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Old 12-21-2004, 07:51   #1 (permalink)
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Japan:Mazda aims to build stronger brand in U.S., CEO Hisakazu Imaki says

Talk from the Top: Mazda aims to build stronger brand in U.S., CEO Hisakazu Imaki says

AUTOMOTIVE NEWS

HIROSHIMA, Japan -- Mazda Motor Corp. is firing on almost all cylinders under CEO Hisakazu Imaki.

The automaker is solidly profitable, although debt levels remain high. Its sales are up in difficult markets in Japan and Europe. In the United States, though, Mazda is in third gear but not overdrive.

Imaki is keenly aware of the need to improve Mazda's U.S. performance. He spoke with Automotive News Asia Editor James B. Treece at Mazda's headquarters here.

In your letter to shareholders in Mazda's annual report, you said one of your four priority objectives is to "revitalize the Mazda brand in North America." You have talked a lot about increasing the number of exclusive Mazda dealerships, but what else can you do to revitalize Mazda in North America?

One is product. We are not necessarily participating in all the popular segments in the U.S. market. I think that the crossover is one important such segment.

It doesn't mean that we are going to do everything, but I firmly believe that we need to further strengthen our product line from that perspective.

Of course, it goes without saying that customer satisfaction is important. We are having programs developed and implemented for dealers to more effectively deal with customers.

Regarding the brand, another important fact is the value of used cars, how we can retain the residual value of used cars. These are very simple and basic things. We want to do them thoroughly and simply.

Your U.S. market share is about 1.6 percent. What is your target?

No specific target is set. I mentioned residual values. If I overemphasize sales, we will go in the wrong way in that regard. So I'm refraining from saying it too much.

Looked at from another way, I believe that if we build a strong brand, share will follow.

A few years ago, former Mazda President Jim Miller once mentioned a target of 3 percent for both the United States and Europe. I haven't heard much about that lately. Is that still in the back of your mind?

Ideally, yes. But once those words come out of my mouth, I'm afraid that it's going to destroy zoom-zoom and the brand building we've been doing, so I think it's wise to refrain.

It was when I interviewed you exactly a year ago that you announced Mazda would be the lead engineer for a new B-segment car for Ford of Europe, the size of the Fiesta and smaller than the Mazda3. Where does this project stand?

It is going extremely well. With you, I can be candid. I think I mentioned last time, too, that our relationship with Ford in North America is pretty long, so we have a pretty good understanding of each other. But when it comes to the B segment, then the relationship with Ford in Europe becomes key. Our relationship with Ford of Europe hasn't been as deep as with Ford in North America.

But since I talked about this at our last interview, there has been considerable effort made on both sides.

I'm the president of Mazda. Mr. (Lewis) Booth is chairman and past president of Ford of Europe. Quite recently, Mr. (John) Fleming became president. I'm a close friend of Mr. Fleming. My relation with him goes way back. As a result, at the top management level, we have an extremely close relationship.

When did you first meet Mr. Fleming?

So long ago, I've forgotten. I think when he was still doing vehicle operations in North America. If we meet in Germany, we can go to a local pub together. It's that kind of relationship.

It's not just Mr. Booth and Mr. Fleming alone. Generally speaking, the environment is conducive to close communications. On the r&d side, Mazda's Mr. (Joe) Bakaj, although he had to overcome some hardships, still has been able to get good communications with Ford of Europe and also we've seen good cooperation in the purchasing area. As a result, we've been able to see a product that's going to be a lot lighter and a lot less costly.

Have you had the design freeze?

I don't think we've gone that far. I can't give you the specifics. I'm afraid when you are CEO, you slowly become oblivious to the details. I apologize.

But you can consider that with Mr. Booth and other members from FoE and also with those people involved from Detroit, we've had good talks. We are convinced that this is going to be a good direction, and we have a good commitment amongst the parties. As part of the Ford enterprise, I think we will see a good result from this cooperation.

The B segment worldwide is a huge segment. Will this be the highest-volume project done jointly by Mazda and Ford?

Yes.

How many factories worldwide could end up building it?

If you include the KD(knockdown) operations, too, I can't even begin to tell. Also, it will not be limited to Europe.

Will there be a North American version?

With regard to the North American version, nothing has been decided yet. But outside North America, for example in Asia-Pacific, things have been decided.

