The High Yen Drives Japanese Automakers Out Of The Country

Less than a year ago, the Tokyo automotive press corps was summoned to Kyushu, the southernmost of the four main Japanese islands to visit a Nissan plant. Nobody knew why, until Nissan CEO Carlos Ghosn had one of his trademark impromptu outbursts. He called the exchange rate "abnormal," several times, until everybody got it. He threatened several times that Nissan and most of the Japanese industry would pack up and leave, and delivered an ultimatum: "If six months down the road we are still in this situation, then this will provoke a rethinking of our industrial strategy." Today, the situation has not changed. The yen is as deviant as it was when we were in Kyushu. Today, Carlos Ghosn is some 150 miles away from that Nissan plant. He is across the water in Busan, South Korea, where he announces a $160 million investment into Renault's plant with Renault Samsung Motors (RSM). The money is used to install equipment to produce the Nissan Rogue in 2014 "with an annual capacity of 80,000 units." "Most of the Rogue SUVs built in Busan will be exported from 2014," a Nissan spokesman told Dow Jones via The Nikkei [sub]. It is a logical choice. The plant across the water was underused, it even had to shut down for a few days. The South Korean Won remains steadily cheap against the dollar. South Korea has a free trade agreement with the U.S. and the EU,  and is negotiating deals with Canada and Mexico. It also is one of these cases where free trade agreements mean jobs. In the meantime, the "hollowing out" of the Japanese industry continues.  Most Japanese automakers exported their growth elsewhere and are engaged in a holding action at home. Nissan is turning South Korea into the export base Japan used to be. from The Truth About Cars http://www.thetruthaboutcars.com

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