Yen Strengthens, Mazda Freaks
You know who is really freaked about the stronger and stronger Japanese yen? Mazda. Mazda is considered the Japanese manufacturer with the highest exposure to currency swings. Mazda builds 70 percent of its vehicles in Japan. In the first half of 2010, Mazda exported nearly 80 percent of its Japanese output. Ouch. A year ago, a dollar bought 110 yen. Today, it buys only 84. As the yen continues its march upwards against other currencies, Mazda is enacting emergency cost reduction measures to protect their profits from being gobbled up by a steadily advancing yen on its earnings. Here is the plan:
- Suppliers will have to give up 3-5 percent on their parts.
- Mazda’s R&D will be made more efficient, most likely by taking some pages out of Volkswagen’s playbook: They will use a common framework for making differently sized cars.
- Sales operations will be made more efficient.
That’s it. No Nobel Prize material. Mazda expects to save between $350m and $470m (at today’s dollars …) That’s exactly what will be missing in their kitty should the yen remain at current levels. Right now, the Japanese currency is 6 yen stronger to the dollar, and 17 yen to the euro, than what’s in Mazda’s budgets.
According to The Nikkei [sub], Mazda forecasts that group operating profit will jump 220 percent in fiscal 2010. If everything goes as planned.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
Mazda cannot make it as an independent auto maker. They would have died decades ago without Ford's money and technology. Mazda needs to get remarried, and fast.
Hello, Fuchū ? Wolfsburg is on line 2.
I believe VW Group will buy a controlling stake in Mazda Motor Corporation in next 12 months . Mazda could use SEAT Martorell factory to build cars for european market .
I believe VW Group will buy a controlling stake in Mazda in next 12 months ( Ford will sell its 11 % stake in Mazda very soon ) . Mazda could use SEAT Martorell factory for building their cars for european market .
I don't understand why Mazda hasn't bought an abandoned plant in America yet. It's not like they're hard to find. It would be a great PR move on their part. Toyota had, what, 9,000 applicants for their new Mississippi plant? In the first week? Or, how about partnering with Mitsubishi and using the Normal, Ill plant so those workers have something to do other than build cars that no one wants? Or, how about ceasing North American production of the 6 and build 3s at the plant instead. 3s sell, 6s don't. Or, how about building the BT-50 here with the diesel and snorkel and the whole nine so us auto enthusiasts can finally shut up about how North America lacks small pickups with diesels and manual transmissions! Thank You and Good Day.