The reason I ask is that starting about at the Geneva motor show, there has been increasing talk about small cars in North America. Toyota has been successful with the Scion. The BMW Mini has been very successful. Previously, people thought that cars in that segment were too small for America. Would Mazda be interested in having a B-segment car in North America?

Yes. I do have an interest. I have in the back of my mind maybe some trial case. But as I mentioned earlier, no firm decisions have been made yet.

Is Ford interested?

I'm not aware of the extent of Ford's interest in this regard. And maybe their thoughts in this regard are undergoing changes in light of the recent hike in oil prices and other changes.

I believe you've said you want to expand Flat Rock's capacity. Is that for additional models, say in the B segment?

Actually, I don't have an expansion of capacity at Flat Rock in mind. Right now, according to our plan, the Mustang will take more than 50 percent of the plant's capacity.

In light trucks, you plan three new SUVs specifically for North America, including a redesigned Tribute. How large will the largest one be?

I'm sorry, but I'll have to refrain from answering. Suffice it to say, it's a size that we haven't had up until now. And beyond the size, I want to emphasize that it is a zoom-zoom product.

How soon will the first one arrive? Will it be the first half of next year?

It's impossible to be early next year. For that, we'd already have to be in the pilot-production stage at this moment.

So are we talking about 2006?

Yes, 2006 or 2007 is the time frame. Styling is basically decided. I've been told not to respond to questions regarding products.

It's also true that you're the boss, and you can tell them not to give you orders.

Although I'm the president, I'm being trained and educated by everyone. And we don't stick too much to hierarchy or rank around here. We try to have a little fun in our business. As an aside, coming back from China, I sometimes get e-mails asking me if I brought back some Chinese rice wine to give as presents at end-of-year parties. My secretary has to juggle the requests. That's the kind of company we have. I'm not the boss in any way.

A few more product questions. Are you facing difficulties getting enough batteries for the Tribute Hybrid, just as Ford is for the Escape Hybrid?

You can consider Ford's problems to be Mazda's problems. Regarding the Tribute Hybrid, we're relying on Ford's capabilities. But of course, we didn't rely on Ford for this all of a sudden. If we have duplications, it would be inefficient. So we have a division of roles, and Ford happens to be taking the lead on hybrids.

I don't know if you've announced a target date for launching sales of the Tribute Hybrid, but compared with your internal targets, have you had to delay it because of the battery issue?

No. I'm aware of the issue regarding the batteries, but it has not had a major impact on our plans.

The Tribute is, as you say, done in cooperation with Ford, and they are taking the lead on that. But are there any Mazda-specific hybrid vehicles in the works?

We've just started. For hybrids using a conventional engine, Ford is taking the lead. For something unique to Mazda, we've just embarked on research on a hydrogen-powered rotary engine.

How important are hybrids to your lineup?

I think a corporation's sense of social responsibility is essential, and hybrids have an impact on a corporation's image.

How important is the MazdaSpeed business in America?

It's important as a part of a corporation's image. It's an element within zoom-zoom, but it's not the only element. If you have any thoughts for me on what we should do with MazdaSpeed, I'd appreciate it.

My main question is this: North America gets the MazdaSpeed6 this summer, but in terms of the tuner market dominated by young people, it's usually a smaller-segment car. So how soon will Americans get a MazdaSpeed3? That's likely to have a higher visibility.

I don't know the timing or what they are doing, but the advice I get from you is very valuable.

Currently, 50 percent of Mazda's volume is in vehicles that are part of joint projects with Ford. That is set to rise to 80 percent over the next three years. What will remain exclusively Mazda? The RX-8, Miata and what else?

In Japan, the Bongo truck and commercial vehicles.

But let me re-emphasize that even when we go to 80 percent, it's not going to lose its zoom-zoom in any way.

I think Mazda also is contributing to Ford, too, but these joint programs are a great help to us. As you know, cost is determined with the investment in the numerator and the volume on the denominator. Mazda's volume is small, but a combination of platforms provides us with bigger volume. This is what we consider part of the synergies we derive.

I'd like to re-emphasize that it's a completely different vehicle, even though it may be a joint program. If we do just rebadging of products, that would be considered odd.

Probably the showcase of that is the Mazda3. I'm sure that from now, a similar success will be realized by Ford utilizing the Mazda6 platform.

Presumably that 80 percent would include the next-generation MPV. Will that be off a joint platform from Mazda?

