid falls and were getting ready to intervene.
According to Gupta in a Reuters Newsmaker interview, currency changes were the final step in "the business value chain" when it came to Nissan's planning. "We don't take our decisions, especially the mid- and long-term decisions based on the current foreign exchange rate," he said.
The most recent statistics from the Japanese commerce ministry show that about a quarter of the manufacturing of Japanese enterprises is done abroad. That contrasts with less than 15% two decades ago and about 17% a decade ago. The research revealed that the percentage of overseas production in the auto industry is considerably greater, at 44%.
Nissan has manufacturing facilities in more than a dozen nations. According to him, nations are also requesting that it provide more for their markets. Government incentives, he suggested, may be related to increasing this local output. Gupta added that the automaker's dual strategy of manufacturing "e-power"-type advanced hybrids and battery-electric vehicles would enable it to withstand possibly stricter rules on clean cars in some nations.
"We are fully prepared," he said. "From the economy of scale viewpoint, we use the same e-power train for e-power and the battery electric."
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