The slide in the yen has turned Mazda Motor Corp.’s biggest weakness into its biggest strength. All Japan’s most export-dependent automaker has to do now is sell more cars.
Japan’s fifth-largest car company has the wind of the yen’s 16 percent descent in the past six months in its sails. Shares have tripled to their highest level since 2008 as more-profitable exports and cost reductions steer Mazda toward its first annual profit in five years.
Despite Mazda’s status as the top performer on Japan’s benchmark stock index over the past six months, the Hiroshima-based carmaker needs to make a hit out of a new version of the Mazda3, its top seller, due this fiscal year, to prove it doesn’t require a weak yen to compete against its bigger rivals.
“It’s very critical,” Ashvin Chotai, London-based managing director of Intelligence Automotive Asia, said of the Mazda3, which accounts for a third of the automaker’s sales. “Mazda is a small company and they can’t afford to make any mistakes.”
Few companies better illustrate how Japanese Prime Minister Shinzo Abe is reversing Japan’s fortunes by weakening the yen.
About a year ago, Mazda was so desperate for cash that it printed 1.22 billion new shares, equivalent to almost 70 percent of outstanding stock, at the expense of existing investors, who saw their holdings diluted. The stock fell to record lows.
Now, the cheaper local currency is giving Mazda CEO Takashi Yamanouchi, 68, breathing room to show his turnaround efforts are bearing fruit and for the company to focus on rolling out new models.