Nissan Sees Yen as ‘1,000-Pound Gorilla’ Curbing Sales

Nissan Motor Co. CEO Carlos Ghosn
Carlos Ghosn, chief executive officer of Nissan Motor Co., said Japan’s second-largest carmaker may “ramp-up” its Brazilian plant expansion to compensate for the changes in the agreement. Photographer: Scott Eells/Bloomberg

Nissan Motor Co. said sales at Japan’s second-biggest automaker may reach 10 trillion yen ($123 billion) this year depending on the strength of a currency Chief Executive Officer Carlos Ghosn compared with an over-sized ape.

“There is a one-thousand-pound gorilla that’s unpredictable, which is going to be the level of the yen,” Ghosn said in an interview at the Beijing auto show yesterday. “All the Japanese car manufacturers are suffering from it, but for the rest of it, business is going very well.”

Nissan, Toyota Motor Corp. and Honda Motor Co. will report higher earnings this fiscal year, according to analysts’ estimates, as they restore production hobbled by natural disasters in Japan and Thailand during 2011. While the yen has weakened the most in a basket of 10 developed-nation currencies this year, it’s still about 40 percent stronger than in the months before Lehman Brothers Holdings Inc.’s 2008 bankruptcy.

According to the Bloomberg Correlation-Weighted Currency Indexes, the yen is at a level of 399 today, compared with 285 in June 2008. The gauges track 10 developed-nation currencies, and the yen is down 8 percent this year, the worst performer.

“Nissan is still in the process of expanding production in the U.S. and building a structure that can offset the effects of the strong yen,” Koichi Sugimoto, a Tokyo-based auto analyst at BNP Paribas SA said today. “Some of Nissan’s popular models in the U.S. are still made in Japan, and against the dollar, the carmaker still needs to build up resistance.”

Nissan fell 0.6 percent to 831 yen at the close of trading in Tokyo. The stock has climbed 20 percent this year, compared with a 12 percent advance for the benchmark Nikkei 225 Stock Average.

Nissan’s revenue may increase 6.9 percent to 10.03 trillion yen in the year ending March 2013, according to the average of 27 analysts’ estimates compiled by Bloomberg. The last time Nissan’s sales reached 10 trillion yen was in the 2008 financial year.

China Sales

Ghosn, who’s also CEO of Nissan’s biggest shareholder Renault SA, forecast the Yokohama-based company’s sales to continue to outperform in China, where industry growth may range from 5 percent to 6 percent this year.

In China, Nissan plans to become one of the top three automakers in the country, helped by models such as those introduced under the Venucia brand, which is geared toward Chinese consumers looking for affordable cars, Ghosn said. The automaker plans to introduce about 30 models in the country by 2015, including electric cars, and to almost double its deliveries to more than 2.3 million units.

Ghosn reiterated his targets for Nissan’s Infiniti brand to account for 10 percent of the global luxury-car market, compared with about 2.5 percent to 3 percent today.

Nissan Executive Vice President Andy Palmer, who heads the Infiniti business, yesterday said sales of the luxury brand in China may reach 100,000 units by the end of March 2017, or 20 percent of its global deliveries.

Nissan plans to begin producing two Infiniti models in China in 2014, Palmer said.

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