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Yen prompts Nissan to source more non-Japanese parts

Strengthening yen reduces the value of overseas earnings
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Nissan Motor Co., Japan’s second-largest automaker, may have to import more components from overseas as it looks to counter the yen’s appreciation.

“We are importing parts from other neighbouring countries such as China and Thailand to reduce exposure in Japan,” Toshiyuki Shiga, chief operating officer of Yokohama, Japan- based Nissan, said in Bangkok. “If the yen continues to appreciate, may be we have to do more.”

Nissan imports about 40-45 per cent of its parts from outside Japan, Shiga said. The Japanese currency gained to a postwar high of 75.82 yen to the dollar in October last year and has traded at an average of 78.73 over the past 12 months. A strengthening yen reduces the value of overseas earnings and leaves less room for the cars made in Japan to compete on price against rivals from countries with weaker currencies.

The company will have to be careful as sourcing parts from outside Japan will have an effect on Japanese suppliers, Shiga said. Nissan will have to “carefully consider” what percentage of its parts it would source from Japan, he said.

Nissan is still on track to meet its global sales target of 5.35 million units in the current financial year, Shiga said, as demand from Russia and other countries offsets a slowdown in Europe.