By on February 28, 2014

Takashi Yamanouchi

Mazda Chairman Takashi Yamanouchi opened his company’s sole North American factory in Salamanca, Mexico, proclaiming the new factory the key to a global strategy “upon which the very future of [the] company hinges.”

Automotive News reports the strategy with the factory — Mazda’s Structural Reform Plan — follows a three-pronged approach: a hedge against currency exchange disruptions, provide Mazda with a low-cost manufacturing base, and give the automaker access to new markets. The factory’s location allows the automaker to gain more profit for the Mazda3s destined for the United States, than those exported from Japan, while also providing an export base to Europe and access to new markets in Latin America. In turn, Mazda’s new access through Mexico’s free trade pacts provides to markers worth a combined 35 million to 40 million vehicle sales annually.

Though the yen is weakening against the dollar at the moment, Yamanouchi said the factory will act as a hedge against unpredictable currency fluctuations that could bring down profits for his company at any time:

When the yen becomes stronger, we have the Mexican plant, therefore we will never again go into the lost position. But when the yen gets weaker, we will further cost reduce the Mexican plants so it will contribute to our total profitability. Our philosophy is that we will strike the balance of business so that we won’t go into the very difficult times of the past that we have experienced. Never.

The factory is expected to employ 4,600 workers once at full capacity of 230,000 units/annually. Currently, 3,000 employees assemble Mazda3s for the North American market, which will be joined by the Mazda2 and a Mazda2-based vehicle for Toyota. An engine machining plant will also set up shop in the factory by October 2014.

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41 Comments on “Yamanouchi: Mazda’s Mexico Factory Key To Global Strategy...”


  • avatar
    PrincipalDan

    Just 3s and 2s?

    OK. I assume the 2 based vehicle for Toyota will be a “Yaris” replacement. Toyota is starting to sound like the big 3 in the mid 70s. “We don’t know how to build (insert vehicle segment here) so we’ll find a partner to do the heavy lifting.”

    • 0 avatar
      Uncle Wainey

      At least in the US market, non-premium B-segment vehicles are among the least profitable models an automaker can sell. It makes sense for Toyota look for a risk-sharing/cost-sharing partner for the next Yaris, particularly Mazda, since their Skyactiv tech is especially well suited to making small cars more competitive at a relatively low cost.

    • 0 avatar
      racer-esq.

      Come on! How can you compare Toyota now to the big-3 in the past. The big-3 relied on sales from a large range of SUVs and trucks while letting their cars lag behind and become uncompetitive, and also had a problem with refusing to kill failed brands.

      • 0 avatar
        PrincipalDan

        GM – We can’t build a competitive small car so we will rebadge a Daewoo as a Pontiac LeMans. We can’t build a competitive small truck so let’s buy LUVs from Isuzu.

        Chrysler – re-badge European cars and Mitsubishis as Plymouths and Dodges.

        Ford – Could I sell you a Kia with Fiesta badges? Ohhhhhhhh lets partner with Mazda and they can do the engineering work on cars like the 90s Escort.

        The American makes have largely moved beyond those things and Toyota would have been “too proud” to partner with Mazda just 10 years ago. Now they are letting Subaru and Mazda design cars for them. If GM or Ford did this in North America the critics would be howling about “old GM.”

        • 0 avatar
          racer-esq.

          It was a joke referring to Toyota’s SUV and truck heavy lineup, uncompetitive cars (but still strong selling, but so were the big-3 sedans) and Scion.

        • 0 avatar
          28-Cars-Later

          @PrincipalDan

          Not much has changed.

          GM leaned on Opel, Daewoo, and Holden to develop its current line of car models. GM also starting bringing over Opel designed or mfg’d models in late 90s starting with gen 1 Catera in 1997 and the L200 in 1999. GM’s current car lineup was designed for global sales and it shows when you compare them to the previous GMNA designed models (aged as they are).

          http://en.wikipedia.org/wiki/Catera

          http://en.wikipedia.org/wiki/GM_Sigma_platform

          Ford started to bring over Euro designed models starting with Contour and later Focus. When DN101 Taurus went away, they did partner with Mazda on Fusion but now use the variant of the Euro spec Mondeo for Fusion as of MY13. One could argue the larger Fords are also of Euro origin since they were derivative of a Volvo design.

