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Jerry Flint, 05.02.06, 6:00 AM ET

New York - Car writers love Mazda cars. Auto scribes praise Mazdas for their performance, ride, handling, looks and value. Only one problem: There has been no growth in Mazda sales for over a decade.

Mazda U.S. Sales
1995
283,745

1996
238,285

1997
221,840

1998
240,546

1999
243,708

2000
255,526

2001
269,602

2002
258,213

2003
258,865

2004
263,882

2005
258,339

Source: Automotive News

Over the same 11 years in which Mazda's volume stagnated, Toyota Motor (nyse: TM - news - people ) sales more than doubled to 2.3 million; Honda Motor (nyse: HMC - news - people ) sales nearly doubled to 1.5 million; and Nissan Motor (nasdaq: NSANY - news - people ) gained 40%. While BMW can thrive in the U.S. selling one-quarter of a million cars per year in the U.S., it is harder for a mass-market-priced brand such as Mazda to get rich here with that kind of volume.

The root of the problem for Mazda, which is 37%-owned by Ford Motor (nyse: F - news - people ), goes back to a disastrous strategic decision--made nearly 20 years ago--to compete head-to-head with Toyota in their home market. Mazda even planned a Lexus-like luxury car called Amati. But the bursting of the Japanese "bubble" economy in the '90s ended all that, including Amati.

The present strategy in the U.S. is "zoom zoom," or punchy engines and sharp handling. "We're looking at a very targeted audience; somebody who wants more emotion in the things they drive, in styling, in being different. Someone who wants a car that interacts with them and interacts with the road," says Robert Davis, a senior vice president at Mazda. To me, this sounds like the profile of a BMW customer--but at a much lower price point.

The problem for Mazda is expanding its customer base: Are there enough Americans who really want "zoom zoom?" A number of factors have hampered this goal. For one, its dealer force was one of the weakest in the business. A few years ago, only 20% of Mazda dealers were exclusive, which means the other 80% shared their show rooms and loyalty with other brands. With Honda, 82% of the dealers are exclusive. Mazda is improving on this count; 43% of the company's 709 current dealers are exclusive, and the goal is for 50% by the end of next year.

The growth of the Japanese Big Three (Toyota, Honda and Nissan) has given those companies enormous power to develop, manufacture and market their vehicles. I see similarities here with the U.S. auto market in the early 1950s, when we had independent auto companies like Nash, Hudson, Studebaker, Packard, ****** and Kaiser. The current trend is overwhelming the smaller Japanese companies, such as Mitsubishi (otcbb: MSBHY - news - people ), Subaru and Isuzu.

Davis is confident Mazda will not end up like Studebaker: "If you don't know who you are, you will get killed. We are comfortable with whom we are, and we can win in selected segments."

Leadership is another issue. In recent years, the company has been through a string of top managers. Such consistent turnover can be counterproductive. Today's leader in the U.S. is James O'Sullivan, a former head of Mercury for Ford.

Personally, I think some Mazda vehicles, such as the Mazda6 and Mazda5, are a bit too small. In the U.S., Chrysler used to succeed by making its cars and trucks a little bigger than the competition's.

In the first quarter of 2006, Mazda sold 67,271 units, a 5% increase over sales a year ago. That leaves the company on target to sell about one-quarter of a million cars in the U.S. Company executives say real gains will come next year, when the product and the dealer force are ready. What's more, the parent company, after years of losses, is running in the black. In the year ended March 31, consolidated profits were a record $568 million.

Another positive sign is that Ford has stopped shuffling Americans in and out of the top job in Japan. A Japanese executive now runs the company.

And the product? The MX-5 Miata roadster is one of my favorite fun cars. Mazda has a new generation model for 2006, and the new Pontiac Solstice and Saturn Sky roadsters might actually bring some attention to the market. Still, this is a low-volume segment.

The Mazda6 sedan, built near Detroit, competes with Toyota's Camry and Honda's Accord but is only a so-so seller. "Did you know the Mazda6 buyer is 17 years younger than the Camry [buyer]?" asks Davis. It doesn't help that the V-6 available in Mazda is an anemic, 215-horsepower Ford motor, while the V-6s in its rivals such as Accord, Camry and Hyundai Sonata each have engines that pound out 235 horses or more. Ford is building most of its new vehicles, such as the Fusion, Lincoln Zephyr and the coming Edge SUV, off Mazda6 architecture.

