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Mazda to Concentrate on Domestic Market to Combat High Yen With Dollar-Gold

January 21, 1987

TOKYO (AP) _ Mazda Motor Corp. will concentrate this year on developing its share of the domestic Japanese auto market to cope with the soaring value of the yen, the company said Wednesday.

″We did everything possible to rationalize and streamline all aspects of our operations to meet the challenge posed by the highly appreciated yen,″ Mazda President Kenichiro Yamamoto said.

″However, the burden proved so enormous that we were forced to report a decline in our earnings,″ the president of Japan’s fourth-largest automaker said in a speech to the Foreign Correspondents Club of Japan.

The yen has risen 60 percent against the dollar in the past 16 months, making Japanese goods more expensive overseas and forcing Japanese manufacturers to cut costs and raise prices, thereby reducing profits.

Mazda’s overall sales reached 1.63 trillion yen, or $10.59 billion at current rates, in the fiscal year ended Oct. 31, a 3.6 percent increase from the previous fiscal year’s sales of 1.57 trillion yen.

But profits plunged 73.9 percent, from 31.17 billion yen, or $202.9 million, in fiscal 1985, to 8.14 billion yen.

Yamamoto said he expected Mazda to report a decline in profits for the current fiscal year as well.

To combat the effects of the high yen, Mazda will seek a stronger foothold in Japan’s domestic auto market by intensifying efforts to target new consumer groups and design new auto models for them, Yamamoto said.

Because of the steep rise of the yen against the dollar, the Japanese wage level has increased 60 percent compared with wages in Taiwan and South Korea, leading Mazda and other Japanese automakers to turn to these countries for parts and some production work.

Yamamoto said such procurement practices may result in the ″deindustrializat ion of Japan.″

He said Mazda will accelerate research into electronics and new materials, which can be applied to autos as well as Mazda’s other areas of production, machine tools and drills.