More Production From New Plant in Michigan : Mazda May Hike U.S. Output in ’88
Mazda Motor Co. may enlarge the capacity of its Flat Rock, Mich., plant to increase its sales in the U.S. market after 1988 because it will be “quite difficult” to increase exports of Japanese-made cars, Kenichi Yamamoto, president of Mazda, said Wednesday.
“Our dependence on overseas markets has been quite significant, but exporting (increased numbers of) built-up cars is over,” Yamamoto said. “As far as exports are concerned, we will have to go overseas, contribute to the economy over there and create employment over there.”
Yamamoto said that Mazda’s present network of American dealers will have no trouble handling the 220,000 cars that it will be allowed to export to the United States under a new program of Japanese government-imposed quotas. The number that can be shipped in the year that began April 1 represents a 60% increase over the previous year.
Mazda also expects to sell 120,000 pickup trucks in the American market this year, Yamamoto added.
But when production of 240,000 cars at the new Flat Rock factory begins in 1988, Mazda will need more U.S. dealers to handle the extra 120,000 cars, or about 50% of the Michigan output, which the Hiroshima-based company will sell under its own brand name, he said.
‘Change in Life Style’
Ford, which owns 25% of Mazda’s stock, will buy about half of the production of the Michigan plant to sell through its dealer network, although the precise allocation of the U.S. production has yet to be finalized with Ford, he said.
Yamamoto said he believed that a “change in life style” in the United States and Japan will force auto makers to produce more models to meet the varied tastes of consumers.
In both countries, he said, families are having fewer children, the number of single adults living alone has increased and more women are seeking careers of their own.
“The movement from large cars to small cars in the United States is happening not just because of the energy crisis but is also associated with a change in life style,” he said.
“We haven’t reached a conclusion yet, but we might have to add a new car suitable just to the American market,” he said.
Such a car might be manufactured at the Flat Rock plant, thus increasing the planned production there, he said.
Yamamoto said he expected no significant growth in car sales in Tokyo and other metropolitan areas in Japan, but he saw potential for expansion in less populated areas, where economic growth is expected to outstrip growth in the cities.
“Japanese society, particularly the consumer society, is changing. A majority of the consumers are seeking their own life style, with more individuality. I think the number of the kinds of cars we have been producing is not enough to meet a diversified life style,” he said.
He said Mazda plans to add a new, smaller model to its domestic line, which will increase its production capacity in Japan.
Yamamoto said his firm believes that Asia, particularly China, will become a “strategic market” for auto makers in the future. Mazda, he said, is cultivating a relationship with Kia Motors of South Korea, a firm that Ford has also approached as a possible source of subcompact cars to sell in the U.S. market. He said Mazda has offered to make an additional investment in the South Korean firm, in which it already owns 10%. The company now produces only trucks and small buses.
“If they want help, we’ll give it,” he said.
Already, two South Korean firms--Hyundai and Daewoo, the latter a joint venture with General Motors--have committed themselves to launching car exports to the United States, while Chrysler has set up a joint parts-procurement venture with Samsung as a preliminary step to entering auto manufacturing.
