Japan-China tension weighs on Nissan investments

DETROIT Mon Jan 14, 2013 7:12pm EST

Nissan Chief Executive Officer Carlos Ghosn speaks at a round table meeting with reporters at its headquarters in Yokohama, south of Tokyo, December 18, 2012. REUTERS/Kim Kyung-Hoon

Nissan Chief Executive Officer Carlos Ghosn speaks at a round table meeting with reporters at its headquarters in Yokohama, south of Tokyo, December 18, 2012.

Credit: Reuters/Kim Kyung-Hoon

DETROIT (Reuters) - Nissan Motor Co. will remain cautious about future Chinese investments including Infiniti brand production until the country's relations with Japan improve, Chief Executive Carlos Ghosn said on Monday.

Ghosn was speaking at the Detroit auto show after the three main Japanese automakers all said an anti-Japan consumer backlash continued to depress their Chinese sales by between 16 and 30 percent.

"Unless there's a complete normalization between the two countries, every single investment decision is going to have to be weighed" against the risk of further disruption, the Nissan chief told Reuters in an interview.

"So far we're maintaining all of the investments we've decided," Ghosn said.

"But it's true that any additional investment will benefit from a clarification of the relationship - and on the contrary would suffer from any uncertainty around the relationship."

That includes Nissan's ambition to build vehicles for its upscale Infiniti division in China, where the company has a joint venture with Dongfeng Motor Group, Ghosn said.

A September outbreak of tension over a chain of disputed islands led to violent protests and a boycott of Japanese-branded goods in China.

Nissan's sales in the country are still down by about 20 percent, product, planning and programs chief Andy Palmer said in an interview.

Honda's deliveries are 20 percent to 30 percent lower than a year ago, CEO Takanobu Ito also told reporters, a week after Toyota said December Chinese sales fell 16 percent.

"The economic ties between Japan and China are very large and very important to both countries," the Honda boss said on Monday. "I hope the Japanese and Chinese governments recognize the economic ties and implement good diplomacy."

The current level of sales is nonetheless an improvement on plunges of almost 50 percent recorded in October, amid protests over the islands known as Senkaku in Japan and Diaoyu in China.

"We're cautiously optimistic about it coming back, but it's not back yet," Nissan's Palmer said.

Nissan and parent Renault, whose 13-year-old carmaking alliance lacks a premium brand with global reach, are both betting on China to boost volumes and upscale offerings.

Nissan has said it expects China to account for 40 percent of Infiniti sales in 2016-17 - by which time it aims to more than triple global deliveries to 500,000 annually.

The carmaker moved Infiniti divisional headquarters to Hong Kong in May, a month after saying it hoped to begin local assembly of two Infiniti models with Dongfeng next year.

(Additional reporting by Norihiko Shirouzu; Editing by M.D. Golan)