Some experts consider the smaller Mazda3 to be one of the best cars in its class. Last year, this car was Mazda's top seller in the U.S., with 97,000 deliveries. Coming this fall is a punchy version called the MazdaSpeed3, which will join the 149-mph-capable MazdaSpeed6. A MazdaSpeed (high-performance) version of the MX-5 roadster is on the way too. And, of course, there's the RX-8 sports car with the rotary engine.

Mazda is also expanding its lineup of "people-movers." The Mazda5, which is smaller than conventional minivans, came out last year. The CX-7, which is coming out now, is a sleek, crossover SUV. Mazda says that this model will compete with the Honda CR-V and Toyota RAV4. The engine is a four-cylinder turbo, which generates 244 horsepower. It's wonderful but does require premium fuel. The CX-7 starts at $23,750, but the nicely equipped one I drove was $28,785. Mazda says this is the first vehicle it ever designed with the American buyer in mind. The company is shooting for 40,000 sales per year, but I think they'll have to work hard to reach that goal.

Coming this fall is third, van-like crossover, the CX-9, which is larger than the CX-7 and Mazda5. But here's what puzzles me: These three similar-looking (to me, anyway) vehicles are built on three different architectures. That's a costly way to go. But putting that aside, Mazda has a good lineup of current and upcoming models.

But the question remains: Will a scrappy little company that knows where it wants to go and that builds good cars be able to compete against the giants? History in the U.S. says no. But then, old Henry Ford once said, "History is bunk."

source : forbes
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Personally, I love their cars, both in style(except the SUV & the RX-8) & in how they drive.

Lexmex

On a side note, I read something in a newspaper down here that Mazda had the fastest growth over a 3 month period since they opened in Mexico of any car maker in their first 3 months. However, not sure how that will translate into the long run or how they are doing in the rest of the world.

I did hear something similar and read a few things online about how Mazda has completely taken the Israeli automarket by storm and Mazda is the most common type of vehicle seen on the road there.

GS69

Looking @ the sales #s recently, I have been wondering what is wrong w/ the Mazdas. On the whole, I say that their cars are the best looking: exterior, not interior. I guess I like the sporty look & found their commercial calling the Accord & Camry boring rather amusing.

Anyhoo, I always assumed that the lack/decline of sales had to do w/ reliability. My brother's RX-8 has had some issues & I also think that some people may be turned off of their cars when they find out Ford is part of the company.

I thought they had a winner w/ the 3 but even its sales are declining.

LexFather

ew York -

Car writers love Mazda cars. Auto scribes praise Mazdas for their performance, ride, handling, looks and value. Only one problem: There has been no growth in Mazda sales for over a decade.

Over the same 11 years in which Mazda's volume stagnated, Toyota Motor (nyse: TM - news - people ) sales more than doubled to 2.3 million; Honda Motor (nyse: HMC - news - people ) sales nearly doubled to 1.5 million; and Nissan Motor (nasdaq: NSANY - news - people ) gained 40%. While BMW can thrive in the U.S. selling one-quarter of a million cars per year in the U.S., it is harder for a mass-market-priced brand such as Mazda to get rich here with that kind of volume.

The root of the problem for Mazda, which is 37%-owned by Ford Motor (nyse: F - news - people ), goes back to a disastrous strategic decision--made nearly 20 years ago--to compete head-to-head with Toyota in their home market. Mazda even planned a Lexus-like luxury car called Amati. But the bursting of the Japanese "bubble" economy in the '90s ended all that, including Amati.

The present strategy in the U.S. is "zoom zoom," or punchy engines and sharp handling. "We're looking at a very targeted audience; somebody who wants more emotion in the things they drive, in styling, in being different. Someone who wants a car that interacts with them and interacts with the road," says Robert Davis, a senior vice president at Mazda. To me, this sounds like the profile of a BMW customer--but at a much lower price point.

The problem for Mazda is expanding its customer base: Are there enough Americans who really want "zoom zoom?" A number of factors have hampered this goal. For one, its dealer force was one of the weakest in the business. A few years ago, only 20% of Mazda dealers were exclusive, which means the other 80% shared their show rooms and loyalty with other brands. With Honda, 82% of the dealers are exclusive. Mazda is improving on this count; 43% of the company's 709 current dealers are exclusive, and the goal is for 50% by the end of next year.

