Infiniti will build cars outside Japan because of strong Yen image

Premium automaker Infiniti will build its next models outside its home market to escape the burden of a strong yen, Chief Executive Carlos Ghosn said on Wednesday.

The executive said that the strength of the yen, which at 77 to the dollar is close to a record high, makes Infiniti cars price less competitive.

On the same time, the mother company – Nissan has decided to halt domestic production of its Teana luxury sedan as early as 2012 for the same reason. Nissan plans to move Japanese production of the Teana to the U.S. Domestic sales of the sedan will continue through imports.

“Today, at 77 yen to the dollar, it’s a nightmare,” Andy Palmer, Nissan executive vice president in charge of global planning and program management, told Dow Jones Newswires at the Frankfurt Motor Show.

Nissan estimates that each time when the dollar weakens by 1 yen, the move reduces the company’s annual operating profit by Y20 billion. The company projects an operating profit of Y460 billion for the current fiscal year through March.

However, the strong yen has merits: people can travel abroad from Japan and companies in Japan can import raw materials from abroad at lower prices.
But most economists believe that the adverse effects of the strong yen on the economy caused by poor business performances will outstrip the merits of the strong yen.