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A good read if you have the time. Half of Ford's cars will be based on the designs of its Japanese affiliate by 2010, up from 43% this year...
Ford chief executive officer Alan Mulally's crisis is Mazda CEO Hisakazu Imaki's opportunity.
The two men are partners in moving the second-largest US automaker away from the trucks and large sport-utility vehicles consumers are shunning in the face of $US4-a-gallon gasoline. Ford, which saved Mazda from near-bankruptcy 12 years ago, owns a third of the Hiroshima-based company, Japan's fifth-largest automaker.
Ford's Fusion and Mercury Milan midsize sedans, based on the Mazda6 and rated at up to 29 highway miles per gallon, were the Dearborn, Michigan-based company's only models to gain US sales last month.
Half of the automaker's cars will be based on the designs of its Japanese affiliate by 2010, up from 43% this year, according to CSM Worldwide, a Northville, Michigan-based automotive-consulting firm.
"Mazda is attractive now," said Masayuki Kubota, a fund manager at Daiwa SB Investments in Tokyo, who oversees the equivalent of $US1.7 billion, including the automaker's shares.
"There's a flood of demand for small cars in the US right now and Mazda gains from Ford's need for its development expertise."
The Japanese company is saving about 12 billion yen ($US111.4 million) a year through joint development with Ford, according to Credit Suisse Group senior analyst Koji Endo.
That amount will rise as cooperation increases, he said. Mazda plans to spend 115 billion yen on research and development in the year ending next March.
The shares may rise to 700 yen within 12 months, according to Endo, approaching their 16-month high of 718 yen in June 2007. Ten analysts in a Bloomberg survey recommend buying, seven say to hold, and two advise selling.
Mazda climbed 1.6% to 620 yen in Tokyo Stock Exchange trading yesterday, making Ford's stake worth $US2.73 billion. The 11% gain this year makes it the best-performing Japanese automaker. A rise to Endo's target price would add about $US355 million to the value of Ford's investment.
Mazda plans to increase its models' fuel economy by an average of 30% in the next seven years by making vehicles lighter and developing thriftier engines. The quest for efficiency is spurring cooperation between Mulally and Imaki.
Ford will make a small Fiesta model based on a Mazda design in India as early as 2009, according to CSM, and the two companies will build autos at a jointly owned Thai plant next year.
The Japanese carmaker will also supply Ford with redesigns for the Fusion sedan and Edge crossover wagon to be built in the US
Designing cars with Ford provides Mazda savings through greater economies of scale and purchasing power with suppliers, said Ashvin Chotai, a London-based independent auto analyst. The Japanese company's sales are less than a quarter of its US relative's.
"Without Ford's volumes, Mazda would find it difficult to justify all the expenditure that has gone into the platform development," Chotai said.
Developing the basic structure for the Mazda6 alone would cost as much as 30 billion yen for designers, parts outsourcing and prototypes, and take at least two years, according to Credit Suisse's Endo.
Imaki, 65, a production engineer known as "Mr. Manufacturing," is a four-decade Mazda veteran who ran the headquarters plant and became CEO in 2003. As a student at the Himeji Institute of Technology, he longed to work for the company he now runs according to "Why Mazda Arose," a book by Yoshikazu Miyamoto.
The CEO meets with Mulally, 62, an aeronautical engineer and former Boeing executive, a few times a year at Ford headquarters and international auto shows, according to Mazda spokeswoman Yukari Hara. They also speak in teleconferences, using an interpreter, and engineers from both companies work at each other's design centers in Dearborn and Hiroshima.
Mazda, after recovering from its biggest loss in company history in the year ended March 2001, has posted record net income in each of the last four years. Ford is expected today to report its sixth quarterly loss since Mulally arrived in September 2006.
US consumers' shift to fuel-efficient autos has deposed Ford's F-Series pickup trucks as the country's best-selling vehicle. Small-car sales in the US rose 20% in June, according to Autodata in Woodcliff Lake, New Jersey. Mazda's are up 0.3% this year on top of a 10% gain in 2007.
"Nobody anticipated we'd see changes like this so fast," Mulally said on June 3. "We are going to absolutely be relentless on improving the fuel efficiency year after year."
Changing preferences prompted General Motors to close four truck factories and start reviewing its Hummer SUV unit for a possible sale. Toyota will shut two truck plants temporarily and start making the Prius hybrid in Mississippi.
"The trend the world over is to small cars," said Yuuki Sakurai, general manager of financial and investment planning at Fukoku Mutual Life Insurance in Tokyo, which manages the equivalent of $US54 billion. "That's Mazda's strength and their link to Ford is very convenient as they wouldn't be able to reach that broad global market on their own."
The redesigned Mazda2 and Demio compacts, introduced by the Japanese company last July, were selected by automotive journalists as the World Car of the Year in March. The models start at a list price of 1.2 million yen and get 23 kilometers per liter (52 mpg) of gasoline.
Compact cars and sedans account for more than 60% of Mazda's global sales, with minivans, minicars and SUV's making up the rest. Mazda stopped truck production in 2003. Its domestic plants are running at full capacity.
Ford took effective control of Mazda in May 1996, raising its stake to the current 33.4% from 25%. Suffering from debt and excess capacity, Mazda lost 102 billion yen in the three years through March 1996.
In 2007, Ford earned a $US204 million pretax profit from its investment in Mazda, up from $US168 million in 2006.
"Ford once saved Mazda," said Sakurai at Fukoku Mutual. "Now Mazda is indispensable for Ford."
