Japan’s big automakers, led by Toyota and Nissan, are speeding up their shift overseas, as the unfavorable strong yen is seen as a long-term possibility.
The slowing home market and energy shortages following the widespread nuclear power shutdown are also tipping the balance toward investment in other countries. Toyota and Nissan said on Thursday that current exchange rates were forcing them to change their production plans.
Nissan CEO Carlos Ghosn said fixed exchange rates should be applied, otherwise the company may be forced to transfer more of its manufacturing overseas. “We need just one thing. Fix the exchange rate. Fix it,” Ghosn said told the Japan Society in New York.
The yen was trading at about 77 yen to the dollar on Friday, compared with 90 yen two years ago. The euro is down to 104 yen, compared with 134 yen in November 2009, reducing the value of overseas revenues brought home to Japan by exporting companies.
The yen’s strength has put at risk Toyota’s commitment to producing at least 3 million cars in Japan each year, with CEO Akio Toyoda saying on Thursday the company may need to “deepen alliances” to address the issue. “Rival companies are spreading their production, and in this day and age, how far can they stick to an obligation like that?”, Yuuki Sakurai, president of Fukoku Asset Management in Tokyo, was quoted as saying by Reuters.
Shares in Nissan fell 2.5 percent, Toyota closed down 2.3 percent and Suzuki dropped 2.7 percent on Friday.