Infiniti to Move Production Out of Japan; Strong Yen to Blame

By Trevor Dorchies | April 05, 2012
At the 2012 New York International Auto Show, Nissan CEO Carlos Ghosn made it known that Infiniti will be moving its production facilities from Japan to an undetermined location. No timetable or destinations have been mentioned yet, but Ghosn acknowledged that a decision would be coming shortly. "You won't have to wait a long time before we make a decision about the new base for sourcing of Infiniti," Ghosn told Automotive News Wednesday during the New York auto show. "If you follow our logic, we should make the cars where we sell them." Nissan recently moved some of its production facilities to Tennessee and Mississippi, so it's not out of the realm of possibility Infiniti could follow in the same footsteps and come stateside. As it stands now, Infiniti exports every model it produces from Japan except for the all-new 2013 Infiniti JX35 crossover, which will be pieced together in Tennessee. Ghosn went on to say that both the United States and China are in the final running for an Infiniti production site. Infiniti has also been building a new production facility down in Mexico near parent company Nissan's other plants but has yet to clarify what will be assembled there.
As for the reason why Infiniti is looking to close up shop in Japan, the strong yen is to blame. Earlier today, one U.S. dollar fetched 82.36 yen in trade. The Japanese currency has fluctuation considerably against the dollar in the shaky economy. The strength of the yen has suffocated any type of earning of a profit on exports and has forced the automaker to move production elsewhere. Ghosn even went as far to say that the yen is why Infiniti didn't hit its goal of collecting 10 percent of global luxury sales. Infiniti still has a way to go still to reach that goal, and Ghosn is aware of that. "Infiniti is not sold in Japan," Ghosn said in an interview to Automotive News. "So this is an interesting case where you have most of the sourcing in Japan, none of the sales in Japan. And today, having the sourcing in Japan with the yen is obviously not the right system. So we're going to be moving Infiniti out of Japan in order to give it a little bit more competitiveness." Ghosn noted that Infiniti executives had observed its German counterparts and noted how automakers like BMW and Mercedes-Benz have production facilities around the world including the United States. Last year, Infiniti saw its sales grow 61 percent in China, and the automaker recently moved its headquarters from Japan to Hong Kong as well. Through March, Infiniti sales are down 5.8 percent versus last year's sales numbers from the first quarter. Infiniti expects to combat the decline with its new JX35, which went on sale last month. Source: Automotive News (subscription required)