Mazda says it may pull out from Flat Rock factory jointly operated with Ford

Article by Christian A., on February 22, 2011

As production has become unprofitable, Mazda Motor Corp.’s CFO Kiyoshi Ozaki said that the company may pull out from a U.S. factory it operates jointly with longtime partner Ford Motor Co. Ozaki told reporters in Tokyo that plans for the Flat Rock, Mich., factory will be revealed by the middle of the year.

Ozaki said that Mazda, Japan's second-largest car exporter, will consider overhauling the plant or change the models built there. However, Ozaki didn’t provide further details.

Currently, the plant assembles the Ford Mustang and Mazda6 sedan on one production shift. Ozaki said that for the plant to make a profit, it has to operate at 70 percent of its full 240,000-unit capacity.

Mazda seeks to present a more fuel-efficient engine to spur demand and boost domestic production to improve economies of scale after falling into a third-quarter loss.

In January 2011, Mazda’s U.S. sales dropped 9 percent, as demand fell due to increased incentives on Toyota Motor Corp.'s Corolla compact, and as demand for Hyundai Motor Co.'s Elantra took away some of the demand for the Mazda3.

The carmaker has to adjust U.S. inventory by 5,000 units through the end of March. Mazda seeks to increase domestic production 33 percent to 1.1 million units in the year ending in March 2016, compared with 827,910 units last fiscal year. Ozaki also said that the ratio of exports will also go up as demand for cars in Japan declines.

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