Mazda's Profits Zoom (Zoom)

Quick, when you think of Japanese car companies, which ones come to mind?

I'll bet the top three are, well, the top-three Japanese auto companies: Toyota (NYSE: TM), Honda (NYSE: HMC), and Nissan (Nasdaq: NSANY). Maybe, you also think Mitsubishi, which has been in the news a lot of late -- although, not in a good way.

But what about Mazda? Little "zoom-zoom," as it's known to its fans, reported turbocharged profits on Friday -- up 40% over 2002. Pretty impressive, even if those results were for a 15-month fiscal year as opposed to 2002's 12-month fiscal year. You might think that the U.S. had a lot to do with that, given the ubiquity of Mazda's "zoom, zoom, zoom" commercials here, and the company's double-digit U.S. sales gains of recent months. But the fact is that the cost of those commercials contributed to Mazda losing money in the U.S. in 2003.

It was actually Europe, where Mazda makes roughly 20% of its sales, that contributed most to the company's success last year. European sales increased 29% for the fiscal year, vs. an overall sales increase of 23%. And while a weakening dollar dropped fewer yen per dollar of sales to Mazda's bottom line, the relative strength of the euro had the opposite effect, making every euro of European sales worth more yen to the company's profit margin.

Good news to Mazda shareholders, and there are more of them in the U.S. than you might think, despite the company not being listed on any major U.S. exchange. Ford (NYSE: F), which is listed here, owns one-third of Mazda. And the fact that Ford has been performing rather poorly in Europe of late -- it barely broke even last quarter -- is therefore made up in part by its ownership stake in the popular Mazda.

But only in part. A one-third stake in the profitable sales of what is, in all honesty, a niche market carmaker, cannot make up for Ford's failure to execute in Europe on its own behalf.

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Fool contributor Rich Smith owns no shares in any company mentioned in this article. While he drives a stick-shift GM truck himself, he admits that his wife's Mazda Protege is probably better suited for Washington, D.C.-area commuting.