Tokyo: Japan’s Mazda Motor Corp and Mitsubishi Motors Corp warned on Wednesday they would lose money this year as they build fewer cars in view of tumbling demand, joining a growing list of automakers awash in red ink.
The revisions had been expected after bigger rivals Toyota Motor Corp and Honda Motor Co slashed their forecasts in the past few weeks, also citing pressure from the yen’s steep rise.
Carmakers everywhere are idling factories, slowing assembly lines and shedding workers to prevent a costly further buildup of inventory. But with sales continuing to tumble -- the US market hit a 27-year low in January -- low output levels are set to persist well past the business year ending on 31 March.
Mazda, Japan’s fifth-biggest automaker, owned 13% by Ford Motor Co, now expects an operating loss of ¥25 billion ($279 million) in the year ending on 31 March, instead of a ¥90 billion profit. It sees a net loss of ¥13 billion instead of a profit of ¥50 billion.
For the October-December third quarter it had an operating loss of ¥24.2 billion.
Mazda has announced plans so far to build at least 148,000, or 14%, fewer vehicles than the 1,096,000 it had planned at the beginning of the business year.
Sixth-ranked Mitsubishi Motors earlier forecast a net loss of ¥60 billion and operating profit of ¥5 billion for 2008-09. In late October, it had forecast a net profit of ¥20 billion and an operating profit of ¥50 billion.
For the October-December third quarter, Mitsubishi Motors had an operating loss of ¥5.5 billion and net loss of ¥17.6 billion.
Race to cut costs
With no recovery in car sales expected until the latter half of this year in the key US market, automakers are scrambling to reduce fixed costs to stop the losses. Mazda said last month it would cut salaries for white-collar workers in Japan, with non-factory workers taking two days off every month on reduced pay.
Mazda’s sales in the US slumped 30% in January, and Mitsubishi’s by 37% to just 4,730 vehicles.
Detroit’s Big Three suffered even bigger drops ranging from 43% to 57%.
Sales in Japan were no better, with all brands shrinking by double digits.
Mitsubishi Motors said it would build 330,000 fewer vehicles this business year than it had initially planned -- roughly equivalent to a third of its sales volume forecast.
To save money, it said it would pull out of the Dakar Rally, while reducing salaries for management. It will also cut investment by cancelling plans to expand capacity of a domestic engine plant and delaying by a few months the start of production of a mid-sized SUV at a planned Russian factory.
Fuji Heavy Industries Ltd, the maker of Subaru cars, repeated its operating and net loss forecasts of ¥9 billion and ¥19 billion for the full year, along with a sharp downturn in 9-month earnings.
It had flagged the annual losses in a profit warning last month.
Shares of Mazda ended up 4.4% before the results were announced. Mitsubishi Motors closed up 2.6% after its earnings, which were announced during afternoon trade. The benchmark Nikkei average rose 2.7%.