Carmakers are still reeling from the effects of the coronavirus pandemic, with prolonged global shutdowns of factories and dealers causing a severe impact on their bottomline. Mazda is no different, having requested 300 billion yen (RM12.1 billion) in financing from three of Japan’s biggest banks (or megabanks) and other institutions to navigate its way out of the storm, according to the Nikkei Asian Review.
Those banks that Hiroshima has requested loans from include the Mitsubishi UFJ Financial Group (MUFG) Bank, Sumitomo Mitsui Banking (which owns a minority stake in the company) and Mizuho Bank, along with the Sumitomo Mitsui Trust Bank and the state-owned Development Bank of Japan. They are expected to agree to provide the loans, with some of them having already released funds, the financial publication said.
Mazda had reportedly already been struggling with slow sales, and the pandemic – which has triggered the temporary closure of its plants in Japan and the United States – has turned its cash flow negative. The company is said to be planning to use those funds to build up its cash reserves and help prepare for the possibility of the pandemic drawing out.
It had nearly 500 billion yen (RM20.2 billion) in cash and around 63 billion yen (RM2.6 billion) in securities as of December, and it also secured a credit line of around 200 billion yen (RM8.1 billion) from Sumitomo Mitsui Banking and other financial institutions. Its free cash flow from April to December 2019, however, was negative 130 billion yen (RM5.3 billion).
The impact of the coronavirus on the carmaker has been huge, sales having fallen 14% in February and 33% in March compared to the same months last year; most of its main plants in Japan and elsewhere have also been suspended since the end of March. The pandemic has compounded a difficult period for Mazda, which has been in dire straits even before the disease’s unprecedented spread.
In November, it revised its operating profit outlook for the financial year that ended in March to 60 billion yen (RM2.4 billion), down 27% from the previous year and significantly lower than its initial estimate of 110 billion yen (RM4.5 billion). Then in February, the company downgraded its sales estimate from 1.55 million vehicles to 1.5 million, a decline of 60,000 units compared to the preceding fiscal year.
The reduction in sales stemmed from Mazda’s recent attempt to move upmarket. The company launched two new models – the Mazda 3 and CX-30 – last year, with higher prices that has reportedly alienated customers. This, the Nikkei Asian Review said, has resulted in lower sales in North America, which accounts for nearly 30% of Mazda’s sales. It also tried to limit dealer incentives, often used to offer showroom discounts, to build its brand value – a strategy that has apparently also backfired and has led to dismal sales globally.
Mazda is not the only carmaker badly hit by the coronavirus, with financing also requested by Toyota (1 trillion yen, or RM40.4 billion), Nissan (500 billion yen, or RM20.2 billion), General Motors (US$16 billion, or RM69.4 billion) and Ford (US$15.4 billion, or RM66.8 billion).
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Haoyue, like all other Geely cars, are monocoque bodied so no way it can be turned into a proper pickup. Best bet would be a 2 door ute with extra long cabin and with car like height level, ala Arena.
Imagine the sheer fury if it was Proton seeking RM 12Billion loan from the taxpayer. What goes around comes around.
no need loan, juz lower your model price or discount around 20%, confirm will have good sales
Mazda is premium brand now, so no problem
Mazda only delude themselves into thinking they are luxury brand now. Their plummeting sales and profits tells another story.
Meanwhile all Japanese company CEO MD drives LEXUS not a single Mazda model were found.
Wow! those billions figures is no joke, it shows the sheer size & operation scale of those companies.
For those who said Mazda should price down to survive and they can sell well, this is pretty stupid opinion. WTH doesn’t know this concept but in real it is hard to achieve. By offering advance tech and premium material in all models Mazda is suffering high cost but demand is low. Mazda unable to achieve great economy of scale, with low production it leads to higher cost and this will direct translate to expensive price to consumers.
Why Toyota Honda can survive and in fact making good margin? Toyota and Honda never mean to make premium car, instead they using cheaper material and sharing common components among the models they sold. Their cost of production is lower as demand is high, therefore they able to offer lower price to consumers.
Mazda spent too much in R&D to make the car great in driving but this isn’t suit to mass market wants. Mazda produces a car suit for 20% car enthusiasts whereby most car brands are targeting the 80% who is price sensitive. If Mazda wanted to survive they have no choice but have to cut cost in material, spend less on R&D but more on advertisement, targeting mass market etc.
Mazda is neither here nor there. They are not the premium luxury brand as they seek, reflected by their poor sales & profits. They also cannot compete pricing with cheaper Toyota or Honda cars. If they want to become a niche carmaker like Lotus, just scale down everything and become like Lotus.
Nonsense! Sure they don’t skimp on driving pleasure, but a large portion of their R&D goes to making an efficient engines, not even performance engine. That’s why SkyActive engines has won numerous awards back then. Until today they still holding back electrification believing ICE won’t die any time soon, but they have to do something to adhere to ever stringent emission regulations, enter the latest SkyActive-X with HCCI & SPCCI.
MX-5 is the only car from their whole current line-up that’s targeting enthusiasts. Even all their MPS/Mazdaspeed version has been axed since the introduction of their Kodo Design. Their RX Vision concept meant to be a halo car, just like Audi R8 or Lexus LFA, it’s mostly for the brand marketing.
They’re actually segmenting themselve as a premium brand. They’re still targeting mass consumers with all kinds of SUVs, from CX-3 to CX-9. That’s what the mass consumer wants, but not really the premium price tags. With all the competitions coming from the conti brands, sure they’re sure quite struggling.
It is always good the carmakers produces a high efficiency engine but what the NA engine cannot get rid of higher displacement to produce higher horsepower. Even the skyactiv-x 2.0l is producing 180ps 224nm but Honda 1.5T already able to makes up 201ps and 260nm. One thing Mazda did not mention is Skyactiv-X is not capable to run in Euro 4 fuel standard as it requires at lest Euro 5. Even though Singapore already adopt Euro 6 standard but Mazda still offering Skyactiv-G in their latest model. If they can’t apply the engine across the board the cost of production will be higher.
I like Mazda as they are designed for car enthusiast but it is less practical as it lack of space and premium price with only normal badge. You mention CX-3 to CX-9 is targeting mass market but the price is pointing to niche market instead except CX-5. Mazda generally selling price is 10-20% higher than Toyota and Honda while the latter both are remain famous than Mazda.
Even before the coronavirus pendamic Mazda already suffer huge losses. Banks are not doing charity, they will definitely question how Mazda can survive if Mazda receive the rescue fund. What if Mazda still unable to reduce their cost of production or move the brand reputation to higher level where people willing to pay, the same crisis will happened again where Mazda will seeking more funds later on.
If worse come to worst, Mazda may end up acquired by bigger group and their brand remain “premium”. Meanwhile their own technology will shared among the group just like Volvo.
Mazda should know it takes ages for u to reposition itself as a premium brand. They can’t expect just a few models with a better packaging move them to a premium brand. It will take generations Of models to move up the ladder. Most will not pay premium for a jap mass market car especially the likes of a c segment when choices are plenty and price is still the driver for sales. In MY, seriously their pricing is at D segment levels. The current Mazda 3 makes sense as a great bargain in the used car segment as the value will likely drop faster as it ages.