Mazda seeks RM 12 billion to handle the coronavirus pandemic’s repercussions

KUALA LUMPUR:  The COVID-19 outbreak is causing extensive concern and economic hardship for businesses, communities, and consumers across the globe. As the pandemic disrupts the industries and throws the economic outlook into trouble, the automobile sector is on the front line. From the cancellation of big shows to production halts, from car launch delays to profit decline, the pandemic is wreaking havoc in the industry. 

Amid all these, the Japanese automaker Mazda is in big trouble. The firm seeks a loan of 300 billion yen (more than RM 12 billion) from three giant banks of Japan as well from other loan providers of the country, as reported by Reuters. However, this is hardly surprising considering the production suspension.

The megabanks are Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group. The other loan service providers include the Development Bank of Japan, Sumitomo Mitsui Trust Holdings, and some other institutions. The source also cited that some of the loans have already been extended to the company. Although, the firm as well as loan providers, refused to comment in this context on both Reuters and Nikkei reports.

Just like other automakers, Mazda had also halted production at factories around the globe for the past couple of months, when governments announced lockdowns for controlling the spread of coronavirus. However, the sales chart and balance sheet of the company have not been good even before the virus put the brakes on selling. According to Nikkei, the firm’s interest-bearing debt of 650 billion yen is far exceeding its cash and cash equivalents.

Talking about the impact on other companies, Ferrari had already announced the delay of its four upcoming model launches, while some of the car rental companies are also facing challenging situations.

While some countries are now easing out the regulations made for controlling the spread of the virus, the volume of car sales can see some improvements in the coming months. But nothing is certain as of now, the demand for the vehicles could go in one or the other way.

Also read: Warranty and free service extension announced by Mazda Malaysia