Weak Yen, New Models, Has Mazda In Reach Of Profitability
A weak yen and a slew of new models has Mazda within sight of profitability. With Mazda heavily dependent on exports, the yen’s 16 percent decrease in value relative to the U.S. dollar could not have come at a better time for Mazda, as it readies a whole slate of new products for sale.
According to Bloomberg, Mazda is on track to turn a profit for the first time in nearly 5 years. Aside from the yen, an onslaught of new product and increased demand has helped Mazda revive its fortunes. The new Mazda6 will be followed by the Mazda3, a critical car for the Japanese auto maker. The two models account for half of all Mazda’s sales. Following these two will be the next generation Mazda5, which will incorporate SkyActiv technology and be produced for Nissan as the Lafeasta minivan for the Japanese market. A new MX-5 jointly developed with Alfa Romeo may be derailed by a possible sale of Alfa Romeo, but a plan to build a new subcompact for Toyota is still underway. Mazda plans to introduce a total of 8 new models incorporating SkyActiv technology by 2016.
The Toyota deal resulted in Mazda expanding capacity at its new Mexican plant from 140,000 annual units to 230,000. Despite the favorable exchange rate, Mazda will remain greatly exposed to the yen’s fluctuations as long as the majority of its cars are built in Japan and subsequently exported. The Mexican plant is a positive step towards localizing production, and should insulate Mazda from currency shocks in the crucial North American market.