Mazda has long occupied an idiosyncratic position among car makers, making sporty, fun-to-drive vehicles that don’t cost much to own. In the late-1980s, it introduced the Miata, a lightweight two-seater that became the world’s best-selling roadster as well as one of the most recognizable cars ever made, much like the Volkswagen Bug or Chevrolet (GM) Corvette. It was willing to make products more conservative manufacturers wouldn’t, including models using an innovative rotary engine.

Now, Mazda is in pain. The hammer dropped for the spitfire car company in February when it announced that it expected to lose 100 billion yen ($1.21 billion) for the fiscal year ending March 31. The loss stems from Mazda’s heavy reliance on Japanese-base production at a time of steep appreciation in value of the yen against foreign currencies.

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On March 7, Mazda successfully undertook at $1.9 billion share sale to raise capital to be used in part to build a plant in Mexico by the spring of 2013. A few days later the automaker said it was offering buyouts to some of its 701 U.S. employees. Mazda stock has been the worst performer among Japan’s eight largest automakers.

“The U.S. buyouts caught us off guard, because we hadn’t seen similar moves from two other small Japanese carmakers, Mitsubishi and Suzuki,” says Rebecca Lindland, an analyst for IHS Global Insight. “Mazda can’t make money selling in dollars and manufacturing in yen. It’s a formula for losing your shirt.”

With 2.4% of the U.S. car market, Mazda sales rose 47.5% in the first two months of 2012, largely on the strength of the Mazda 3. That model is about the same size as a Honda (HMC) Civic or Toyota (TM) Corolla – but much hipper, according to reviewers. “You can’t make money importing them from Japan,” says Lindland.

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In contrast, the Civic, Corolla and other contenders in the Mazda 3’s segment are built in North America, which helps make them profitable, from the standpoint of currency translation and transportation costs. Mazda currently builds 70% of its production in Japan, a level it would like to reduce to 50%.

Mazda had enjoyed a long-term alliance with Ford Motor Co. (F) until 2008 when the Detroit firm was forced to sell part of its equity stake in Mazda to raise cash. Mazda and Ford built cars together at an assembly plan in Flat Rock, Michigan. Last year Mazda announced plans to stop production of the larger Mazda 6 sedans there.

The world auto industry has seen a number of mergers and alliances in recent years, meant to spread the soaring cost of new technology and models over a larger number of units sold. Mitsushige Akino, a chief fund manager at Ichiyoshi Investment Management told Reuters “I don’t think Mazda can continue on as an independent, and with its future vision still unknown, it’s hard to make an investment decision on it.”

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Jeremy Barnes, a Mazda spokesman, said “through all of this Mazda has continued to invest in product. Dealers in the U.S. tell us there are waiting lists for our new CX5 [compact crossover].”

Sergio Marchionne, the chairman of the Chrysler-Fiat alliance, has been frank about his desire for another partner. And some wonder whether Mazda might be the right fit with its engineering prowess and proximity to Asian markets. Mazda still has strong brand awareness in the U.S. and a hardy band of enthusiasts. The Takeri design concept, supposedly a thinly-disguised version of the new Mazda 6 midsize sedan, was shown earlier this month at the Geneva Auto Show, to the delight of many reviewers who praised its swoopy exterior.

Good looks are necessary, though often not sufficient. Solvency, however, is a must. Mazda’s newly-raised cash, its venture in Mexico and perhaps even an alliance may be enough to keep it business.