Mazda, Subaru profit from strong U.S. sales amid downturn in Japan

The newest Mazda2, sold in Japan as the Demio, is the first to be equipped with the full suite of Mazda's fuel-saving Skyactiv technologies.
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TOKYO (Reuters) -- Japanese automakers Mazda Motor Corp. and Subaru parent company Fuji Heavy Industries Ltd. said they are on track for record full-year profits after strong sales in the United States powered double-digit profit growth in the April-June quarter.

The United States is the biggest market for both of the carmakers and the overall market registered a sales rate of 17 million vehicles in June -- the highest rate in eight years. 

The strength of U.S. demand offset weakness in Japan where the two firms stumbled in their fiscal first quarter ahead of new and remodeled vehicle launches, they said today.

The earnings surge for both companies also showed their focus on profitability over sales volume.

"This is a time when our patience is being tested," Mazda Executive Officer Tetsuya Fujimoto told reporters.

He warned Mazda's July vehicle sales in Japan likely fell 20 percent as it prepares to launch a remodelled Demio/Mazda2 subcompact in the fall.

"We can cover for the domestic drop with sales overseas," he said.

Mazda said today it posted a 56.4 billion yen ($549.1 million) operating profit in April-June, up 54.4 percent. Its operating profit margin for April-June improved to 8 percent from 6 percent a year ago.

Japan's fifth-biggest carmaker is boosting profit per vehicle as it launches fuel-efficient vehicles in its "Skyactiv" series that share common structures and are built under a new manufacturing system that cuts costs, Fujimoto said.

Subaru gains

Mazda is following in the footsteps of Fuji Heavy, the smallest of Japan's seven passenger carmakers but with the highest operating profit margin at about 13 percent, in fostering a unique image and set of features for its vehicles.

Fuji Heavy, whose all-wheel drive Subaru vehicles offer an advanced crash prevention system that has proved popular, said today it booked its highest ever first-quarter operating profit of 78.7 billion yen, up 13 percent. 

A weaker yen also helped to boost profit at both Mazda and Fuji Heavy, among Japan's three biggest auto exporters along with Toyota Motor Corp. Both stuck to their annual profit forecasts.

Mazda's April-June U.S. sales jumped 18 percent to 78,373 vehicles, helped by the launch of its remodeled Mazda3 compact. The average incentive per vehicle for the three months dropped 13.7 percent from a year ago to $1,563 -- which was less than Toyota, Nissan Motor Co. and Honda Motor Co.

For Subaru, the incentive figure was even lower at $786. Subaru's U.S. sales grew 12 percent to 125,620 vehicles in the April-June quarter, according to the Automotive News Data Center. Subaru's U.S. sales have been led so far this year by the Forester compact SUV, with sales up 16 percent to 74,400 units during the first six months. 

Japan declines

But both automakers saw sales drop at double-digit rates in Japan in the first quarter ahead of vehicle launches, while a sales tax hike in April also weighed them down.

Fuji Heavy delayed the launch of its new Levorg station wagon in Japan by about a month to June.

Another headache for Subaru is its limited production capacity. Over the next few months, it will add 20,000 vehicles of annual capacity in Japan and 30,000 vehicles at its U.S. plant in Indiana. By 2016, it plans to boost the Indiana plant's capacity by 50 percent, to 300,000 vehicles.

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