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Mazda may be forced to cut China sales goal

Bloomberg

Mazda Motor Corp. is saying it may cut its midterm China sales target after deliveries in the world’s biggest car market fell for 17 straight months.

Mazda is Japan’s most export-dependent automaker, and its plan for China sales to reach 400,000 units by the year ending March 2016 “may be revised,” Masamichi Kogai, who was promoted to president in June, said in an interview last week.

Hiroshima’s biggest company is forecasting China sales to reach only 200,000 this fiscal year.

While no Japanese carmaker has seen a bigger turnaround, in terms of profits or share price, since the yen began weakening almost a year ago, Mazda has yet to emerge from its slump in China. After reshuffling its top management in the country this year, Mazda is now betting that the locally produced CX-5 SUV and Mazda 6 will help spur a recovery.

“Mazda is switching to local production of their top models in China now, so once that kicks in, sales should pick up,” said Koichi Sugimoto, an auto analyst at BNP Paribas SA in Tokyo. “Their products are improving, and the models they’ll be introducing fall under the popular category in China too.”

Mazda’s sales in China have fallen 21 percent in the first eight months of the year, making it among the worst performers.

Mazda is not alone in struggling in China.

Sales at Japanese automakers from Toyota Motor Corp. to Honda Motor Co. have yet to fully recover from the furor over the Senkaku Islands dispute. Even so, Mazda’s slump predates the territorial flap.

Aversion toward Japanese brands has been a boon for carmakers such as Ford Motor Co., which has seen China sales surge 50 percent during the first eight months.

According to estimates by the state-backed China Association of Automobile Manufacturers, the country will see total vehicle sales reach 20 million units this year.

By contrast, Mazda’s sales in the U.S. are picking up.

Deliveries rose 26 percent in August, helped by surging demand for the new Mazda 6 and the CX-5, which have been equipped with a fuel-saving system the company calls SkyActiv technology. For the first eight months, sales climbed 6.8 percent.

U.S. demand, coupled with the falling yen, is helping profits as the company forecasts net income will more than double to ¥70 billion this fiscal year. Recent profits haven’t been enough to offset accumulated losses that prevent Japanese companies from paying dividends. Mazda aims to resume payments by March 2016, Kogai said.

Separately, Kogai said the joint effort with Fiat SpA’s Alfa Romeo to develop a roadster will be a one-time project and that Mazda is continuing to do research on its discontinued rotary engines.