Weak Yen, New Models, Has Mazda In Reach Of Profitability

Derek Kreindler
by Derek Kreindler
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.

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  • L'avventura L'avventura on Apr 05, 2013

    I wouldn't go as far as calling the yen "weak" just yet. Its still hovering near the low-mid 90s. Its 'weaker' than was from its insane highs of the mid-70 yen/$ exchange from last year, but historically its still comparatively strong. Both Carlos Ghosen & Akio Toyoda see 100 yen/$ as 'neutral'. Morgan Stanley sees the yen at 105 yen/dollar by next year. The real reason for the yen's 'strength' is really because the dollar has weakened after 3 consecutive rounds of US QE (printing money) since the housing market crash, and every other major economy including China, EU, S. Korea, etc have also basically printed money to keep up with the US' weakened dollar. Japan, who has a horridly high public debt, have avoided QE due to political unwillingness and economic fear of their weak debt situation.

    • See 1 previous
    • Ect Ect on Apr 06, 2013

      Japan also benefits from the fact that its public debt is almost entirely held internally - i.e., by Japanese creditors. Just like US debt after WWII.

  • SaulTigh SaulTigh on Apr 05, 2013

    New 6 is beautiful in person, better looking IMHO than anything else in it's class at the moment. Also really liked the interior, which is was much classier than anything I've seen from Ford and Honda lately. I'm going to test drive one of the new diesels when they come out.

  • Thornmark Thornmark on Apr 05, 2013

    AutomobileMag just tested the midsizers and the Mazda6 came in a close second to the Accord Sport so it must be good. http://www.automobilemag.com/reviews/driven/1303_midsize_madness_day_five/

  • Ptr2void Ptr2void on Apr 05, 2013

    I just got my new 3 (iGT MT) and am really enjoying it, but I've got to say that the new 6 is sexy. Were it available currently with the MT and heated seats I probably would have went that route.