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Mazda’s SUV CX-5. (Vincent Thian/Associated Press)
Mazda’s SUV CX-5. (Vincent Thian/Associated Press)

Yen’s fall sparks auto showroom battle Add to ...

Mazda Canada Inc. plans to take advantage of the drop in the Japanese yen to boost vehicle sales this year, in a sign that recent currency gyrations are flowing through to the Canadian economy – right down to the showroom floor.

“Things are finally turning to our favour, so it’s time for us to be a little bit aggressive,” Mazda Canada president Shusuke (Kory) Koreeda said on Thursday. The auto maker wants to outpace overall industry sales by between 5 per cent and 10 per cent in 2013, he said.

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The moves by Mazda come as finance ministers of the Group of Seven countries grapple with actions taken by the new Japanese government, which have sent the currency down 15 per cent against the U.S. dollar in the past three months.

The drop in the yen has sparked anger from the Detroit Three auto makers, but has provided a big boost to Japanese auto makers and other manufacturers. Many of those companies closed factories in their home country and shipped production overseas in recent years as the rise in the value of the yen, to less than 80 against the dollar, sent costs soaring and slashed profits.

“We need to invest in marketing, that’s something that we have not been able to do in the past because of the exchange rate,” Mr. Koreeda said in an interview at the Canadian International Auto Show in Toronto.

Mazda has already taken action on its two best-selling vehicles in Canada, the Mazda3 compact car and the CX-5 crossover. On Feb. 1, lease payments on the CX-5 were trimmed by $50 a month, to $269 from $319 over 36 months; while payments on the car fell by $17, to $169 over 48 months. All Mazda vehicles sold in Canada are imported from Japan, but a plant in Mexico that is scheduled to begin production next year will help reduce the impact of future currency shocks.

Mazda’s sales rose 3.5 per cent last year, but its market share fell to 4.3 per cent from 4.4 per cent as overall Canadian industry sales rose 6 per cent.

“The depreciation of the yen helps all Japanese manufacturers,” said Ted Lalka, Subaru Canada Inc. vice-president of product planning and marketing. About 50 per cent of Subaru Canada’s vehicles are made in Japan and the rest, which are assembled in Indiana, contain parts made in Japan, he said.

But the auto maker has been absorbing the effect of the yen itself in recent years, Mr. Lalka noted, because it had to remain competitive in the Canadian market. So he does not expect any Subaru price cuts.

“What it will do, though, for certain, is provide a little more room for reinvesting in the brand [and] research and development,” he said.

Other auto makers are watching the currency situation closely.

“The Japanese are tough competitors,” said Reid Bigland, president of Chrysler Canada Inc. “I expect them to become tougher competitors now that they’re getting a bit of a tailwind with respect to the depreciating yen.”

Steve Kelleher, president of Hyundai Auto Canada Corp., has his own currency issues to deal with an 8-per-cent rise in the value of the South Korean won last year.

That rise “obviously is going to help some of our competitors and they don’t need any help being aggressive,” Mr. Kelleher said at the Hyundai booth at the auto show.

Honda Canada Inc. and Toyota Canada Inc. get less benefit than do Subaru and Mazda from the drop in the yen, because the two former companies make more than two-thirds of the vehicles they sell in Canada at plants in North America. The Honda figure is about 90 per cent, Honda Canada president Takashi Sekiguchi said.

Nonetheless, Japan-based auto makers “are likely to switch from a defensive to an offensive mode,” Morgan Stanley auto analyst Adam Jonas said in a recent research report.

Follow on Twitter: @gregkeenanglobe

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