Renault-Nissan CEO Carlos Ghosn said the euro is currently at a more reasonable level against the dollar.
“The strengthening of the yen beyond anything that would be based on basic economic facts is stunning for us,” Ghosn told CNBC.
Ghosn also said he isn’t concerned about a slowdown of economic growth in China. “Slower growth is not such bad news for those looking for a long-term strategy,” he said. “A growth of 6%-7% of the car market still adds one million more cars in China.”
In addition, Ghosn painted a gloomy outlook for carmakers in Europe this year, saying he expects automobile sales in the region to decline 2%-3% and 5%-6% in France.
However, the executive expects a record year for the automotive industry this year. Speaking in an interview in Davos, Switzerland, Ghosn said a European market decline will be offset by sales in the rest of the world. He said his forecast is also valid for Nissan and Renault.
“The rest of the markets outside Europe will be growing.” You will have growth in the United States, we think one million more cars, growth in China, even in Japan.”
Strong Yen and Mexico
Over the past 6 months, the Yen’s strength has increased by 9%. This has made not only Nissan’s, but all Japanese auto makers exports less effective and profitable.
In a way to avoid high costs, the company will produce more cars in Mexico, where the company will invest $2 billion to build a new manufacturing plant.
“Relative to what have been low-cost Asian production sources, Mexico is looking more attractive,” said Alan Baum, principal of Baum & Associates, a provider of automobile- industry analysis in West Bloomfield, Michigan.
Construction of the plant in the northern state of Aguascalientes will begin this summer and production should start by the end of next year, according to a company statement.
Nissan has led market share in Mexico for three years, ending 2011 with a total of 24.8 percent. The automaker has been increasing its market share in the U.S., meanwhile, for the last six years straight, finishing 2011 with a total of 8.2 percent.