Nissan To Cut Export Prices On Cars, Parts Amid Weakness In Yen
Dow Jones Online News, Tuesday, June 09, 1998 at 10:58
TOKYO -(Dow Jones)- Nissan Motor Co. has lowered its free-on-board
export prices, denominated in overseas currencies, on autos and auto
parts by 3% to 4% on average, the Nihon Keizai Shimbun reported in its
Wednesday morning edition, citing company sources.
The company is seeking to take advantage of the continuing weakness
of the yen against the U.S. dollar and European currencies, the
newspaper said. The new prices will mean lower purchase costs for
Nissan's overseas units and, Nissan hopes, increased price
competitiveness and operating strength.
In the current fiscal year through March 1999, Nissan (NSANY) plans
to export 670,000 vehicles, a 5.8% decline from last fiscal year.
Exports to North America are denominated in dollars, while shipments
to Europe are denominated in Deutsche marks. The yen's average exchange
rate in fiscal 1998 is expected to be 128 yen to the dollar and 72 yen
to the mark, compared with 120 yen to the dollar and 69 yen to the mark
last year.
Each one-yen depreciation of the Japanese currency against the dollar
translates into 5.5 billion yen (about $25.57 billion) in extra annual
profit for Nissan. Although the profitability of parts imports is
sliding, Nissan calculates it can realize 40 billion yen in profit from
foreign-exchange gains in the current year if it doesn't lower export
prices.
The car maker plans to halve its potential foreign-exchange profit
and use it to help boost the profits of its overseas sales units.
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