Mazda recently announced that the Mazda2 will be sold in Canada.
There was, apparently, some measure of satisfaction and a large dollop of surprise when The Globe and Mail broke the news in April that the Mazda2 subcompact would be coming to Canada - perhaps as early as next year.
Insiders at Mazda Canada had been pushing to get the slick little city runabout for some time. While no one would go on the record, Mazda Canada officials made it clear that they would love to add the Mazda2 to their lineup - if they could price it right so as not to compete against the Mazda3.
So the Mazda2 is coming. The prediction here is that it will be a huge success in Canada. After all, subcompacts and compacts make up half the Canadian market. We buy small cars in big numbers.
Apparently, Mazda Motor Corp. president and chief executive officer Takashi Yamanouchi had enough of the equivocating and waffling and worrying that had been dominating discussions among the sales and marketing staffs at Mazda, both here in North America and in Japan.
"I've just decided," Yamanouchi, a 42-year veteran of Mazda who assumed the top job last November, said at the New York Auto Show.
All that's left is confirmation of the exact launch date. The smart money is on next year.That makes the most sense. Ford is launching its Fiesta subcompact in 2010 and that car shares its basic mechanical bits and pieces with the Mazda2. The Mazda2 was recently named World Car of the Year, too.
This is all good news for Canadian consumers. The Mazda2 is designed to compete against the Honda Fit, Toyota Yaris, Hyundai Accent and Chevrolet Aveo, among others. We buy a lot of these cars.
But between now and then, Mazda must figure out how to price the Mazda2 so that it does not compete against the Mazda3, yet also turns a tidy profit.
"There has been a lot of discussion about that," Yamanouchi said. "There is concern it would cannibalize Mazda3 sales. We need it to be incremental."
The 3 is Mazda's bestselling car in Canada by far. Through the first half of this year, it was Canada's third bestselling car, too. Only the Honda Civic and Toyota Corolla are more popular. The Mazda2 that goes on sale here would need to be priced below $15,000 - at least $1,000 less than the least-expensive Mazda3.
Pricing the Mazda2 so that it can be profitable and also compete effectively won't be easy. The strong yen makes Japanese exports expensive overseas. And that's just one of many problems facing Mazda.
All of them seem more daunting, too, now that Mazda has freed itself of Ford's controlling ownership. Mazda has been on its own since late last year, when Ford raised $540-million (U.S.) by cutting its Mazda stake from 33.4 per cent to 13 per cent. By owning one-third of Mazda, Ford essentially had a controlling interest. No more.
Mazda is still in joint ventures with Ford, but the final decision making is being made at Mazda headquarters in Hiroshima, something of a conservative country town compared to Tokyo. There is fear within Mazda that the most senior management will return to formerly conservative ways - to the detriment of the "zoom zoom" company.
The great challenge at Mazda is for it to compete globally, even though by world standards, the company is a pipsqueak. Mazda will sell slightly more than a million vehicles worldwide this year. Honda, Japan's No. 2 auto maker, sold 1.6 million through the first six months, while Toyota moved nearly 3.6 million during the same period.
So Mazda does not have the resources to make mistakes or to gamble on design and technology ventures that will not have a payoff. Within many companies, the potential rewards of taking risks are often outweighed by a fear of failure and its devastating consequences. This is the struggle now taking place within Mazda.
Nonetheless, Mazda has a plan to push ahead not just with the Mazda2 in North America, but also to address the most obvious trend in the marketplace - the so-called "green" revolution.
In a nutshell, fuel economy and low emissions are the new horsepower. Performance is now measured less in engine output and 0-100 km/h times than in range, savings at the fuel pump and boldness of enviro technologies - from extended-range electrics to pure electrics to fuel-sipping gas and diesel engines that get more power out of less displacement using less fuel and going farther on a tank of gas or diesel.
Mazda, Yamanouchi said, will improve average fuel economy of its global fleet by 30 per cent by 2015. The company plans to get a better than 20-per-cent fuel economy bump with its next-generation gas engines due in the next 12 months, too.
He said Mazda will first improve so-called "base technologies." That means squeezing better economy out of gas engines by:
- Reducing weight;
- Cutting resistance and friction inside engines and anywhere else drag brings a fuel penalty, including vehicle design itself;
- Improving transmission performance;
- Introducing a start-stop feature that shuts off the engine at idle, while adding other technology, as well.
Indeed, a Mazda3 sedan equipped with Mazda's new I-Stop technology has just been introduced in markets outside North America. I-Stop shuts down the engine to save gasoline when the car halts at red lights.
Mazda says it provides for a fuel-efficiency bump of up to 10 per cent in stop-and-go traffic. But the long-distance, high-speed commutes common in Canada and the United States make the cost of I-Stop difficult to justify in terms of a fuel-economy payoff here.
Mazda will also add hybrids to its fleet, and hydrogen power is also being studied extensively.
"Sustainable zoom zoom is the long-term vision," Yamanouchi said. That means finding the right balance between "driving enjoyment and the environment."
Still, Yamanouchi and others at the company will not say exactly when Mazda plans to offer electrics and hybrids. He will only say they will be in the lineup in 2015. More important in the near term is Mazda new family of fuel-efficient gasoline and diesel engines.
"Our new gasoline engines will achieve the same fuel economy as current diesel engines, and our diesel engines will achieve similar fuel economy as existing hybrids," Yamanouchi said.
The exact details will be revealed in October at the Tokyo auto show.
"We will be able to offer affordable eco-friendly vehicles to 90 per cent of the car-buying public, not to just a limited segment of the market," he said.
Moreover, Mazda's new engines and engine technology will not be shared with Ford.
"This is unique technology for Mazda. But if Ford desires, we will be ready to sell our technology," he said.
Selling technology to Ford? It seems that Mazda really is free of its Ford ties.
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Sales drop
Sales fell 45 per cent in terms of value during that period, due to the deadly combination of falling sales volume and a rising yen. Mazda forecasts that sales this year will be down in all markets except China.
Mazda Canada's sales were down 17.5 per cent through the end of July. Spokesman Greg Young says sales were down largely because Mazda projected and planned for a significant sales decline this year.
Mazda Canada's market share has remained steady at 5.3 per cent this year. And the company could sell more vehicles if it could get them. Anticipating a down year, Mazda did not order more vehicles. But if and when product becomes available, Mazda Canada will sell it, Young says.