Anuj

http://tennessean.com/business/archi...nt_ID=46610924

Nissan Motor Corp. may cut jobs in Middle Tennessee if it doesn't get a federal exemption that would preserve the average fuel economy of its foreign-made models.

In a petition to the National Highway Traffic Safety Administration, Nissan seeks to keep its Mexican-made Sentra from becoming classified as a domestic rather than foreign-made car starting next year under the North American Free Trade Agreement.

If the exemption is not granted, Nissan is threatening to move production of the Sentra and the locally made Maxima and Altima lines outside of North America.

''We most certainly do not want to cut jobs,'' said Harland Reid, Nissan's senior director of government affairs. ''We feel confident we will get this.''

The Sentra, classified as foreign-made, gets high gas mileage, and Nissan projects it will help maintain the corporate average fuel economy (CAFE) level for its fleet of foreign vehicles. CAFE standards are calculated for foreign and domestic models.

If the high-performing Sentra is reclassified as domestic, Nissan's foreign vehicle fleet will fall below the CAFE, resulting in heavy penalties under a 1975 law.

The United States has considered vehicles U.S.-made if 75% of their cost was because of value added in the United States and Canada. Mexico will be added starting with the 2005 models under the law passed in 1994 to implement NAFTA.

''What happens is, because the Sentra's no longer in the import fleet, we end up doing well in domestics but not in imports,'' Reid said.

The CAFE standard is 27.5 miles per gallon for domestic and foreign-made cars and 20.7 for light trucks. Reid said he did not know how much the standard would fall if the Sentra was reclassified.

The five-speed manual version of Sentra's 1.8-liter engine gets about 27 miles per gallon in cities and about 35 miles per gallon on highways, according to Nissan's Web site. The Infiniti G35 sedan, made in Japan, travels an average of 22.5 miles per gallon in city and highway driving, less than U.S. requirements, according to government estimates.

European manufacturers regularly pay CAFE fines ranging from less than $1 million to more than $20 million a year, NHTSA said. Asian and U.S.-based automakers have never paid a civil penalty, the agency said.

One remedy would be for the Japan-based automaker to move production of the Sentra, as well as its Tennessee-built Altima and Maxima lines, out of North America, thus classifying them as foreign-built and raising the fuel economy. It would also result in job losses.

Another would be to change enough parts in the vehicles to classify them as foreign-built.

A third option would be to keep the Altima and Maxima in Tennessee and raise the fuel economy standards of its other foreign-built vehicles so that the fleet average does not fall below the minimum.

''Fuel economy is important to us,'' Reid said. ''We're looking at a number of options.''

Nissan, which is completing one of the auto industry's fastest expansion plans in North America, is boosting plant capacity 54% on the continent between 2002 and the end of this year.

Nissan last year opened a factory in Mississippi making Quest minivans, Titan pickup trucks, Armada and Infiniti QX56 sport-utility vehicles.

Nissan has about 15,000 U.S. employees, but the company aims to lift U.S. sales 25% to 1 million by 2005. A reduction in its U.S. work force could be a serious problem, said Yoshihiro Okumura, general manager of Chiba-gin Asset Management Co. in Tokyo.

''It may lead Nissan to adjust its U.S. strategy,'' he said.

The United States is Nissan's most profitable market, Okumura said. If Nissan has to shift its production to Japan, ''they may have to reconfigure their production plans at home because the Japanese production capacity is already quite full.''

Volkswagen AG was the first automaker to ask for a vehicle exemption. The German automaker won it in 1981 for U.S. production of the discontinued Rabbit.

NHTSA is expected to answer Nissan's petition by April 22.

maxspeed96CT

iTrader: (9)

I didnt read you entire post but if prices go down cause of this then its a good thing.

Colonel

This is probably the WHOLE reason why MOST people have trouble getting the EPA numbers on the sticker. Nissan is so worried about getting their "Fuel" break, I bet those numbers are as "concrete" as their HP number for the 02-03 3.5.

''Fuel economy is important to us,'' Reid said. ''We're looking at a number of options.'' I bet its only as important to them as how it affects their bottom line...otherwise I dont believe they would give a...er....crap.