The growth of the Japanese Big Three (Toyota, Honda and Nissan) has given those companies enormous power to develop, manufacture and market their vehicles. I see similarities here with the U.S. auto market in the early 1950s, when we had independent auto companies like Nash, Hudson, Studebaker, Packard, ****** and Kaiser. The current trend is overwhelming the smaller Japanese companies, such as Mitsubishi (otcbb: MSBHY - news - people ), Subaru and Isuzu.

Davis is confident Mazda will not end up like Studebaker: "If you don't know who you are, you will get killed. We are comfortable with whom we are, and we can win in selected segments."

Leadership is another issue. In recent years, the company has been through a string of top managers. Such consistent turnover can be counterproductive. Today's leader in the U.S. is James O'Sullivan, a former head of Mercury for Ford.

Personally, I think some Mazda vehicles, such as the Mazda6 and Mazda5, are a bit too small. In the U.S., Chrysler used to succeed by making its cars and trucks a little bigger than the competition's.

In the first quarter of 2006, Mazda sold 67,271 units, a 5% increase over sales a year ago. That leaves the company on target to sell about one-quarter of a million cars in the U.S. Company executives say real gains will come next year, when the product and the dealer force are ready. What's more, the parent company, after years of losses, is running in the black. In the year ended March 31, consolidated profits were a record $568 million.

Another positive sign is that Ford has stopped shuffling Americans in and out of the top job in Japan. A Japanese executive now runs the company.

And the product? The MX-5 Miata roadster is one of my favorite fun cars. Mazda has a new generation model for 2006, and the new Pontiac Solstice and Saturn Sky roadsters might actually bring some attention to the market. Still, this is a low-volume segment.

The Mazda6 sedan, built near Detroit, competes with Toyota's Camry and Honda's Accord but is only a so-so seller. "Did you know the Mazda6 buyer is 17 years younger than the Camry [buyer]?" asks Davis. It doesn't help that the V-6 available in Mazda is an anemic, 215-horsepower Ford motor, while the V-6s in its rivals such as Accord, Camry and Hyundai Sonata each have engines that pound out 235 horses or more. Ford is building most of its new vehicles, such as the Fusion, Lincoln Zephyr and the coming Edge SUV, off Mazda6 architecture.

Some experts consider the smaller Mazda3 to be one of the best cars in its class. Last year, this car was Mazda's top seller in the U.S., with 97,000 deliveries. Coming this fall is a punchy version called the MazdaSpeed3, which will join the 149-mph-capable MazdaSpeed6. A MazdaSpeed (high-performance) version of the MX-5 roadster is on the way too. And, of course, there's the RX-8 sports car with the rotary engine.

Mazda is also expanding its lineup of "people-movers." The Mazda5, which is smaller than conventional minivans, came out last year. The CX-7, which is coming out now, is a sleek, crossover SUV. Mazda says that this model will compete with the Honda CR-V and Toyota RAV4. The engine is a four-cylinder turbo, which generates 244 horsepower. It's wonderful but does require premium fuel. The CX-7 starts at $23,750, but the nicely equipped one I drove was $28,785. Mazda says this is the first vehicle it ever designed with the American buyer in mind. The company is shooting for 40,000 sales per year, but I think they'll have to work hard to reach that goal.

Coming this fall is third, van-like crossover, the CX-9, which is larger than the CX-7 and Mazda5. But here's what puzzles me: These three similar-looking (to me, anyway) vehicles are built on three different architectures. That's a costly way to go. But putting that aside, Mazda has a good lineup of current and upcoming models.

But the question remains: Will a scrappy little company that knows where it wants to go and that builds good cars be able to compete against the giants? History in the U.S. says no. But then, old Henry Ford once said, "History is bunk."

rominl

iTrader: (4)

wow i can't believe it, i guess mazda did a fantastic job in keeping the number of cars sold a yr.... i mean, that's really hard to get the numbers so close to each other...

but seriously, i think the 3 and 6 are actually pretty nice cars for what they are. the new rx8 is hedious imho, and overall, they need some serious work to really get back on track