Mazda Motor Corp. has asked for ¥300 billion ($2.8 billion) in loans from Japan’s three mega-banks and other lenders, company sources said Saturday, as the coronavirus pandemic has damaged the automaker’s sales and clouded the outlook for the auto industry.
The virus outbreak has dragged down Mazda’s sales in North America and Europe, the automaker’s mainstay markets, and triggered suspensions of output at its plants in Japan and abroad.
The company has been forced to slash production by 130,000 vehicles due to the spread of the pneumonia-causing virus, which amount to nearly 10 percent of its annual sales.
The company hopes to keep ample funds at hand to prepare for prolonged sales declines amid the virus outbreak as its automobile sales are expected to remain sluggish amid the novel coronavirus crisis. Mazda had around ¥500 billion in cash and deposits as of the end of last year, according to its financial statements.
The mega-banks — Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group — along with the Development Bank of Japan, Sumitomo Mitsui Trust Holdings and others are set to agree, with some already having extended the loans, a source with direct knowledge of the matter said, declining to be identified because the information is not public.
All three mega-banks declined to comment on the loan request. Mazda did not immediately respond to a request for comment.
Other Japanese automakers have also sought additional funding amid the pandemic. Toyota Motor Corp. and Nissan Motor Co. have requested credit lines worth ¥1 trillion and several hundreds of billions of yen, respectively, while Mitsubishi Motors Corp. has called for ¥300 billion in financing from lenders.
Mazda’s global vehicle sales by volume plunged 33 percent from a year before in March, hit by a slump in demand in overseas markets, including Europe and the United States.
The carmaker’s sales and balance sheet had been weak even before the virus slammed the brakes on demand, with its interest-bearing debt of ¥650 billion far exceeding its cash and cash equivalents, according to the Nikkei newspaper.
Mazda is scheduled to announce its financial results for the year ended in March on Thursday.