Capacity Pinched

Mazda Motor Corp.'s long-term future depends on making the right decision about production in North America.

The “Zoom-Zoom” marketing strategy put in place by former President Mark Fields has led to increased sales and profits, Mazda Europe President Jim Muir says.

“Now we are close to our production capacity,” he says.

With debt still huge and no help available from Mazda's major stockholder, Ford Motor Co., any capital investment will have to come from profits.

Mazda's strategy must be to have a plant in North America that is the world source for a vehicle, Muir says.

That would be a natural hedge against yen-dollar currency fluctuations, but it will be a difficult decision for the Hiroshima-based auto maker, as no Mazda vehicles currently are sourced solely outside Japan.

Today Mazda shares the AutoAlliance International Inc. plant in Flat Rock, MI, with Ford, but Muir suggests it is unlikely Mazda would take over that facility completely because Ford is making its hot-selling Mustang there.

He says Mazda could take over another Ford plant somewhere in North America, but negotiations have not yet started. Mazda has shared some production capacity in Europe with Ford, but investment in a plant in Europe is at least a decade away, Muir says.

Mazda Europe expects to sell 300,000 units this year and 320,000 in fiscal 2007. Some of that growth will come from the MX-5, the roadster that has sold more than 700,000 units since it was introduced in 1989.