TOKYO -- Mazda Motor Corp.'s under-used U.S. assembly plant, operated with partner Ford, is dragging the Japanese automaker's North American operations deeper into the red.
Mazda booked a ¥10 billion ($119.5 million) operating loss for North America, the company's single biggest market, in the fiscal second quarter ended Sept. 30. That widened a loss of ¥4.3 million ($51.4 million) a year ago, despite a 3.6 percent regional sales gain.
CEO Takashi Yamanouchi partially blamed the yen's appreciation against the dollar for the loss. But he also pointed a finger at the company's Flat Rock, Mich., plant, which is operating at about half its capacity because of plunging demand for the Mazda6 sedan made there.
"The profitability of our product built at the local plant is not too good," Yamanouchi said while announcing second-quarter earnings Oct. 29 in Tokyo. "They are only operating on one shift now, and they have capacity for two shifts, so it's difficult."
Mazda planned to make and sell 100,000 units of the Mazda6 annually in North America, when the redesigned sedan was launched at Flat Rock in mid-2008. Then the financial crisis hit.
This year, the plant produced only 30,393 units of the Mazda6 through Oct. 23.
Mazda is searching for ways to better utilize the plant, where longtime partner Ford Motor Co. manufactures the Ford Mustang. Ford made 63,984 Mustangs through September.
"We will talk with Ford to see what improvements can be made," Yamanouchi said.
Despite the North American operating loss, Mazda reported an 11-fold increase in global net income for the second quarter, on the back of 3.1 percent increase in global revenue. Profit rose to ¥7.6 billion ($90.9 million), from ¥700 million ($8.37 million) a year earlier.
Citing brisk sales in all markets except Europe, Mazda raised its net income forecast to ¥6 billion from an earlier outlook of ¥5 billion ($59.8 million) for the fiscal year ending March 31, 2011. That compares with a net loss of ¥6.48 billion ($77.5 million) the year before.