Nissan's curious math for Japan production: Not so reassuring

Hans Greimel is Asia editor for Automotive News.Hans Greimel is Asia editor for Automotive News.
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TOKYO -- Nissan Motor Co. CEO Carlos Ghosn rarely talks in public these days without mentioning his commitment to building 1 million vehicles a year in Japan.

The pledge aims to reassure a nation nervous that Nissan and other exporters will close shop in Japan amid the soaring yen and ship those jobs overseas.

But a closer look shows why there is still room to worry.

Producing 1 million vehicles a year in Japan would be a drop from today's output, which is about 1.1 million units a year. So Ghosn's pledge gives him room to cut.

What's more, Nissan is planning to halve the number of vehicles exported from Japan by 2016, according to Japan's Nikkei business daily. Doing so reduces its foreign currency exposure.

The cut would slash more than 300,000 units, from last year's export tally of 671,000. So do the math. That move alone brings Nissan's domestic output below 1 million.

Nissan might be able to preserve 1 million by lifting production of vehicles for sale in Japan. But don't count on it. Japan's market has been declining for years. It's a battle for a shrinking pie.

In a nod to the challenge, Nissan says it needs to boost its domestic market share. Meanwhile, it is shifting production of compact cars overseas for reimport to its home market.

Like all Japanese automakers, Nissan is desperate to counter the yen's surge.

Keeping annual output of 1 million units in Japan will be a tall order. But one thing seems clear even if that target is achievable -- more production will be moving offshore.

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