Nissan Motor Co sees China leading a 2011 boom for the global auto industry, but competition will be tougher than ever while Japanese makers will suffer the most due to a strong yen, a top executive said.
Nissan, held 43% by France’s Renault SA, has emerged from the global financial crisis faster than most as it managed inventory better and outpaced many rivals with sales growth in emerging markets such as China.
While China will continue to be “amazing” in 2011, executive vice-president Colin Dodge said the yen would give Japanese carmakers the biggest headwinds and would force Nissan to take more steps to reduce exposure with the dollar far below the carmaker’s comfort zone of around ¥95.
“It’s quite a worry, the yen,” Dodge, who overseas operations in Europe, Africa, the Middle East and India, told the Reuters Global Autos Summit. “If it goes on a long time, then decisions are made every day which can gradually cause the scale of operations in this country (Japan) to be smaller.”
Dodge said Nissan was in the process of studying how to be profitable at ¥80 to the dollar — it now trades at ¥83 — and that the company had decided some cars now made in Japan would no longer be so when the models are refreshed.
Nissan has done a lot to reduce currency exposure, he said, including shifting production of the Tiida compact and some pick-up trucks to Mexico and Thailand respectively.
It was also concentrating European marketing efforts in the more profitable products, sourced in euro, and away from yen-based products such as the Cube, X-Trail and Murano.
He noted the X-Trail, which had the highest profit margin in Europe in 2007 when the euro was at ¥168, was now the least profitable, while the UK-built Qashqai was its biggest earner.
Nissan would be “comfortable” with the euro at Nissan sees bumper 2011, worries on ¥130, he said, compared with about ¥113 now.
“My outlook for 2011 is that total industry volume will be the biggest in the history of our planet.
“It will be the most competitive in the car industry because all the companies that were competitive have improved even more during the bad times.”
With as much production being done outside Japan, Dodge said Nissan’s factories in Britain, Mexico and Thailand were working at full capacity, while its two US plants and other smaller ones around the world were “very busy”.
Its Thai plant, now making the March/Micra sub-compact for Japanese consumers, was at full production “for the first time” Dodge said, while Russia recently went to three shifts from just one shift six months ago. —Reuters