Tokyo show – Ghosn warns of threat to Japan car plants

Currency pressures in Japan could force car manufacturers to move their factories out of the country, according to Renault-Nissan CEO Carlos Ghosn.

Plants might need to transfer to emerging markets such as Thailand, India and Mexico to improve the profitability of models built for export, including to the UK.

Speaking at the Tokyo show, Ghosn says that the continuing “unrealistic” value of the Yen is the major issue.

“When it stands at 77 to the dollar it is uncompetitive – it is an incentive to move production out of Japan,” he argues.

“Our company is profitable, but there is no profitability in cars made in Japan for the export market. It is difficult to make investment in a company with no profitability.”

According to Ghosn producing in Japan for the Japanese market is not an issue as the brand is competing on an equal level.

“What is at risk is that part of our production that is exported when we are neck to neck with the Koreans and some of the Americans and Europeans. For now we are going to hope for the best, but if we see a risk we are going to shift it.”

Ghosn says that he is already warning the Japanese government that it has to be careful about what the value of the yen is doing to the country’s industrial base. “Even if the yen was at 100 to the dollar it would still be too high, but Japanese industry could be extremely competitive.

“But I don’t think the economy in Japan is in such a shape that the strategy is working. There is something very artificial about this.”

Headline Auto also reports Ghosn’s concerns over financial problems in the euro zone. “Orders are dropping and the slowdown will hit the market at the beginning of next year.”

These pressures come on top of the 11th March earthquake and tsunami which hit parts supply in Japan, only three years after the collapse of Lehmann Brothers triggered an international banking crisis.

“What happened on March 11th didn’t change our strategies, but it did change our processes, organisation and mindset,” Ghosn says.

“We became a more mature company. We reacted well, and with solidarity. It taught us that things can hit you from anywhere, and you don’t know when it might happen.”

Photo: Headline Auto

Words by: Andrew Charman