Bloomberg News

Mazda’s Yamanouchi Planning to Expand Mexican Project

November 29, 2012

Mazda Motor Corp. (7261), anticipating a return to profit in its current business year, said a plant it’s building in Mexico that will also make cars for Toyota Motor Corp. (7203) is going to be larger than planned.

Mazda this month said it will make 50,000 small cars a year for Toyota starting in 2015 at the Salamanca, Mexico, factory under construction. The plant will be fully utilized and need more than the planned 190,000 units of production capacity that includes 140,000 Mazda vehicles, Chief Executive Officer Takashi Yamanouchi said in an interview at the Los Angeles Auto Show.

“As a strategic production location, total volume for the Mexico operation will be larger than the combination of the two,” Yamanouchi said Nov. 28, without elaborating. “I think we’ll be able to make an announcement very soon.”

Mazda’s move into Mexico follows similar announcements by Japan’s Honda Motor Co. (7267) and Nissan Motor Co. (7201), which are all seeking lower-cost production facilities to make small cars for North America. Unlike Toyota, Honda and Nissan, Hiroshima, Japan-based Mazda imports all its vehicles sold in the U.S. from Japan, after ending production of Mazda6 sedans in Michigan.

In addition to low production costs, Mexico is an attractive location from which to export vehicles because it has free trade agreements with 37 nations, Yamanouchi said.

The Salamanca plant is to produce Mazda2 and Mazda3 small cars when it opens in fiscal 2014 as a joint venture with Sumitomo Corp. (8053) Details of any expansion must be worked out between the partners, he said.

Mazda in June 2011 said the plant would cost $500 million and have capacity to make 140,000 vehicles a year, prior to the 50,000-unit increase for Toyota production. Toyota is investing an undisclosed amount in the factory, Mazda said.

Small Toyota

A small Toyota model based on the Mazda2 subcompact will go into production in 2015, the companies have said. That car “may be a variant” of the Toyota Yaris, Jim Lentz, president of Toyota’s U.S. sales unit said Nov. 28 in an interview in Los Angeles.

The automakers have only a contract production arrangement, and there are no plans for equity ties from the project, both Yamanouchi and Lentz said this week.

Mazda also plans to develop a successor to Fiat SpA (F)’s Alfa Romeo Duetto Spider, based on its MX-5 Miata roadster. Details of that project should be set by year end, Yamanouchi said.

“That should be very soon,” he said. “I had a very firm handshake” from Fiat CEO Sergio Marchionne at the Paris Motor Show in August, Yamanouchi said.

Mazda’s U.S. sales rose 8.8 percent this year through October to 228,106. The company last month cut its operating income target for the fiscal year ending March 2013 to 25 billion yen ($303 million), down from an earlier goal of 30 billion yen, in part because of reduced sales in China.

It still expects net income of 10 billion yen, after four consecutive annual losses. The company earned 5.74 billion yen in the fiscal first half.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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