TOKYO (Reuters) – Nissan Motor Co Ltd does not make its longer-term decisions based on currency fluctuations, its chief operating officer said on Thursday, even though the sharp drop in the yen has raised concerns about the ability to Japan Inc to manage volatility.
Ashwani Gupta’s comments also highlight that the yen is no longer a simple issue for many Japanese manufacturers.
Unlike decades ago, when a weak yen was an absolute boon because it made Japanese products more competitive in overseas markets and increased revenue when brought back home, more and more companies are now manufacturing overseas today.
Still, the pace of the yen’s decline this year – the currency is at its lowest against the dollar in 24 years – has worried policymakers in Tokyo. On Wednesday, authorities gave the clearest signal yet that they were uncomfortable with recent sharp declines and were bracing for intervention. [FRX/]
Currency movements were the last part of “the business value chain”, as far as Nissan’s planning goes, Gupta said in an interview with Reuters Newsmaker. “We don’t make our decisions, especially medium and long-term decisions based on the current exchange rate,” he said.
Nearly a quarter of the production of Japanese manufacturers is made overseas, according to the latest data from the Japanese Ministry of Commerce. This compares to around 17% ten years ago and less than 15% two decades ago.
For the automotive industry, the proportion of overseas production is even higher – 44%, according to the data.
Nissan has production operations in more than a dozen countries. Countries are also asking him to produce more in their markets, he said, adding that such local production can be tied to incentives offered by governments.
Gupta also said the automaker would be able to withstand potentially tougher clean car regulations in some countries due to its dual strategy of producing its advanced e-power hybrids and electric vehicles at low cost. battery.
“We are fully prepared,” he said. “From the point of view of economy of scale, we use the same electric train for electric power and electric battery.”
Nissan shares have been little changed so far this year, slightly outpacing a 3.2% decline in the Nikkei 225 average.
(Reporting by Pete Sweeney; Editing by David Dolan, David Evans and Kim Coghill)
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