Mazda Adds New Mazda3 Model in Tough Times

Mazda is replacing far and away its biggest-selling model, the Mazda3, at a difficult time for the U.S. auto industry and for the Mazda brand.

“Right now it’s a game of survival, and we are in a survival mode,” said Robert Davis, senior vice president research, development and quality for Mazda North American Operations, at a press introduction in Laguna Beach, Calif. for the Mazda3.

In the first quarter of 2009, Mazda’s U.S. sales were 53,795, down 30.8 percent from the year-ago quarter, according to AutoData Corp. That likely kills Mazda’s chances of topping 300,000 U.S. sales in 2009. Before U.S. auto sales went into free-fall at the end of 2008, Mazda’s goal was to top that 300,000 milestone, something Mazda used to accomplish routinely until the mid-1990s.

The company lost its focus back then, trying to “out-Honda Honda, and out-Toyota Toyota,” said Mazda spokesman Jeremy Barnes. Mazda learned the hard way that it couldn’t outspend or outsell Honda and Toyota. Instead, Mazda has settled for smaller sales volumes, a sharper focus on performance, on distinctive styling and on a high level of standard equipment for the money. “We like to think of ourselves as the BMW of Japan,” Barnes said.

The repositioning has had results. Even though Mazda sales are down, the rest of the U.S. market is doing worse. Mazda has picked up a bit of market share, to 2.4 percent of the U.S. market, up from 2.2 percent a year ago, AutoData said.

In addition, the redesigned Mazda3 does have some advantages. In industry terms, it is in the “C-segment” or subcompact car size range. That segment has fallen less than others in the U.S. recession.

From the top down, some consumers are downsizing out of bigger, thirstier and more expensive cars and trucks. From the bottom up, some consumers are sticking to the C-segment who might have traded up in more prosperous economic times.

“It’s going from a transitional segment to more of a destination segment, more like Europe,” said David Matthew, Mazda3 vehicle line manager. That should also be good news for Ford, Mazda’s partner and former parent company. Ford is pursuing a strategy of introducing smaller, better-handling and more fuel-efficient cars for the United States that were designed for European tastes. The risk is that most Americans aren’t used to paying a premium price for small cars.

Even though it looks and handles differently, the Mazda3 shares some suspension components with the European version of the Ford Focus, and with the Volvo S40. That helped Ford save some development money. Ford has since announced its intention to sell Volvo. Ford also sold its controlling stake in Mazda in November 2008, but it retained 13 percent of Mazda, and the companies are still partners.

For a car that’s being replaced, Mazda3 sales have held up pretty well. In 2008, Mazda3 sales in the United States were down 8.6 percent, a much better performance than the market as a whole. In the first quarter of 2009, Mazda3 sales were down 12.3 percent to 23,780. The bigger Mazda6, which was a brand-new model last fall, was off 46.4 percent in the first quarter, to only 10,505.

Worldwide, the Mazda3 accounts for about 30 percent of Mazda sales, Davis said. In the first quarter of 2009, the Mazda3 accounted for about 44 percent of U.S. sales, according to AutoData.