Mr Toshiyuki Shiga COO of Nissan Motor Co has voiced concern in a recent interview with The Yomiuri Shimbun that Japan's manufacturing industries may hollow out further.

He said that if the yen's current level of the appreciation continues, more and more midsize and small auto parts makers will relocate overseas.

The following are excerpts of the interview.

Q - How has Nissan coped with the yen's appreciation?

A - We acted quickly to increase use of imported parts and implement other measures. Though Nissan can take various defensive actions, the high yen is a body blow to domestic midsize and small parts makers. Even if we can achieve our goal of maintaining a production level in Japan of 1 million units per year, most of the cars' parts may be imported.

Q - Nissan manufactures its March 2012 compact car in Thailand. What does Nissan think about moving more production overseas?

A - Japanese automakers have developed technologies working with parts makers at home. I don't think production in other countries is a good solution. If auto manufacturers and parts makers, including small and midsize firms, continue to relocate abroad, they won't be able to return home even if the yen's value falls in the future.

However, under the current high value of the yen, it's difficult to start new projects in Japan. While maintaining production of 1 million units in Japan, it's possible some more production may be moved to other countries.

Q - What can be done to revitalize domestic markets?

A - We'll pour more energy into production of cars with higher fuel efficiency and continue to demonstrate the attractiveness of Nissan cars, such as sport utility vehicles. Because cars for the domestic markets are not affected by the yen's appreciation, it's best to manufacture cars for domestic markets inside Japan. I've told our salespeople this is the key to the survival of Japanese auto manufacturing.

Q - Why are Nissan sales brisk in other countries, including emerging economies?

A - Raising the percentage of local production has improved our cost competitiveness. Because of our ties with Renault SA of France, we can offer a wide lineup that includes diesel engine cars.

Since the Great East Japan Earthquake, we have invited nearly 100 of our overseas employees to Japan and subsequently sent the parts they needed to their countries.

Through our equity and business tie-up with Renault, we've been able to achieve goals beyond national borders and between internal departments. This is the source of Nissan's power.

(Sourced from www.yomiuri.co.jp)