Nissan executive vice president Colin Dodge said that Japanese carmakers will continue to suffer from a strong yen next year although China will bolster the company’s performance in 2011.
He said that Nissan had emerged from the financial crisis faster than most of its rivals as it had managed inventory better and outpaced many rivals with sales growth in emerging markets such as China.
Dodge said China will continue to be "amazing" in 2011, but the yen would give Japanese automakers the biggest problems, forcing Nissan to take more steps to reduce exposure with the dollar far below the automaker's comfort zone of around 95 yen.
He told the Reuters Global Autos summit: “The yen is quite a worry. If it remains strong it could gradually cause the scale of the operations in Japan to be smaller."
Dodge is responsible for Nissan’s overseas operations in Europe, Africa, the Middle East and India.
Earlier this week, chief operating officer Toshiyuki Shiga said Nissan will struggle to increase profits in the next business year if the yen remains at its strong levels, even if sales can be expanded.
He said: "We're still working on our projections for next year, but it would be very difficult to see profits continuing their rise with the dollar at JPY80."
Shiga said despite improved sales, Nissan's profit margin was expected to more than halve to 3.4% in October-March, the second half of the current business year given the exchange rate assumption of JPY80 to the dollar versus JPY89 in the first half.
Nissan is already taking steps to offset currency losses, including procuring more components locally for vehicles built outside Japan and using more imported parts for cars produced in its home country.
To become more competitive, Shiga said Nissan wanted to boost the portion of imported parts for its Japan-made vehicles to around 40%. The current ratio for its small cars, which have the highest ratio of imported parts, is between 20%-29%, he said.