Mazda Forecasts 27% Growth in Profit

By Brendan Moore

03.24.2007

It’s been a great couple of years for Mazda both here in the States as well as the rest of the world, and the company sees more of the same on the horizon, forecasting a healthy 27% profit growth over the next four years. Mazda Motor Corporation held a press conference in Tokyo on March 22 in which company officials stated that Mazda would achieve the ambitious profit target through a combination of increased product growth and reductions in manufacturing costs. Hisakazu Imaki, CEO of Mazda, made a point of saying that the expected reductions in costs would come through even closer cooperation with Ford Motor Co., their majority owner, in a pointed effort to put paid to any lingering rumors that Ford would sell their stake in Mazda because of Ford’s desperate need for cash to fix things in Dearborn.

Mazda, based in Hiroshima, galloped past their sales and profit targets for the period ending this month as it notched up large increases in Mazda3 models and Mazda6 sedan sales, as well as respectable increases in sales across the rest of the model range, while simultaneously benefiting from a weaker yen worldwide. Since much of the sales surge occurred in exports for Mazda (18% sales increase), it made the weak yen even more of a factor in the profit column. In 2006 the company built approximately 1.3 million vehicles worldwide with 75% of the total manufactured in their home country of Japan. Japan, however, accounts for only about 20% of retail sales volume for Mazda. The company projects that an even greater percentage of total units retailed will be exports in the next four years since all of the new sales growth is forecasted to occur outside of Japan..

Mazda laid out the following in the presentation:

In 2011, the company expects a profit of $1.7 billion USD – Mazda forecasted a profit of $1.34 billion USD in 2006-2007

The company plans to increase its operating margin to 6% from the current 4.9%

Consistent payouts on dividends will be established

Mazda will add one core model to their lineup in the next four years

The company expects a 23% increase in sales in this same period

“Deeper relationships with Mazda’s younger customer base will be established” in North America (hopefully that means more cars like the completely-addictive 263 HP MazdaSpeed3)

Mazda says it will increase R&D funding by over 30% within the next four years

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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4 Comments

  1. Mazda deserves success like this. They make a great car. I have an RX-8 that is just a wonderful car. So great when the road starts to twist and turn and so wonderfully balanced.

  2. I have Mazda3 – very good quality automobile. I think Mazda makes a better-quality car than Toyota, and the Mazda car is much more attractive than Toyota, Honda, and Nissan cars. Not boring like other Japanese cars.

  3. Henrik, I agree with you on that. I think Mazda quality is as good or better than Toyota and the cars sure are a lot more fun to drive and better to look at.

  4. Amazing what happens when you build a solid, attractive, fun-to-drive product, isn’t it? I doubt that Mazda spends a ton of money on marketing relative to the larger mainstream brands. Hopefully Mazda’s success will inspire stronger competition to improve the breed.

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