Living with the Yen

KANDA-MACHI, Fukuoka, Japan – Watching Nissan X-Trail SUVs preparing to set sail from the carmaker's manufacturing hub in Kyushu, it's hard to grasp the challenge of profitable mass-production in Japan.

But with the yen stubbornly close to a record highs first seen after the 2008 financial crisis, it's never been tougher for the nation's auto and electronics manufacturers to produce competitively at home.

For Japan's largest carmakers, the yen problem is compounded by self-imposed commitments to safeguard Japan jobs and knowhow, with Nissan alone pledging to make 1 million cars a year domestically.

One way to boost efficiency is by shifting output from traditional strongholds.

Toyota is ramping up production at a factory in Sendai, northeast Japan, while Nissan is marshaling resources further south, this month starting sales of Kyushu-made Note hatchbacks.

"Production of the Nissan Note in Kyushu will contribute to increasing, or maintaining, Japanese production volumes," said Toshiyuki Shiga, Nissan's Chief Operating Officer.

"Geographically, Kyushu is close to East Asian countries, such as Korea, China or Thailand, so we can easily access neighboring countries and import very competitive parts and components."

An alliance with Mitsubishi Motors is further boosting efficiency, with Mitsubishi debuting Nissan-built Proudia and Dignity models this summer.

While that won't help Japanese carmakers boost domestic output to pre-2008 levels anytime soon, it at least offers some respite from the yen's surge.

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