          http://en.wikipedia.org/wiki/Ford_D3_platform

          http://en.wikipedia.org/wiki/Ford_CD4_platform

          I am not as knowledgeable of Chrysler products, but I know the LX platform and Grand Cherokee were shared with Daimler-Benz. I also know the Jeep Patriot/Compass and Dodge Caliber were all built on the Mitsubishi GS platform shared with Outlander. Dart is based on an Alfa.

          http://en.wikipedia.org/wiki/Mitsubishi_GS_platform

          http://en.wikipedia.org/wiki/Chrysler_LX_platform

          In short, most of the automobiles for sale new in the 2014 US market have origins outside of North America.

          • 0 avatar
            Lorenzo

            “In short, most of the automobiles for sale new in the 2014 US market have origins outside of North America.”

            …and that’s why I can’t buy a new Oldsmobile Regency Brougham!

  • avatar
    mike978

    This makes sense since the factory will provide around a fifth of their total production and is close to major markets. The CX5 would make sense to come here since it is, along with the 3, a major seller.

  • avatar
    mvlbr

    In other words get them while they are still made in japan because I doubt the prices will come down once they are “Hecho en Mexico”.

    • 0 avatar
      slavuta

      It is not about the prices but the quality.

      • 0 avatar
        28-Cars-Later

        I would need more facts to draw a definite conclusion, but I doubt the retail price will come down much if at all in Mexican vs Japanese construction. The OEM will pocket the savings.

        • 0 avatar
          mike978

          Of course they will pocket the savings, that is the point since they have made a financial loss in the recent past. Moving some production away from Japan (as the other large Japanese manufacturers have done) will help them financially.

        • 0 avatar
          TMA1

          That’s the problem with these Mexican transplants. If savings are to be had, I want them in my pocket, not the company’s.

          For instance, the new GTI – I would expect the price to come down to GLI levels, not be priced like it was built in Wolfsburg.

          • 0 avatar
            mike978

            I understand your point, but Mazda was losing money until recently. So any cost savings they make as part of relocating out of Japan will go to the bottom line first. They may well find their way into more competitive incentives in due course. But they need to remain profitable first.

    • 0 avatar
      VoGo

      Last time I checked:
      – Mexico was the #2 net exporter of cars in the world
      – graduated more engineers than Germany
      – had one of the hardest working workforces in the world

      You certainly wouldn’t want any part of that.

  • avatar
    slavuta

    Yamanouchi: Mazda’s Mexico Factory Key To Global Strategy

    I: I own 2 Mazdas currently but I will not buy Mexican made car.

    • 0 avatar
      Demetri

      What makes you think Mexican people can’t build a quality car?

      • 0 avatar
        LALoser

        Perception maybe. A lot of us grew up with Mexicans equated to farm workers, landscapers, casual labor outside big-box lumberyards and Speedy Gonzales.
        When I was working in Guaymas, MX the people there were educated, detail orientated, and would be very capable of assembling an automobile. Unsolicited they told be more than once, if you were unskilled, etc, best to go to the US.
        But with that said, I will no longer buy a Volvo, (bought 2 new), because of Communist Chinese ownership. And yes, I have worked there.

      • 0 avatar
        TMA1

        Like I said above, if I know the company is spending less money to make the car, I expect the savings to passed on to me. And that generally doesn’t happen with Mexican-built cars. I would just feel ripped off, which is going to diminish my enjoyment of the car.

        • 0 avatar
          Demetri

          If you’re running a company it’s a good idea to stay profitable, and while Mazda is now finally making a profit overall (mostly because of the sinking yen), they’re still losing money in North America. This new factory is going to change that.

          You also have to look at it from the perspective that this is going to allow them to put a lot more content in the car. The new Mazda2 is going to be a major improvement in terms of feature availability, interior quality, NVH… basically everything. That’s all hinged on Mazda being able to build them in Mexico.

          • 0 avatar
            TMA1

            Who said Mazda is going to make the cars better in Mexico though? VW built a Jetta in Mexico that was greatly decontented from its Euro counterpart.

          • 0 avatar
            Demetri

            The reason VW did that is because they looked at the leaders in American compact car sales and saw that they all cost less and had cheaper trim, so they decided to play that game.

