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07-08-2013, 02:09 PM
Doom-Doom? Why Mazda Needs a Savior
Its profits are up and its products are great. So what gives?
http://media.caranddriver.com/images/media/51/doom-doom-inline-1-photo-523780-s-original.jpg
- From the July 2013 Issue of Car and Driver
To the casual observer, Mazda appears to be on a hot streak. The new 6 is great and just beat the Honda Accord in our comparison testing. The CX-5’s 43,319 sales in 2012—the highest for a Mazda crossover in nearly a decade—helped propel the company to its best year since 2007. The company expects 300,000 U.S. sales in 2013, a mark it hasn’t hit in almost 20 years, and in February, its stock soared 12 percent on increased 2012 profits, a huge gain after four straight years of financial losses.
Despite all this, Mazda’s future is wracked with uncertainty, a worrisome notion for those who love affordable fun cars. Mazda’s divorce from 30-year-plus partner Ford deprived the Japanese brand of critical economies of scale, greatly increasing its costs. And last year’s economic windfall was the product of a variable the company doesn’t control: currency fluctuation. Mazda made more money than expected in 2012 because of the weakening yen, which earned the company a greater return on the many vehicles it exports from Japan. If the yen’s value swings the other way, to the stronger position it has generally held the past four years, Mazda’s profits will suffer. Something has to change.
http://media.caranddriver.com/images/media/51/doom-doom-inline-2-photo-523852-s-original.jpg
THE GLOBAL PERSPECTIVE
While the U.S. business looks good, its sales here represent only about one-quarter of Mazda’s global total, and the vehicles that seem so promising in the States are heavily compromised elsewhere. The CX-5 is well-sized for the American and European markets, but smaller, B-segment crossovers will be the next growth area in much of the globe. Mazda lacks an answer to vehicles such as the forthcoming Honda Fit–based SUV, Ford EcoSport, Chevrolet Trax, and Volkswagen Taigun. It’s the same story with the 6. Mid-size sedans in the U.S. have been getting larger and larger, but aligning the 6 with its top competitors here has left the car too big for Mazda’s other major markets in Europe and most of Asia.
http://media.caranddriver.com/images/media/51/doom-doom-inline-3-photo-523854-s-original.jpg
BIG TROUBLE IN LITTLE CARS
Even the Mazdas that aren’t size-compromised are in trouble. The race to more-efficient engines and lower curb weights is driving up development and manufacturing costs for all automakers, but Mazda’s cost increases are compounded by the exit of its longtime partner in Dearborn. Operating as a virtual Ford subsidiary once gave Mazda low-cost access to platforms, drivetrains, and even whole vehicles. With Ford mostly out of the picture, that gravy train ends. Unfortunately for Mazda, the 2 and 3, which together comprise nearly half of the brand’s global sales, are spun from Ford pieces. To even maintain its already inadequate per-unit profits on these cars, Mazda will have to reduce the cost of their replacements or charge more for them.
SHACKIN' UP
MAKE IT UP WITH VOLUME
George Peterson, president of the analysis firm AutoPacific, explains that in the short term, Mazda’s profits on the 6 and CX-5—both built on a low-cost, Mazda-engineered platform—are high enough to offset slim margins on small cars. But while the company can control its own manufacturing costs, the industry’s continued consolidation means Mazda won’t be able to control rising supplier prices. It has a patchwork of small partnerships, and CEO Takashi Yamanouchi says sustaining these relationships is a cornerstone of his recovery plan. But in the long term, Mazda must replace Ford with another partner that can help it keep purchasing costs at a sustainable level.
