Mazda 2012 Annual Report Download - page 10

The second measure is to “Accelerate further cost improvement through Monotsukuri
Innovation.” Our group of next-generation products, beginning with the new CX-5, is expected
to achieve initial cost targets, but in light of subsequent changes in the operating envi-
ronment, we are aiming for additional cost reductions by raising our target for improvement
in the area of vehicle costs from 20% to 30%. In addition, we will look beyond vehicle costs
alone and endeavor to reduce fixed costs. We have already begun work to make investment
in development and production more efficient, improve administrative operations efficiency,
reduce staffing levels while developing staff capabilities, strategically shift domestic indirect
employees to overseas and front line, and make operations in Europe and North America
more efficient.
The third measure is to “Reinforce business in emerging countries and establish global
production footprints.” Reviewing our production structure and bringing the percentage of
overseas production to 50% of total production are important components of the Structural
Reform Plan. We have identified China, Russia, ASEAN, and Central and South America as the
main markets for these activities. We already have a production structure in place in China,
and are expanding our sales network and product lineup, and strengthening customer satis-
faction, with a view to annual sales of 400,000 units. In Russia, we have concluded an
agreement with Sollers to establish a joint-venture manufacturing company, and we plan to
begin production from the fall of 2012. We intend to expand our sales network throughout the
ASEAN region, along with increasing our truck production capacity in Thailand. In Central and
South America, plans for production in Mexico are proceeding on track. In addition to strong
sales in Mexico and Chile, we are considering entering the remaining three-million-unit-
market, Brazil.
One of our assumptions in increasing overseas production is that this will simultaneously
reduce costs and promote additional sales. At the same time, we plan to maintain domestic
production at the 850,000 unit level, but this assumes that we will step up our efforts to
create a cost structure that can generate profit in all of the more than 100 countries to which
we export from Japan, even at current exchange rate levels, as we were able to achieve with
the new CX-5.
The fourth measure is to “Promote Global Alliances.” We have alliances in place with
companies in Japan, the United States, Europe, and China, and going forward we will continue
to pursue business and technological alliances to further strengthen the Mazda brand. Since
the announcement of the Structural Reform Plan, we have already concluded agreements
for alliances with two companies, Sollers and Fiat. We are also proactively tendering tech-
nologies and products including SKYACTIV powertrains.
By steadily pursuing these measures under the Structural Reform Plan, we aim to achieve
operating income of ¥150 billion with an operating income margin of at least 6%, and global
sales volume of 1.7 million units over the four years starting from fiscal year March 2013.
Mazda has been pursuing a variety of measures to strengthen its management and opera-
tions, but at the end of the third quarter our financial position temporarily deteriorated as a
result of sudden changes in the business environment. This timing also marked a major
turning point for future growth, with the global launch of the new CX-5, fully equipped with
SKYACTIV technology.
While implementing the Structural Reform Plan, we were able to secure capital for the
future and strengthen our equity capital to respond to environmental changes, through a
capital increase by means of a public offering of shares and the procurement of a subordi-
Capital Increase by
Means of a Public
Offering
Mazda Annual Report 2012
8