            Mazda is looking up at the subcompact sales leaders and seeing cars that have more features, feel more expensive inside, have more power, and get better fuel economy. The only outlier is the Versa, which is selling well, mainly on size and bargain basement pricing, but there is no indication that Mazda is heading down that road.

  • avatar
    Uncle Wainey

    I don’t get the anti-Mexico sentiment at all. The Japanese have been building high-quality cars overseas for decades. Toyota was building bank-vault-solid XV10 Camrys in Kentucky back when domestic automakers were still trying to sell you 3-speed automatics, automatic shoulder belts, pushrod everything…

    “Ahh but Mexican VWs are crap.” Okay, but when was the last time you saw a 5-year-old German-built VW and thought “Oooh that must be so reliable!”

    The automaker and its internal controls and quality standards trump all.

  • avatar
    jim brewer

    The Mexicans have been building high quality cars for decades. The Lago Alberto Dodge I bought in the late 1980′s rolled past my office window just last week.

    They happen to have a bit of an advantage to it, and I don’t just mean access to the rest of North America. Good for them. Good for Mazda.

  • avatar
    izzy

    It’s just amazing how few people is needed to assemble 230K cars a year.

  • avatar
    Marcus36

    WOW….the anti Mexican sentiment in these forums is downright ridiculous! and ignorantly stuck in the past.

  • avatar
    IndianaDriver

    Nothing against the people of Mexico building for Mazda, but I’d rather see people from the U.S.A. doing it – especially when Mazda sells here. The other foreign automakers (Toyota, Honda, Nissan, Subaru, Mitsubishi, Mercedes, BMW & VW) all employ tens of thousands of people here to assemble cars – Mazda has zero!!!

    • 0 avatar
      TMA1

      To be fair, they built the last 6 here, and no one bought it.

    • 0 avatar
      Demetri

      Mazda needed a low cost area to build the new Mazda2/Toyota subcompact because of the very small margins on those cars. USA wasn’t going to cut it; notice that no one builds a subcompact in the USA except for the Sonic.

      If the Mazda6 and CX cars were a big enough hit, they’d probably build them in the US, but we’re a long long way from that happening.

      • 0 avatar
        TMA1

        That’s true. But given that the 2 doesn’t sell well anyway, and transaction prices are so low, it doesn’t seem worth selling in the US. I can see why they would build them in Thailand (it’s very popular there), but it doesn’t seem worth the cost to bring a low margin 2 to Mexico when they should focus on pumping out 3′s.

        • 0 avatar
          Demetri

          It’s not just about the US. Mazda wants the Mexican factory to be an export hub for North America, Central/South America, and even Europe. The Mazda2′s ghastly US sales are mostly due to it being an uncompetitive product. The idea is to build them in Mexico so that they can add content to bring it up to top tier in the class, while still holding the line on price and making some profit. Subcompacts may only account for a small portion of the US sales pie, but they’re much bigger in the rest of the world (including North/South American countries not named USA), and when you consider that Toyota’s subcompact hopes are also hinging on this deal, there are a lot of potential sales to be had. The Toyota tie-up is a big deal. You take a competitive small car and put a Toyota badge on it and you’ve got a hit.

  • avatar
    wmba

    Mazda’s engine machining equipment is first rate. One set can machine four different engines, including that V6 they put in the CX-9. With different heads, it’s quite a bit different from the 3.7l Ford it’s based on.

    For those who want to read how Mazda uniquely machines 4 cylinder gas and diesel engines plus the V6 on the same machinery:

    http://articles.sae.org/11783/

  • avatar
    SCE to AUX

    What Mazda needs is a strategy to surpass 2% market share in the US market. They haven’t sold more than 295k cars/year since 2002; 2013 was 283k. The 3 alone is nearly 40% of Mazda’s sales volume, and the 6 is another 15%. I don’t know how they can afford to produce all those other models.

  • avatar
    Lorenzo

    How long have Toyota, Nissan and Honda had plants where their cars are sold? Didn’t Henry Ford build plants in England, Germany and Russia, where his model T sales were? What took Mazda so long to figure it out?

    • 0 avatar
      Demetri

      They built cars here for many years, but that was all tied into their partnership with Ford. When that was broken up in late 2008, they started planning on building a factory to have a manufacturing presence on this continent.


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