As part of expansion plans, Mazda is entering a joint venture with Sollers, the Russian automaker, to build vehicles for Russia. Mazda, which is ranked as the fifth largest automaker in Japan, said that 50,000 vehicles would be made for the joint venture’s initial production capacity. Operations will start towards the end of 2012.
The volume is slated to eventually reach 70,000 units annually. The financial details about the joint venture were not announced. The venture will build the following: Mazda's CX-5 SUV, the next-generation Mazda6 car and a Sollers brand vehicle that will be sold in Russia.
Last year, Mazda’s sales n Russia reached about 40,000 vehicles, a 60% year-on-year increase, which makes it Mazda’s No. 2 biggest market in Europe. Government and independent forecasts are in agreement and believe that Russian car sales will expand by about 6% in 2012 to reach 2.8 million vehicles.
Meanwhile, the market is expected to reach 4 million vehicles by 2015. Sollers has recently entered similar ventures with other car companies such as Ford Motor Co and Fiat to benefit from government incentives to give local production a boost.
Mazda, which produces over 70% of its vehicles in Japan and exports more than 75% of that, wants to increase its overseas output capacity so that profits would not depend so much on the strength of the yen.
Last June, Mazda revealed plans to construct a plant in Mexico and is also hoping to increase its output in China. Last March, Mazda sold $1.9 billion in new stock. Almost half of its proceeds will be spent for overseas production bases as well as to improve domestic plants.