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Japan's auto industry faces crisis over strong yen, Nissan COO says

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Japan's auto industry faces crisis over strong yen, Nissan COO says

Nissan Chief Operating Officer Toshiyuki Shiga: "I feel a huge sense of crisis over the strong yen."

Automotive News Europe -- October 26, 2010 08:01 CET

YOKOHAMA (Reuters) -- A top executive at Nissan Motor Co. warned that Japan's auto industry faces a crisis beyond near-term losses as the yen hit a fresh 15-year high and came within reach of a record peak against the dollar.

"We're way past the point of talking about how the yen's rapid appreciation would damage our earnings, or that we're worried about it," Chief Operating Officer Toshiyuki Shiga said on Tuesday. "I feel a huge sense of crisis over the strong yen."

Nissan, like many other Japanese automakers, has assumed an average dollar rate of 90 yen for the business year to March 31, 2011 -- a level Shiga said was still too strong for the car industry.

But the dollar fell to a fresh 15-year low of 80.41 yen overnight -- within reach of a 79.75 record low.

Shiga, also head of Japan's auto lobby, said Nissan is taking various steps to offset near-term currency losses such as building cars exported from Japan at production sites abroad wherever possible.

The strong yen's longer-term implications are dire for Japan's world-leading manufacturing industry, however, and could weaken the competitiveness of automakers and parts suppliers if they are forced to move out of Japan, he said.

Shiga said Nissan wanted to continue building lower-margin compact cars in Japan on top of value-added products such as hybrids and luxury models, repeating he wanted to maintain a domestic production level of about 1 million units a year.

Nissan has made headlines by ending production of its high-volume March subcompact in Japan, shifting to imports from Thailand this year although that plan was made years ago and independent of the yen's recent strength.

Shiga made his comments at the launch of Nissan's first gasoline-electric car developed in-house, the Fuga hybrid, which gets 45 mpg (5.3 liters per 100km) in Japan. That type of fuel economy is comparable to a compact car.

The vehicle, its top-of-the-line sedan, will start at 5,775,000 yen ($71,470).

The Fuga is sold as the Infiniti M in many markets. The hybrid version of the car will be known as the M35h when it rolls out in Europe in spring 2011.

Nissan said its one-motor, two-clutch hybrid system would achieve far better fuel economy, at a much lower technical cost compared with hybrid leader Toyota's complex, two-motor "series parallel" system.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101026/ANE/310269988/1117#ixzz13UCcKVUE

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