All automakers are facing a crisis caused by the COVID-19 pandemic. Demand falls, factories are forced to stop. In such conditions, some companies do not have enough money to cover current losses. As a result, additional funding has to be sought. For example, Mazda requested a 300 billion yen ($2.8 billion) loan from three major banks in Japan due to losses.
The company was already suffering from weak sales before the pandemic, according to the Nikkei, and with the new crisis, its cash flow has turned negative. It plans to use the funding to build up its financial reserves.
The pandemic has put a lot of pressure on Mazda. Sales in February fell 14% from the same month last year, followed by a 33% drop in March. On March 24, Mazda suspended the work of several of its factories in Japan, Mexico and Thailand due to a drop in demand for the automaker's products.
Back in November 2019, Mazda revised its operating profit forecast to 60 billion yen (=$561 million), down 27% from the previous year.
Mazda has lived in financial hardship for decades. In the late 1990s, after posting a net loss for five consecutive years, it came under the wing of American automaker Ford. The union helped the Japanese company get back on its feet, and it released a series of successful models, including the CX-5 crossover.
As for the situation with the coronavirus in Japan, in general, the country is effectively fighting it. Despite the fact that she was one of the first to encounter a new virus, only 16.4 thousand infected were recorded in it. On May 4, the state of emergency was extended until May 31.
Mazda asks for multi-billion dollar loan due to losses amid COVID-19
