Although Mazda jointly owns factories in China and Thailand, the Mexican facility, a joint venture (JV) with Sumitomo is best bet to boost overseas production volumes as it is a majority-owned plant.

In a recent interview with the Nikkei financial daily, Mazda president Masamichi Kogai revealed that the automaker is already considering boosting production capacity at a factory in Mexico that is scheduled to come on stream early next year. The automaker plans to start up the plant in the first quarter of 2014 with an initial capacity of 140,000 vehicles a year, which will then be raised to 230,000 in fiscal year (FY) 2015/16, including compacts supplied to Toyota. The company also plans to add tens of thousands more units to the factory's capacity from 2016 onwards. "After we reach worldwide sales of 1.7 million units, our target for 2015/16, we'll have to build up further," said Kogai. Mazda plans to maintain its current level of domestic production and will not transfer any export-bound domestic production to the Mexican plant, where the extra capacity will be used for overseas sales beyond the FY 2015/16 target, elaborated Kogai.
 

Significance: Mazda's plan to boost output at a plant that is yet to start operations underlines its desperation to boost output overseas. Although Mazda jointly owns factories in China and Thailand, the Mexican facility, a joint-venture (JV) with Sumitomo announced in 2011, is its best bet to boost overseas production volumes as it is a majority-owned plant. Mazda, which makes three-quarters of its total output in Japan and exports around 80% of this, posted four straight annual losses through to FY 2011/12 as a result of unfavourable currency exchange rates owing to a strong yen. The Mexican site, positioned as an export base for the North American market, will lift the automaker's overseas production from 30% of its total output to 50% following the planned expansion in FY 2015/16, and a further capacity increase there would result in the majority of its output occurring overseas. In August, Mazda announced that it would invest an additional USD120 million to add an engine factory to the Mexican facility.

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