Source:
http://business.theage.com.au/business/mazda-shapes-fords-future-20080724-3kan.html?page=1
Ford chief executive officer Alan Mulally's crisis is Mazda CEO Hisakazu Imaki's opportunity.
The two men are partners in moving the second-largest US automaker away from the trucks and large sport-utility vehicles consumers are shunning in the face of $US4-a-gallon gasoline. Ford, which saved Mazda from near-bankruptcy 12 years ago, owns a third of the Hiroshima-based company, Japan's fifth-largest automaker.
Ford's Fusion and Mercury Milan midsize sedans, based on the Mazda6 and rated at up to 29 highway miles per gallon, were the Dearborn, Michigan-based company's only models to gain US sales last month.
Half of the automaker's cars will be based on the designs of its Japanese affiliate by 2010, up from 43% this year, according to CSM Worldwide, a Northville, Michigan-based automotive-consulting firm.
"Mazda is attractive now," said Masayuki Kubota, a fund manager at Daiwa SB Investments in Tokyo, who oversees the equivalent of $US1.7 billion, including the automaker's shares.
"There's a flood of demand for small cars in the US right now and Mazda gains from Ford's need for its development expertise."
The Japanese company is saving about 12 billion yen ($US111.4 million) a year through joint development with Ford, according to Credit Suisse Group senior analyst Koji Endo.
That amount will rise as cooperation increases, he said. Mazda plans to spend 115 billion yen on research and development in the year ending next March.
The shares may rise to 700 yen within 12 months, according to Endo, approaching their 16-month high of 718 yen in June 2007. Ten analysts in a Bloomberg survey recommend buying, seven say to hold, and two advise selling.
Mazda climbed 1.6% to 620 yen in Tokyo Stock Exchange trading yesterday, making Ford's stake worth $US2.73 billion. The 11% gain this year makes it the best-performing Japanese automaker. A rise to Endo's target price would add about $US355 million to the value of Ford's investment.
Mazda plans to increase its models' fuel economy by an average of 30% in the next seven years by making vehicles lighter and developing thriftier engines. The quest for efficiency is spurring cooperation between Mulally and Imaki.
Ford will make a small Fiesta model based on a Mazda design in India as early as 2009, according to CSM, and the two companies will build autos at a jointly owned Thai plant next year.
The Japanese carmaker will also supply Ford with redesigns for the Fusion sedan and Edge crossover wagon to be built in the US
Designing cars with Ford provides Mazda savings through greater economies of scale and purchasing power with suppliers, said Ashvin Chotai, a London-based independent auto analyst. The Japanese company's sales are less than a quarter of its US relative's.
"Without Ford's volumes, Mazda would find it difficult to justify all the expenditure that has gone into the platform development," Chotai said.
Developing the basic structure for the Mazda6 alone would cost as much as 30 billion yen for designers, parts outsourcing and prototypes, and take at least two years, according to Credit Suisse's Endo.
Imaki, 65, a production engineer known as "Mr. Manufacturing," is a four-decade Mazda veteran who ran the headquarters plant and became CEO in 2003. As a student at the Himeji Institute of Technology, he longed to work for the company he now runs according to "Why Mazda Arose," a book by Yoshikazu Miyamoto.
The CEO meets with Mulally, 62, an aeronautical engineer and former Boeing executive, a few times a year at Ford headquarters and international auto shows, according to Mazda spokeswoman Yukari Hara. They also speak in teleconferences, using an interpreter, and engineers from both companies work at each other's design centers in Dearborn and Hiroshima.
Mazda, after recovering from its biggest loss in company history in the year ended March 2001, has posted record net income in each of the last four years. Ford is expected today to report its sixth quarterly loss since Mulally arrived in September 2006.
US consumers' shift to fuel-efficient autos has deposed Ford's F-Series pickup trucks as the country's best-selling vehicle. Small-car sales in the US rose 20% in June, according to Autodata in Woodcliff Lake, New Jersey. Mazda's are up 0.3% this year on top of a 10% gain in 2007.
"Nobody anticipated we'd see changes like this so fast," Mulally said on June 3. "We are going to absolutely be relentless on improving the fuel efficiency year after year."
Changing preferences prompted General Motors to close four truck factories and start reviewing its Hummer SUV unit for a possible sale. Toyota will shut two truck plants temporarily and start making the Prius hybrid in Mississippi.
"The trend the world over is to small cars," said Yuuki Sakurai, general manager of financial and investment planning at Fukoku Mutual Life Insurance in Tokyo, which manages the equivalent of $US54 billion. "That's Mazda's strength and their link to Ford is very convenient as they wouldn't be able to reach that broad global market on their own."
The redesigned Mazda2 and Demio compacts, introduced by the Japanese company last July, were selected by automotive journalists as the World Car of the Year in March. The models start at a list price of 1.2 million yen and get 23 kilometers per liter (52 mpg) of gasoline.
Compact cars and sedans account for more than 60% of Mazda's global sales, with minivans, minicars and SUV's making up the rest. Mazda stopped truck production in 2003. Its domestic plants are running at full capacity.
Ford took effective control of Mazda in May 1996, raising its stake to the current 33.4% from 25%. Suffering from debt and excess capacity, Mazda lost 102 billion yen in the three years through March 1996.
In 2007, Ford earned a $US204 million pretax profit from its investment in Mazda, up from $US168 million in 2006.
"Ford once saved Mazda," said Sakurai at Fukoku Mutual. "Now Mazda is indispensable for Ford."
Source:
http://business.theage.com.au/business/mazda-shapes-fords-future-20080724-3kan.html?page=1
