At a time when Japanese rivals are moving production abroad, Mazda still produces 60% of its vehicles in Japan. Of the vehicles produced at Hofu, 94% are exports. That has left Mazda vulnerable in periods when the yen is strong.
But the unfavorable currency rate has changed course since last year, providing an unexpected lift for the Hiroshima-based automaker. Mazda had honed in on cost cuts and efficiency partly because it wanted to be able to eke out profits even with a high yen.
Mazda is planning to raise overseas production to 50% of total output by the 2015 fiscal year. It is also aiming to increase annual global sales to 1.7 million vehicles by 2017, up from the current 1.2 million.
It is well on its way to achieve its profit forecasts for the fiscal year ending March 2014 at 70 billion yen ($700 million), according to Mazda.
With its success, it’s out to prove wrong the critics who once insisted that high production volume of at least 4 million vehicles a year is needed to achieve profitability. That was once seen as the common sense wisdom in the auto industry.
Some analysts say Mazda still faces an uphill battle because it lacks scale, through which automakers can cut costs. That means Mazda has to become almost an upscale brand that can command a higher price. Kogai said the automaker will not resort to price-cutting to woo buyers as it tended to do in the past.
Mazda, for instance, is charging an extra 50,000 yen ($500) in Japan for its models with a special paint job called “soul red,” a deep lustrous ruby shade, a major part of its innovation. The automaker was able to duplicate an expensive 13-coat luster with just three layers, done in a creative way, such as adding a special coating of reflective paint and adjusting the patterns of spraying.
The article Fast Mazda Plant Rolls Off 1 Vehicle Every 54 Seconds originally appeared on Fool.com and is written by Associated Press.
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