How did a little rain cause so much damage?
Mazda is currently working with Toyota to build a $1.6 billion production plant in Alabama, but until it is complete, the Japanese automaker must rely on its factories in Japan. This wouldn't be such a bad thing if it weren't for recent trade tensions with the US as well as a disastrous act of nature.
According to Automotive News Europe, heavy rain this summer caused Mazda to lose 44,000 units of production. Mazda was forced to suspend production back in July due to heavy flooding in western Japan, with the company only resuming production last week.
The company issued a statement detailing the impact of the torrential rain, outlining that the "production volume of vehicles and knockdown parts for overseas production dropped by 44,000 units and 23,000 units, respectively." Mazda didn't specify how many of the vehicles were intended for the US and other foreign markets but did say the parts were intended for shipment to factories in Thailand, Mexico, and China. The biggest hit from the loss of production was the CX-3 and CX-5 crossovers, which accounted for 33,000 of the 44,000 lost units.
So how big is a 44,000 unit loss for Mazda? The Japanese automaker will count the missed production as a 28 billion yen ($249.3 million) charge in the fiscal second quarter. Earlier this year, Mazda hit a production milestone by building its 50 millionth car and had plans to produce more than 2 million vehicles annually by 2024.
This year, the company planned to increase production by 2% to 1.66 million units, but the unforeseen rain will likely put a dent in that goal. Fortunately, Mazda is back up and running, and after some time passes, this will merely be a small speed bump for a company that is accelerating quickly.