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Nissan’s Outsourcing Future

An announcement by Nissan CEO Carlos Ghosn at the New York auto show should sound a cautionary warning for Canadians wondering about the future of car manufacturing in our country.

Last December, at the Tokyo motor show, Ghosn announced that the high Japanese yen is forcing Nissan Motor to move Infiniti production out of Japan.

"You won't have to wait a long time before we make a decision about the new base for sourcing of Infiniti,” Ghosn told a group of reporters at the New York Auto Show. “If you follow our logic, we should make the cars where we sell them.”

Already the Infiniti JX is being built at Nissan’s plant in Tennessee. Now Nissan may move some, if not all, Infiniti production to perhaps North America or China or elsewhere. The details are unclear. We know this: Nissan has announced plans to build a new $2-billion (U.S.) factory in Aguascalientes, Mexico. While Nissan has not said what models will be built there, Infinitis are now on the radar screen.

The problem, as Ghosn discussed at the show here, is that back around the time of the big financial crisis, the yen traded at about 110 to the greenback. This week it hit 82.36. Last December, Ghosn warned those listening in Tokyo that his company would consider moving production out of Japan if the yen remained at an uncompetitive exchange rate. He’s been true to his word.

The strong yen, he said here in New York, is a barrier to Infiniti reaching its sales goals. Currently, all Infiniti models save the JX are built in Japan – yet Infiniti vehicles are not sold in Japan

“So this is an interesting case,” he said, “where you have most of the sourcing in Japan, none of the sales in Japan. And today, having the sourcing in Japan with the yen is obviously not the right system. So we're going to be moving Infiniti out of Japan in order to give it a little bit more competitiveness.”

Take note that Nissan is not building a new plant in Canada. While it’s true that Toyota recently announced an expansion of its plant in Woodstock, Ont., as a general rule Canada is not the destination of choice for cost-conscious car makers who eye our strong dollar and high wages in the assembly sector and then look elsewhere to invest – in Mexico, the southern U.S. states, China and other places.

Ghosn’s announcement should send shivers down the spines of anyone watching the hollowing out of Canada’s manufacturing sector.

http://www.theglobeandmail.com/glob...rm-for-canadian-auto-industry/article2393139/
 

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Another Article on Nissan's move out of Japan


Nissan to pull Infiniti production out of Japan to counter strong yen

Read more: http://www.autoweek.com/article/20120405/CARNEWS/120409919#ixzz1rBvOAVPo


The high value of the yen will prompt Nissan Motor Co. to shift production of Infiniti vehicles out of Japan to other locations, Nissan CEO Carlos Ghosn said.

"You won't have to wait a long time before we make a decision about the new base for sourcing of Infiniti," Ghosn told a group of reporters April 4 during the New York auto show. "If you follow our logic, we should make the cars where we sell them."

Infiniti currently imports every model but one from Japan. Last month, the luxury brand launched production of the new JX35 crossover at Nissan's assembly plant in Tennessee.

Ghosn said that North America and China are both under consideration as locations for additional Infiniti production sites.

Coincidentally, Nissan said earlier this year that it will build a new $2 billion assembly plant in Aguascalientes, Mexico, and has not specified what products it will produce there.

On Wednesday, one dollar bought 82.36 yen in trading, though the Japanese currency has bounced off its recent highs.

The yen's strength has substantially weakened Japanese automakers' earnings on exports, forcing them to move more output overseas.

Ghosn blamed the high value of the yen for holding Infiniti back from his goal of claiming 10 percent of global luxury sales.

He admitted Infiniti is still far behind on that goal.

"Infiniti is not sold in Japan," he noted. "So this is an interesting case where you have most of the sourcing in Japan, none of the sales in Japan. And today, having the sourcing in Japan with the yen is obviously not the right system. So we're going to be moving Infiniti out of Japan in order to give it a little bit more competitiveness."

Last year, Infiniti sales in China rose 61 percent, according to the company. The automaker recently announced that it will move Infiniti's global operating headquarters out of Japan and establish it in Hong Kong.

Ghosn said that Nissan has observed Infiniti's German rivals diversify their source of production at different locations around the globe. He indicated that diversification is also a smart move for Infiniti.

"We're seeing what the Germans are doing," he said. "The Germans are diversifying their base and they are producing practically everywhere."

Infiniti's U.S. sales are down 6 percent so far this year from the same period in 2011, despite the addition of small numbers of new JX sales.



Read more: http://www.autoweek.com/article/20120405/CARNEWS/120409919#ixzz1rBvAaZOc
 
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