TOKYO -- The head of Nissan Motor Co. said steel supply problems could resurface in March and cut output by 15,000 vehicles, a week after the carmaker said it would suspend some production in Japan due to a lack of steel.
"Our projection is that January and February should be OK, but in March there is still a risk of further supply constraints," CEO Carlos Ghosn said on Thursday. An output loss of 10-15,000 units could dent profits by $58.5 million, he said at a news conference to mark the launch of the company's new Lafesta minivan.
Nissan, 44 percent owned by French carmaker Renault, said last week it would stop production at some of its Japanese car plants for five days due to a lack of steel, which would result in lost production of about 25,000 vehicles, to be made up early next year.
Nissan's problem arose after the roll-out from early September of a string of new models such as the Tiida compact car and Fuga luxury sedan, for which orders outpaced projections.
With the Note compact due out next month, Nissan will have launched six vehicles in Japan in just five months -- after nearly a year without new models -- as it races to meet its commitment of selling 3.6 million vehicles in the 12 months to September 2005, or 1 million more than it sold in fiscal 2001.
Ghosn acknowledged that part of the reason for the squeeze could have been his strategy of slashing Nissan's supply base by a third when he took over the near-bankrupt company in 1999.
But he stressed that doing so had enabled Nissan to save 1 trillion yen, implying that losing 6 billion yen as a result was a small price to pay.
The steel shortage has forced Nissan to seek an emergency supply of steel products from South Korean steel maker POSCO Co. Ltd., which used to provide a small amount of steel to the automaker.
"We are discussing (steel procurement) from our existing suppliers, the suppliers of Renault and others," Ghosn said, adding that Nissan may buy more steel from POSCO in future.
"Supply of steel in Japan will continue to be tight for six months at least. We need to watch the situation in March," Ghosn said. Japanese automakers typically gear up production in March in a final spurt to dress up their fiscal-year performance.
The steel shortage was also troubling Nissan's domestic competitors, Ghosn said.
That situation stands in contrast to the conditions faced by General Motors and Ford Motor Co., which said this week that they would cut production more than expected due to weak demand for their vehicles.
Even as they sweetened incentives this year, the U.S. auto giants struggled with growing inventories of unsold vehicles as sales of their ageing car lineups slipped and consumer tastes shifted from their stable of large SUVs.