NISSAN DISCUSSES U.S. AND GLOBAL AUTO INDUSTRY,

UNCLAS TOKYO 001411 SENSITIVE SIPDIS STATE FOR EAP/J, EEB, AND OES PASS TO USTR FOR AUSTR CUTLER AND M. BEEMAN COMMERCE FOR H. MISISCO, D. BARZDUKAS, AND D. LEE EPA FOR CHRISTOPHER GRUNDLER E.O. 12958: N/A TAGS: EIND EFIN PGOV SENV KGHG JA SUBJECT: NISSAN DISCUSSES U.S. AND GLOBAL AUTO INDUSTRY, PLANS FOR ALTERNATIVE VEHICLES REF: A. TOKYO 890 ¶B. TOKYO 515 ¶C. TOKYO 345 ¶D. TOKYO 228 SENSITIVE BUT UNCLASSIFIED. CONTAINS PROPRIETARY INFORMATION ¶1. (SBU) Nissan Senior VP for External and Government Affairs Hitoshi Kawaguchi and International Affairs General Manager Takehiro Kasai met June 10 with EMIN and FCS Minister Counselor, the first such meeting between senior Nissan personnel and emboffs in a number of years. Kawaguchi opened stating Japanese automakers, including Nissan, want to see stability in the U.S. auto market and noted all Nissan's tier I and II parts suppliers in North America also serve U.S. automakers, noting that a stable market benefits all automakers. He stated the USG's actions are a necessary response to the current crisis, but stressed the need for fair competition as the U.S. and global economy moves into the recovery phase. Kawaguchi also asked about the "card check bill" under consideration in the Congress. ¶2. (SBU) Looking at the global market, Kawaguchi expects the U.S. market to recover before Japan's due to stronger U.S. demand, but he has not yet seen signs of a recovery and expects it will be slow when it does occur. Nonetheless, Nissan has not reduced production at its plant in Tennessee, Kawaguchi stressed. One bright spot for Nissan is the consumer response to recent GOJ incentives for "green" vehicles (Ref A). The measure resulted in increased Japanese sales of high-mileage and hybrid models in May, but sales figures are still lower than they were last year. For the U.S. market, Kawaguchi called the "clunker bill" before Congress the "great hope" of the auto industry for a speedy recovery. ¶3. (SBU) Responding to Emboffs' questions, Kawaguchi said Nissan has been borrowing significant money from the government-owned Japan Bank for International Cooperation, including to support Nissan's U.S. operations. Kawaguchi said the loans have helped avoid a situation where small and medium-sized businesses are precluded from being able to get loans from financial companies. The loans have also helped Nissan hold down its debt and maintain its credit lines with private banks. Betting on Electric Vehicles -------------- ¶4. (SBU) Discussing next generation vehicles, Nissan believes electric vehicles (EV) offer the best technology. Kawaguchi sees current hybrid cars as a bridge technology to pure electric vehicles which produce zero emissions at the tailpipe. He sees hydrogen vehicles as a much more distant prospect. Nissan plans to enter the EV market in 2010. It has applied for Department of Energy loans to produce EVs in the U.S. and expects a decision soon. ZUMWALT