NEW YORK Nissan Motor Co (7201.T) Chief Executive Carlos Ghosn said the Japanese government's efforts to rein in the rise of the yen had failed, forcing manufacturers to reduce investment in Japan and shift output elsewhere.
"If the Japanese government wants to really safeguard and develop employment, then something has to be done," Ghosn told Reuters in an interview in New York. "We have been talking about this as an industry for a while. Unfortunately, it keeps happening. It looks like whatever effort has been done so far has not delivered results."
"We have to have some vision of what is going to be the exchange rate landscape," he added.
Over the past two years, the U.S. dollar has dropped from near 91 yen to just over 76 yen. The trend toward a stronger yen, which has accelerated since April, has forced Nissan to reevaluate investment in future vehicle production and to consider moving more production outside Japan, Ghosn said.
"We have to make investment decisions all the time," he said. "This is one of the factors that we have to consider when we look at a project and say are we going to do it in Japan or are we going to do it in another country?"
Despite the pressure on Japan's manufacturing base, Ghosn said there was no sign that global consumer demand was in retreat because of the debt crisis in Europe and economic uncertainty in the United States. He said he expected that U.S. vehicle sales would rise in 2012, without providing a detailed forecast.
"So far there is no sign of weakening, at least in the automotive sector," he said.
EV SUBSIDIES COULD BE PHASED OUT IN 2-3 YEARS
Ghosn, who also heads Renault SA (RENA.PA), said Nissan would build an electric car in China, now the world's largest vehicle market.
But he said the automaker was open to using the technology behind its battery-powered Leaf to build a different vehicle for the Chinese market depending on the final form of regulations that Beijing has been preparing on electric vehicles.
Nissan has said it is working with its Chinese partner, Dongfeng, to develop an electric car for the Chinese market. Nissan is also supporting Dongfeng's launch of the Venucia brand, a Chinese-only brand expected to target the fast-growing market for vehicles priced at $7,500 or below.
"We have the intention to go with an electric car in China, but we are still waiting for the Chinese government," Ghosn said. "Without any doubt the technology that is the basis of the Nissan Leaf -- if it is not the Nissan Leaf itself -- will be present in our operations in China."
Nissan exports the all-electric Leaf from Japan and has plans under way for production in the United States and Britain.
Nissan, which trails Toyota Motor Corp (7203.T) (TM.N) in traditional hybrids, projects that all-electric vehicles will account for up to 10 percent of global auto sales by 2020. As of August, sales of the Nissan Leaf and the Chevrolet Volt, a General Motors Co (GM.N) plug-in that can also be driven in all-electric mode, accounted for about 0.1 percent of U.S. auto sales.
Ghosn said government subsidies in the United States and other markets would remain important in kick-starting sales of electric vehicles but might be phased out as quickly as two to three years if volumes rise quickly enough.
"We don't need it forever," he said. "We need it to boost sales and reach a minimum scale which is going to be a necessity for us to cut the cost and make the car competitive."
Once annual sales of electric vehicles top 500,000 vehicles, Nissan will have the volume it needs to drive costs down and step away from the reliance on subsidies, Ghosn said.
He said Nissan would not chase Toyota in the market for gas-electric hybrids now dominated by the Prius.
"In hybrids we are a me-too car company. We are not trying to take leadership here," Ghosn said. "We are putting our energy in zero-emission cars."
Renault owns 43 percent of Nissan.
(Reporting by Paul Ingrassia, writing by Kevin Krolicki, editing by Matthew Lewis)