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brand strategy

2013 Mazda CX-5.David Dewhurst

For just a moment, let's turn the clock back to 1970 and cast Mazda Motor CEO Takashi Yamanouchi in the role of Eberhard von Kuenheim. Bear with me on this, okay?

Back in the time when there were two Germanys and Pierre Trudeau was a sexy and brainy prime minister wooing queens (Elizabeth II) and newly minted dictators (Fidel Castro), von Kuenheim was the new CEO of a struggling BMW. In 1970, BMW was desperate to reinvent itself and von Kuenheim would lead the transformation. BMW's goal was not only to survive, but to remain stubbornly independent after narrowly avoiding either bankruptcy or, worse, a painful sellout to rival Daimler AG (then known as Daimler-Benz).

No small task, that. BMW had spent the 1950s and 1960s building a hodge-podge of vehicles, from the tiny 250-cc one-door Isetta to the high-end V-8 507 sports car. BMW stood for nothing and everything. But under von Kuenheim, and with the firm support of the Quandt family who then and now control BMW, the company turned its focus to building only high-quality products. Period.

"We did not even know the term 'premium' back then, but it describes our approach," von Kuenheim says in his European Automotive Hall of Fame profile. "We needed to grow without becoming a mass producer. And we wanted to be among the best."

Though I have interviewed him only a handful of times, I believe the Yamanouchi of 2012 would surely have acted as von Kuenheim did in 1970. He would have been comfortable in that role because the challenges facing Mazda today are eerily similar to those facing BMW back in the days of the gold standard.

And this is not some Harvard Business School case study, either. Mazda now, and BMW then, can safely be described as export-dependent companies in need of expansion into emerging markets with a transformed product lineup.

BMW went a route that turned the company into the world's No. 1 premium auto maker today. Mazda officials say they plan gently to slide the brand and its products up-market as well, though not quite into BMW territory. Not yet, at least.

Whatever the timeline, to get there, Mazda is counting on racy designs, race-tuned driving dynamics and above all what it calls SkyActiv fuel-saving powertrains to do the job.

"I wouldn't disagree with what you're saying," says a senior executive at Mazda who is inside product planning and brand development discussions at the company's highest levels.

The trick, he adds, is to nudge Mazda up-market where the higher profits can be mined while not abandoning the meaty part of the mainstream market where Mazda now competes. Unprofitably.

The thing is, a relatively small player like Mazda – global sales in the 1.2 million-range versus some 8.0 million for Toyota – simply must glide upscale to survive and thrive. BMW did this 40-plus years ago and Mazda needs to do it in starting in 2012.

The alternative? Look at the balance sheet. Mazda has said it will lose about $1-billion in the current fiscal year due to a combination of factors, not least of which is an over-inflated Japanese yen that makes manufacturing in Japan unprofitable. Japan-made vehicles account for 85 per cent of the company's North American sales. Something has to change. No, a lot must change at Mazda.

But the ingredients are in place. Unlike Toyota, Nissan and Honda, Mazda runs its operations out of the relatively small, southern Japanese city of Hiroshima. Mazda's rugged, go-it-alone ways are not unlike BMW, which for the record is in the south of Germany, in Bavaria.

Mazda and BMW are both headquartered away from the capitals of their respective countries and both have long valued sportiness, ingenuity, independence, engineering prowess, manufacturing efficiency, and technology – not technology just for technology's sake, but to make the driving experience more rewarding. These two car companies are in so many ways mirror images.

Mazda's future is simple to conceive: become the Japanese BMW. The template is already in place. Now it's up to the product planners and marketers to take Mazda there. The execution of that strategy is the hard part. If nothing else, Mazda appears to have the right leadership in place.

Take Robert Davis. He's Mazda's senior vice-president of U.S. operations and for me an endless source of product knowledge. He's passionate about cars, too – racing RX-8s and MX-5 Miatas in his spare time.

In Monterey, at the launch of the 2013 Mazda CX-5 crossover that is critical for the company's future, I had a long look at the 1991 Mazda 787 Le Mans race car that Davis used to attack Mazda Raceway at Laguna Seca during the Rolex Monterey Motorsports Reunion last August. On the track, he approached speeds of nearly 300 km/h. The car looked fast on display, too.

Davis isn't the only Mazda executive with gasoline in his veins, but he is perhaps the most forthcoming when it comes to Mazda's future product plans. With Ford no longer a controlling shareholder, Mazda has embarked on a completely independent course, one that does not share high-volume platforms with Ford.

"Our product strategy and what we have in the pipeline is going to allow us to grow," he told me in an earlier interview.

Mazda has certain key strengths and they are not to be overlooked. In the just-released Auto Maker Report Card published annually by Consumer Reports, Mazda was the most improved car company in the survey, moving to second overall from seventh, based on a combination of road-test results and predicted reliability. Mazda stepped up thanks to "an improved Mazda3 and the shedding of two models that dragged down its score, the Tribute SUV and RX-8 sports car," the magazine said.

Late last year, Mazda also led all mainstream brands in ALG Canada's Perceived Quality Score. The PQS survey reflects consumer perceptions about perceived quality in the market. Mazda topped the list with a 12-point margin over second-place GMC. (Audi led all luxury brands.) Mazda also finished second in ALG's Retained Value Awards announced last month, just behind Subaru.

So two of Mazda's brand strengths are quality and resale value.

The next step is to introduce a range of new SkyActiv models – models like the 2013 CX-5 – which are lighter, sleeker and more fuel-efficient and above all entertaining to drive. And to get the message out with more aggressive marketing.

At the launch of the newest Mazda3 with SkyActiv powertrain technology, Jim O'Sullivan, CEO of Mazda North American Operations, said Mazda needs to increase consumer awareness. He called a lack of awareness a "glass ceiling." A new advertising agency is now in place to get out the "Zoom-Zoom" message created by Mazda's former ad agency, Doner.

The current Mazda3 is the start of a produce wave that arrives with one message: Mazda's vehicles are fuel efficient and fun to drive – more fun to drive by far than anything the competition has to offer.

The CX-5, which is being launched this spring, will be the first all-new Mazda to fully embrace all that SkyActiv is, from the design to the powertrain to an emphasis on weight reduction.

After the CX-5, Mazda is planning to introduce a redesigned Mazda6 by the end of this year. It will be based on the Takeri concept first shown last fall at the Tokyo Motor Show. The 2013 Mazda6 will be followed by redesigns of the Mazda3, MX-5 Miata and CX-9 in 2013.

The key to all of them: new lightweight platforms with new gasoline and diesel powertrains that boost power and fuel economy. That's Skyactiv. Mazda also plans to add stop-start, regenerative braking and hybrid technologies by 2016.

All these vehicle platforms, as well as the powertrains and the designs, are the first developed solely by Mazda in decades. The current Mazda3, for instance, was jointly developed with Ford and Volvo. Mazda's new flexible architectures will underpin future generations of the Mazda3, Mazda6, CX-5 and even larger vehicles. Going this route could save Mazda as much as 70 per cent on vehicle development and production.

"We're never going to be a big-volume brand," O'Sullivan told me last fall. "It's not our objective."

But Mazda could and should become the Japanese BMW.

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