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| In reviewing results for fiscal year 2000, would you discuss the highlights in each of the major markets, namely Japan, North America and Europe? |
In Japan, the market environment remained difficult, plagued by weak private consumption and a decline in total industry production volume. Despite these harsh conditions, our market share grew for the third consecutive year from 5.4% to 5.5%. In the registered car market, our market share grew half a percentage point to 7%, our highest share in six years. Among the five largest domestic auto manufacturers, Mazda was the only company to increase absolute volume in the registered car market. We were able to achieve these results through successful launches of major products, such as the Premacy, MPV and Bongo.
In the United States, we continued to make strides, including the successful introduction of the MPV. To strengthen our sales and marketing efforts, our subsidiary, Mazda North American Operations (MNAO), obtained distribution rights in the Midwest and Great Lakes regions, extending direct management and operation of a uniform sales network throughout the entire United States. Further, we continued to enhance our brand.
In Canada, bolstered by an overall increase in the general economy, the automobile industry posted solid growth. Due to outstanding acceptance of the Protegé and MPV, Mazda's retail sales jumped 23.1% compared to the previous year, far exceeding growth rates for the overall industry average.
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| In Europe, we introduced new products, including Premacy, MPV, Capella Wagon and freshened Demio and B-series pickup trucks. To increase market share, particularly in southern Europe, we established wholly-owned distributors in Italy and Spain. Unfortunately, we were buffeted by a stronger yen and our business in Europe did not grow to the extent we expected. However, on a calendar year basis, Mazda maintained the top position for Japanese imports in Austria and Germany, the latter of which is the biggest market in Europe. | 
Mark Fields - President |
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| Restoring profitability to the domestic dealer organization has been a key priority. What measures and/or tangible results have been achieved in enhancing dealer operations? |
We have been rebuilding our domestic dealer organization over the past several years. We have taken measures to boost sales, including the Sales Expansion Project, which cascades sales know-how and expertise at showroom locations, along with initiatives to improve customer satisfaction. Further, we have strengthened domestic dealerships through subordinated loans totaling ¥ 145 billion, allowing dealer management to focus on selling cars and servicing customers. We implemented the “One Operation” dealer program in 1998, which integrates main functions like management and administration. It now encompasses 45 dealers in 18 prefectures as of April 1, 2000. We have enhanced the appeal of our products through other actions, including introduction of new models and limited editions.
We are starting to see the fruits of this labor. Out of 60 consolidated dealerships, approximately 80% were profitable in fiscal year 2000. This represents the first profitable year for our dealers in 10 years and strongly illustrates significant improvement of the management foundation of these domestic subsidiaries.
We will continue to take measures to strengthen domestic dealerships in the coming years. In January 2001, we will merge the general wholesaler and local wholesalers of the Autozam sales channel into one subsidiary, targeting increased efficiency driven by a sound management base. |
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| Mazda depends heavily on exports. In light of the strong appreciation of the yen, what are your plans to reduce risks to foreign currency exposure? |
The appreciation of the yen seriously impacted our operations. We will continue to take measures to hedge against other currencies in countries where we have major sales. In particular, a weakened euro versus the yen has hurt us in Germany, the largest market for Mazda in Europe, as well as most other European markets. To reduce our exposure to exchange rate fluctuations and supply more competitive products, we are studying as one of our strategic options the possibility of producing Mazda vehicles in Europe, using Ford's facilities. We will decide this matter by the end of this calendar year.
Moreover, to reduce associated operational risks, we will continue to undertake efforts to expand production overseas. These include the manufacture of a global engine family at Ford's overseas manufacturing facilities as well as in Hiroshima, the production of a left-hand-drive Tribute model at Ford's U.S. facility near Kansas City, and continued use of AutoAlliance (Thailand) Company Limited (AAT) as an export base for B-series pickup trucks. Exports of AAT are performing particularly well, with further increases expected following commencement of exports of KD sets from Summer 1999 to countries in Asia, Africa and South America. Mazda also plans to increase procurement of parts overseas to support production in Japan. |
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| Mazda has made substantial progress in improving financial structure. What are the principal achievements for fiscal year 2000? Despite these improvements, what factors contributed to performance below plan? |
Mazda's consolidated net debt stood at ¥ 537.0 billion, down ¥ 293.3 billion or 35.3% at comparable accounting standards compared with the prior year. Consolidated cash flow was ¥ 275.0 billion including ¥ 126.6 billion of positive cash provided by operating and investing activities and a substantial net debt reduction from divestiture of equity in subsidiaries. As a result, we have achieved an all-time record positive cash flow, which is important in our business where we're trying to pay down debt and, at the same time, maintain strong cash flow to invest in new products.
Despite these improvements, consolidated profit and returns were inadequate. Cost reductions were used largely to offset a strong yen instead of improving bottom-line profit. Moreover, our volume growth was less than we assumed because of lower industry and segmentation changes in Japan and lower-than-planned market share growth. |
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