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Mazda Europe sees currency risk of import strategy

Reuters

PARIS -- The head of Mazda Motor Corp.'s European operations said its current business model of importing cars into the region could not last, because it exposed the company to adverse currency swings.

"We rely on Japanese production more than any of our domestic competitors," James Muir, CEO of Mazda Europe, told Reuters today. "On a long-term basis, this is not sustainable."

Mazda's global production is approaching maximum capacity of 1.25 million units a year, and the company has said it will decide in the near future where and how to add capacity to keep up with demand.

Muir acknowledged that with sales in Europe expected to hit 300,000 units this year across many models, volumes were not quite enough to warrant a local production base.

But he noted that sales were growing steadily in Europe -- almost doubling in the past five years -- and that reducing Mazda's currency exposure needed to be a short to medium-term priority.

"Mazda is still recovering as a company, and we can't afford to make mistakes," he said in an interview at the Paris auto show. "My job is to convince my management to feel certain and confident that investment in my region would make sense."

Muir noted that Europe was a profitable market for Mazda, churning out 40 percent of the company's overall profits despite accounting for just a quarter of sales volume -- partly thanks to the euro's strength against the yen.

With more Europeans driving away with the sporty Mazda3 compact and Mazda5 wagon, Mazda has boosted its sales in the region by 13.8 percent in the first eight months of this year, bucking a contraction in the overall market.

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Stacy94PGT
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....