Nissan to Trim Automotive Production in Japan

June 21, 2012
The move will mark the first time the automaker has trimmed domestic output in about a decade.

Nissan Motor (IW 1000/29) is cutting its production in Japan by 15% from next month in a response to surging manufacturing costs driven by a stronger yen and weakening domestic demand, reports said Thursday.

The company will suspend one of two production lines at the Oppama factory south of Tokyo, resulting in its domestic annual output falling to 1.15 million vehicles from 1.35 million, according to the Nikkei business daily and domestic agencies Jiji Press and Kyodo News.

A Nissan spokesman confirmed to AFP plans to suspend one line at the plant, adding that it will still be used to test new models and no job cuts were planned but did not confirm other details.

The move will end domestic production of four models including the Note and Tiida hatchbacks, and Tiida Latio sedans, the spokesman said, marking the first time that Nissan, Japan's second-biggest automaker, has trimmed domestic output since shuttering a Tokyo-area plant about a decade ago.

Some of the Oppama plant's Tiida Latio production will be moved to Thailand, the Nikkei said.

"It is a reduction of our mass production capacity but not a complete reduction of production capacity, as the line could be reactivated again if necessary," the spokesman said.

"Of course we will keep employees, although for a different role," he added.

Separate reports have said rival Toyota Motor will gradually cut its annual domestic production by 400,000 units to 3.2 million while boosting overseas production due to high manufacturing costs at home.

Japanese automakers have been increasingly eyeing increases to their overseas output amid high labor costs and a strong yen, which makes their products pricier overseas while shrinking repatriated foreign-earned income.

The industry was also battered by Japan's quake-tsunami disaster last year, flooding in Thailand in late 2011 and wobbly domestic demand.

However Nissan still posted a 341.43 billion yen (US$4.29 billion) net profit in the fiscal year to March, up 7% year-on-year and bucking a national trend of falling auto profits.

The company also said sales rose to a record 9.41 trillion yen with 4.85 million vehicles sold globally, largely driven by foreign demand, particularly in its biggest market, China.

Copyright Agence France-Presse, 2012

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