Mazda Motor Corp to resume full production at its plants

Like other Japanese automakers Mazda Motor Corp, which had cut production in the wake of the global economic crisis, says it now plans to resume full production at its plants in Japan in next month in view of demand picking up in Europe.

Mazda, Japan's fifth-largest automaker had closed its Hiroshima and Hofu plants.  It started normal production at its Hofu plant in April itself and at Hiroshima plant, which was suspended for two days in the month was later reduced to a day. The company said that from June production will resume to normal.

The European governments to encourage people to buy more ecological vehicles have come out with tax incentives in the form of tax cuts or rebates, which is improving auto demand. This may gradually translate to renewing demand in other markets as well as in Japan under various government economic stimulus packages.

For instance in Germany the government helps consumers to scrap their nine-year old car for a new one by paying the consumer 2,500 euros($3,400). This has resulted in demand improving in German, France and UK.

Last week, Mazda posted a net loss of nearly $728 million for year ended 31 March. It also warned that this year too would not be good.

Mazda has seen its sales collapse in the face of a global economic meltdown which resulted in its short-term borrowing rising steeply last fiscal year. The company may have no option but to turn to the government for low interest loans as its credit rating has taken a beating preventing it from tapping the capital market.