Reducing vehicle content to offset the effects of the strong yen can be dangerous for Japanese importers.
The better solution, some executives say, is strategic sourcing of vehicles and components.
"If you let engineers run your programs, you would simply de-content," says Andy Palmer, Nissan Motor Co.'s executive vice president in charge of global vehicle planning, who is based in Yokohama, Japan. "But we're not going to do that. What we will do is reduce our exposure to the yen by limiting what we build in Japan."
Trying to protect profit margins by removing content would be a mistake for Nissan and Infiniti, Palmer says.
Nissan has declared that it will produce no more than 1 million vehicles in Japan in the future, and 500,000 of those will be for the Japanese home market.
As for exported vehicles, yen-based content will be limited to 40 percent of the value, Palmer says.
This year alone, Nissan has decided it will build the Nisan Rogue crossover and Leaf electric car and Infiniti JX crossover in Smyrna, Tenn., to supply U.S. dealers. And its new B-segment NV200 commercial van will come from Nissan's Cuernavaca, Mexico, plant.
Toyota Motor Corp. just opened a plant in Blue Springs, Miss., to build 150,000 Corollas annually.
Mazda could begin shipping Mazda2s and Mazda3s from its Guanajuato, Mexico, plant, which is scheduled to open in 2014. The factory will begin turning out vehicles for Brazil and other Latin American markets in 2013.
"If we've got a plant down there with 140,000 units of capacity, you'd think that the U.S. would want to at least try to source some of that out of there," says Jim O'Sullivan, CEO of Mazda North American Operations.
Still, that's just a fraction of Mazda's manufacturing footprint. And Mazda Motor Corp. CEO Takashi Yamanouchi cautions that there are limits to the parts it can import to its Hiroshima, Japan, plant.
"It's about 20 percent today," Yamanouchi says. "But you can't ship bulky things from overseas because of expensive transportation costs. So because of that, the maximum we think we can import is 30 percent of the parts."
Mitsubishi increased the percentage of imported parts used in its Japanese plants from 18 to 21 percent in one year. By 2013 it will be 25 percent, says Osamu Masuko, president of Mitsubishi Motors Corp.
"It may look like a slow shift, but the actual monetary amount is quite high: more than ¥1 trillion," or about $12.8 billion, Masuko says.
Yasuyuki Yoshinaga, appointed president of Subaru parent company Fuji Heavy Industries Ltd., says Subaru's midterm business plan hinges on the yen at 90 to the dollar. If it holds at 76, the company is going to have to look into more aggressive options, which might include expanding the plant it shares with Toyota in Indiana.