Mazda has much to offer. It consistently produces engaging vehicles, and its ability to design products for low-cost manufacture is a rare skill in any industry. Perhaps the greatest hope lies in *Mazda’s new tie-up with Fiat. Currently confined to just a one-product agreement, the deal is set to yield an Alfa Romeo roadster from the next Miata. Fiat supremo Sergio Marchionne has mentioned that cooperation between the two companies could expand beyond this project. Roadsters alone will do little to change the company’s fortunes, but if this endeavor leads to a deeper cooperation, the Miata just might save Mazda.
read more: http://www.caranddriver.com/features/doom-doom-why-mazda-needs-a-savior-feature
Its profits are up and its products are great. So what gives?
http://media.caranddriver.com/images/media/51/doom-doom-inline-1-photo-523780-s-original.jpg
- From the July 2013 Issue of Car and Driver
To the casual observer, Mazda appears to be on a hot streak. The new 6 is great and just beat the Honda Accord in our comparison testing. The CX-5’s 43,319 sales in 2012—the highest for a Mazda crossover in nearly a decade—helped propel the company to its best year since 2007. The company expects 300,000 U.S. sales in 2013, a mark it hasn’t hit in almost 20 years, and in February, its stock soared 12 percent on increased 2012 profits, a huge gain after four straight years of financial losses.
Despite all this, Mazda’s future is wracked with uncertainty, a worrisome notion for those who love affordable fun cars. Mazda’s divorce from 30-year-plus partner Ford deprived the Japanese brand of critical economies of scale, greatly increasing its costs. And last year’s economic windfall was the product of a variable the company doesn’t control: currency fluctuation. Mazda made more money than expected in 2012 because of the weakening yen, which earned the company a greater return on the many vehicles it exports from Japan. If the yen’s value swings the other way, to the stronger position it has generally held the past four years, Mazda’s profits will suffer. Something has to change.
http://media.caranddriver.com/images/media/51/doom-doom-inline-2-photo-523852-s-original.jpg
THE GLOBAL PERSPECTIVE
While the U.S. business looks good, its sales here represent only about one-quarter of Mazda’s global total, and the vehicles that seem so promising in the States are heavily compromised elsewhere. The CX-5 is well-sized for the American and European markets, but smaller, B-segment crossovers will be the next growth area in much of the globe. Mazda lacks an answer to vehicles such as the forthcoming Honda Fit–based SUV, Ford EcoSport, Chevrolet Trax, and Volkswagen Taigun. It’s the same story with the 6. Mid-size sedans in the U.S. have been getting larger and larger, but aligning the 6 with its top competitors here has left the car too big for Mazda’s other major markets in Europe and most of Asia.
http://media.caranddriver.com/images/media/51/doom-doom-inline-3-photo-523854-s-original.jpg
BIG TROUBLE IN LITTLE CARS
Even the Mazdas that aren’t size-compromised are in trouble. The race to more-efficient engines and lower curb weights is driving up development and manufacturing costs for all automakers, but Mazda’s cost increases are compounded by the exit of its longtime partner in Dearborn. Operating as a virtual Ford subsidiary once gave Mazda low-cost access to platforms, drivetrains, and even whole vehicles. With Ford mostly out of the picture, that gravy train ends. Unfortunately for Mazda, the 2 and 3, which together comprise nearly half of the brand’s global sales, are spun from Ford pieces. To even maintain its already inadequate per-unit profits on these cars, Mazda will have to reduce the cost of their replacements or charge more for them.
SHACKIN' UP
MAKE IT UP WITH VOLUME
George Peterson, president of the analysis firm AutoPacific, explains that in the short term, Mazda’s profits on the 6 and CX-5—both built on a low-cost, Mazda-engineered platform—are high enough to offset slim margins on small cars. But while the company can control its own manufacturing costs, the industry’s continued consolidation means Mazda won’t be able to control rising supplier prices. It has a patchwork of small partnerships, and CEO Takashi Yamanouchi says sustaining these relationships is a cornerstone of his recovery plan. But in the long term, Mazda must replace Ford with another partner that can help it keep purchasing costs at a sustainable level.
Mazda has much to offer. It consistently produces engaging vehicles, and its ability to design products for low-cost manufacture is a rare skill in any industry. Perhaps the greatest hope lies in *Mazda’s new tie-up with Fiat. Currently confined to just a one-product agreement, the deal is set to yield an Alfa Romeo roadster from the next Miata. Fiat supremo Sergio Marchionne has mentioned that cooperation between the two companies could expand beyond this project. Roadsters alone will do little to change the company’s fortunes, but if this endeavor leads to a deeper cooperation, the Miata just might save Mazda.
read more: http://www.caranddriver.com/features/doom-doom-why-mazda-needs-a-savior-feature