Mazda Seeking New Auto Alliance, Worst Fiscal Year In a Decade

Mazda predicts its current fiscal year, which ends the end of March, will mark its fourth straight year of ending in the red. Its financial burden comes from a combination of its global sales slipping to 0.2 percent to 1.25 million units and the yen’s strength against the U.S. dollar and other currencies.

Mazda CEO Takashi Yamanouchi said the automaker predicts a loss of 100 billion yen ($1.29 billion) because of the reduced sales. The loss has the automaker “actively” seeking alliance partners, according to Automotive News. This could be the worst lost for the Mazda since it lost $2 billion in 2001.

Unlike most Japanese automakers, Mazda exports most of its cars from Japan, which means the yen’s strength compared to the U.S. dollar hurts its profits on sales overseas more than competitors with a larger North American manufacturing base. Mazda recently announced a new factory in Mexico to help avoid the currency-exchange losses. The Mazda2 and Mazda3 small cars will be built at the Mexican plant for U.S. and Latin American sales – small cars exported from Japan generally see more loss than larger, more expensive cars.

Yamanouchi also told Automotive News that Mazda needs to raise capital because the automaker may be facing a credit downgrade due to debt. Mazda raised $1.2 billion in capital by selling off some of its shares in 2009 and may do so again.

“We are considering every option,” Yamanouchi told Automotive News. The automaker may offer its new Skyactiv line of fuel efficient engines and lightweight body structures to attract new partners.

Source: Automotive News

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2012 Mazda Mazda3

2012 Mazda Mazda3

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