Model rush as Mazda goes up a gear
BY BRUCE NEWTON | 29th Nov 2004
No, it’s not one car, but in fact the total number of important new vehicle launches planned by Japan’s fifth largest manufacturer between now and the end of its 2006 fiscal year in March 2007.
The model rush is a key component in a strategy labelled Mazda Momentum, which also aims by the end of the 2006 fiscal year to:
- Boost annual total sales by 10 per cent to 1.25 million.
- Grow operating profit beyond $US1 billion for the first time.
- Increase research and development spending by 30 per cent.
- Reduce its debt-to-equity ratio from 150 per cent to below 100 per cent.
The Millennium Plan was introduced by former Mazda boss Mark Fields (now running PAG for Ford) back in 2000 when the company was in the doldrums, losing money and saddled with conservative models.
But in the past four years Mazda has launched a series of dynamic vehicles underpinned by four core architectures and recorded its best financial results (Y33.9 billion net profit) in 10 years in the 2003 fiscal year.
And the Millennium Plan is expected to bow out on a high with Mazda forecasting an all-time record Y78 billion profit for the 2004 financial year.
"Some would say (the Millennium Plan) was a transition plan, some would say a survival plan," said Mazda’s global sales and marketing chief Stephen Odell.
"We are now moving ahead, we are now shifting goals and I would say shifting gears."Mr Odell was speaking at a recent media function called ‘2005 and Beyond’ in Mazda’s hometown, Hiroshima, where Mazda Momentum was discussed and some future product plans revealed (mostly under embargo).
The 16-vehicle rush nearly doubles the nine launched in the 2001 to 2003 fiscal years. Obvious inclusions are the Mazda5 (Premacy replacement), the turbocharged all-wheel drive Mazda6 MPS, the third generation Mazda MX-5 roadster, the B-series commercials, MPV full-size people-mover and Tribute SUV.
There are niche models that would count as well, like the forthcoming current generation Tribute petrol-electric hybrid bound for the US and the Mazda3 MPS.
But the March 2007 timing also means we should at least see previews of the next generation Mazda6 and Mazda2, which both went on sale in 2002, as well as at least one cross-over aimed at the North American market.
Indeed, the message from Mazda going forward is that more models will be localised for regions, with less emphasis on global cars. It is able to do this because it now has those core architectures off which it can spin different sheetmetal.
For instance, the Mazda2 has already spawned the classy Verisa model in Japan, the Mazda3 is the basis for the Mazda5 and RX-8 componentry will underpin the next MX-5, due in 2005.
"When we kicked off the Millennium Plan we were losing money, so we were forced to do global vehicles because we couldn’t afford to do three or four different versions of the same vehicle in each market," said Mazda’s global R&D chief Joe Bakaj.
"Now, we are making a bit more money …You look at the unique needs of each market and you say ‘well maybe the next time round we will do two different ones or three different ones’."Mr Bakaj said that Mazda could afford to be so flexible because of its four core architectures and the speed of computer-based model development.
The Verisa, for instance, went from design freeze to production in 12 months without a single prototype car being built.
"The only other element you need is the right ideas for what you want to build, and we have got that running as well," said Mr Bakaj. "So with those three elements we can do those 16 models without over-stretching ourselves."Mazda got itself into trouble in the early 1990s with an adventurous and highly-diversified model mix that caused the company, which is 33.4 per cent owned by Ford, to go conservative in the late 1990s. That in turn led to the Millennium Plan.
But Mr Odell rejects suggestions that Mazda is in the process of repeating history.
"When we did it in the 1990s we borrowed heavily through a bubble economy to fund it. We have actually reduced our debt down to about $US3.5 billion net debt and it was $US10 billion five or six years ago," he said.
"And we have proven even with a US dollar-Yen at 106/107 versus a dollar-Yen at 200-odd, we can still make sense of that.
"We are not looking over the wall at Toyota saying we need coverage of every-thing. This is nice, progressive growth, building cars that we can put a Mazda badge on that denotes a Mazda and are financially prudent."