Nissan chief: price hikes likely in Japan

Nissan chief: price hikes likely in Japan

YOKOHAMA, Japan – Nissan Motor Co., Japan’s third-biggest automaker, will likely raise prices in its domestic market as soaring prices for steel and other raw materials boost production costs, chief executive Carlos Ghosn said Wednesday.

Ghosn, speaking to reporters after a shareholders meeting, said price increases are probably inevitable in Japan, following those already announced in the United States and Europe. He said Nissan may have to raise prices by two or three per cent.

He predicted that all Japanese automakers would be forced to raise prices, especially as steel costs are expected to keep climbing – although it would be hard for Nissan to be the first to do so when rivals like Toyota and Honda haven’t.

“In pricing, the industry has no choice,” Ghosn said after addressing more than 2,000 shareholders in Yokohama, southwest of Tokyo.

“At the end of the day, we are sure everyone is going to do it.”

Nissan, as well as Toyota and other manufacturers, have already raised the U.S. prices of some models.

Japanese automakers, while faring better than American rivals General Motors Corp. or Ford Motor Co., are struggling to maintain profits amid a stronger yen, higher material costs and sluggish U.S. and Japanese markets.

He sought to allay fears about the company’s declining share price, blaming soaring oil costs, the U.S. slowdown and other factors that are hurting all automakers.

Ghosn, who also serves as head of the Japanese automaker’s alliance partner Renault SA, told shareholders that a stagnant Japanese auto market and rising steel and materials costs are also to blame for the company’s falling share price.

Nissan stock has fallen 37 per cent over the last 18 months and 14 per cent since the start of the year.

“I don’t think what we are seeing today is related to the performance of the company,” Ghosn said.

He pointed out that Toyota Motor Corp. stock is down 15 per cent this year, and the entire Japanese stock market has been suffering.

Ghosn acknowledged that Nissan’s executive pay is far higher than the compensation at Toyota, but he said this is because Toyota executives are almost all Japanese, while a quarter of those at Nissan are non-Japanese, requiring pay that reflects “global standards.”

In outlining Nissan’s five-year plan through 2012, Ghosn pointed to expansion in emerging markets such as China, Russia, India and Brazil. He acknowledged, however, that major growth cannot be expected in the traditional markets of North America, Europe and Japan.

He pointed to Nissan’s cheap entry-level car, promised for 2011, to respond to the needs of emerging markets.

The company is also working on a zero-emission electric vehicle.

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