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Nissan to Cut Japan Output If Yen Strength Persists: Ghosn

Japan's second-largest automaker may be forced to shrink its manufacturing base in the country, if the current strength in the yen persists, CEO Carlos Ghosn has told CNBC.

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The company, which produces 1.2 million cars in Japan has been able to bring production back to normal after March's devastating earthquake and tsunami.

But Ghosn, who was named CNBC's Asia Business Leader of the Year on Thursday night, said it was difficult to justify continuing to make investments in the country, given the strength of the yen.

"Today it's very difficult with the yen, which is around 76-77 to the dollar, which is a 50 percent appreciation compared to the average yen we had for the last 3 years," Ghosn said in an interview with CNBC's Managing Asia program. "If this continues, without any doubt you are going to see many projects moving from Japan to China, Thailand, Mexico, Indonesia and other countries."

Nissan is planning to increase capacity in the U.S., where its factories have been running at full throttle. Ghosn said a decision on how to expand production in the U.S. would be taken in the next few months.

Europe Crisis Weighs

The CEO of Nissan said the company was planning for a drop in sales of between one and five percent in the European market next year, given the region's debt crisis. Nissan is especially vulnerable because it has a 43 percent stake in Renault, whose core market is France.

"We are going to be reducing our inventory to a minimum and be ready to face a contraction without being surprised by it," Ghosn said.

But Ghosn added that strong sales in the U.S., China, India, Middle East and Latin America will help balance the slowdown in Europe.

Catch the entire interview with Carlos Ghosn on Managing Asia on 25th November at 6:30 pm (SIN/HK).