Currency doesn't determine long-term plans: Nissan COO

NISSAN Motor Co does nit make its longer-term decisions based on currency fluctuations, its chief operating officer said on Thursday (Sep 15), even as the yen’s sharp sell-off has sparked concerns about Japan Inc’s ability to manage the volatility.

The comments from Ashwani Gupta also highlight how the yen is no longer a straightforward issue for many Japanese manufacturers.

Unlike decades ago, when a weak yen was an unmitigated boon because it made Japanese goods more competitive in foreign markets and drove up revenues when they were brought home, more firms today are manufacturing abroad.

Still, the pace of this year’s yen decline – the currency is hovering at its lowest against the US dollar in 24 years – has worried policymakers in Tokyo. On Wednesday, authorities issued their clearest signal yet that they were not comfortable with recent sharp declines and were preparing for intervention.

Currency moves were the last part in “the business value chain” when it comes to Nissan’s planning, Gupta said. “We don’t take our decisions, especially the mid- and long-term decisions based on the current foreign exchange rate,” he added.

Almost a quarter of Japanese manufacturers’ production is carried out overseas, latest data from Japan’s trade ministry showed. That compares to around 17 per cent a decade ago, and less than 15 per cent 2 decades ago.

For the car industry, the proportion of overseas production is even higher at 44 per cent, the data showed.

Nissan has production operations in more than a dozen countries. Countries are also asking it to produce more in their markets, Gupta said, adding that such local production can be linked to incentives offered by governments.

He also said that the automaker would be able to weather potential tighter regulations on clean cars in some countries because of its twin strategy of producing its “e-power”-type advanced hybrids and battery-electric vehicles.

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“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.”

Shares of Nissan are little changed so far this year, slightly outperforming a 3.2 per cent decline in the Nikkei 225 average. REUTERS