Actually, we start to lose sight of who developed the platform. The original base when we go back to the start was the Mazda6. Ford then is going to use that as a base to develop about 10 products. Of the platforms that Ford uses, we can then take back some and use them. It's not Ford alone. We're working together, with their products too.

Most minivans in the United States are larger than the MPV, which is seen as somewhat small. Are you looking at a larger version for the next generation?

Sizewise, it will become somewhat larger. You saw the Mazda5 (minivan). We can't have the MPV be the same size.

When you say you can take these platforms back, you're not talking about badge engineering, right? You'd have to change the vehicle - substantially?

Rebadging is completely out of the question. Once we do that, zoom-zoom is going out the window.

But you could take back all 10 of Ford's Mazda6-based products? Three or four?

It's not going to be all 10. But what we do from now on, there are some that have already been decided, and there are others still under study.

To clarify, though it's based on the Mazda6, when Ford develops products off the Mazda6 for the North American market, Ford is not developing them by itself. It is developing them jointly with Mazda.

And because Phil Martens is there, it facilitates a lot of things.

Mazda's cars are doing extremely well in Europe. They are doing well, but not as well, in North America. Why?

Unfortunately, that's a fact.

My response is probably similar to the first question. Even if you take our product size, our current lineup is more matched to European markets. And, as represented by crossovers, we don't have products in the segments that are hot in the United States. That's on product.

In terms of exclusivity of dealers, we're very strong in that regard. We now control more than 80 percent of our sales in Europe. Although we're making good progress, still in North America as of October, our portion of exclusive dealers was only about 30 percent. It's ahead of schedule, and we're going to pull the 50 percent target ahead by one year.

I think that also reflects our weakness in customer satisfaction. Europe is probably stronger in that regard.

So we have a good example in Europe, and all we need to do is very effectively follow what we've done there for the U.S. market. In other words, in terms of size of the vehicle, segment where we go in, exclusivity of the dealers and all that will relate to customer satisfaction. All we need to do is very thoroughly and judiciously work on that.

My impression is that your global high-volume products are set, such as the Mazda5, Mazda3 and RX-8, so now you are stressing regional products like the Premacy/Mazda5 for Japan and Europe, and big SUVs for North America.

That's an accurate assessment. The reason is quite simple. When we embarked on the recovery for Mazda, we knew that we couldn't resolve everything at once. With the four new models, it required a lot of investment in both people and money. So first, what we tried to do was Global One: products to establish a global base. Gratefully, all those products that we did as Global One were very successful. They allowed us to establish our base.

That was the first step. For the next step, we know there are some regional models. For example, Mazda3 is popular worldwide. But for crossover-type products, I know there are regional elements. So we're now in the stage of expanding the lineup in that regard.

But I'd like to re-emphasize that we're going to be focused. In whatever we do, we're going to take account of our size and capability.

For the full fiscal year to next March 31, you are forecasting sales of 290,000 in Japan, 285,000 in Europe and 275,000 in the United States. (That does not include Canada.) Three years from now, what will be the order of ranking for those three markets?

North America will be the top.

We've been able to take measures for Europe pretty much in advance. In contrast, in our measures for North America, we're still behind. North America need not sadden us. It means we have all the more opportunities. That means North America will probably see the greatest growth.

And No. 2?

I don't know. We'll have both markets compete.

The current spread among those three markets is quite close. Do you expect that to be the same?

The European market still has an interesting point from another perspective. Some markets like Russia are still to be explored. Those kinds of markets still have the potential for future growth. It will be interesting to see how they develop.

In the Japanese domestic market, the industry as a whole has probably hit the ceiling. In order to establish a firmer brand in Japan, the price of used cars will be a key point. If we become too obsessed with volume, it's going to be counter to that effort. Of course, I will tell my men to sell more.

Can you get all the steel you need?

Like other carmakers, we do have our problems. But right now, the problem is still something my purchasing director is struggling with. It's not to the level that I have to be worried. If I had to worry about all the worries my direct reports have, I couldn't stay sane.

In short, there's been no report to me that this issue will result in the reduction of production.

Prices of steel, oil and other commodities are up. Will you achieve your goal of cutting costs by 25 percent by the end of March, compared with three years ago?

I can declare we'll be able to hit that target. The tougher things get, the more ideas come out.

In the global auto markets, do you worry more about Toyota or Hyundai?

Actually, I'm not concerned about either of them as a competitor. My biggest concern is within: it's the fight for our soul. I'm convinced Mazda has a large potential and pretty good abilities. Whether we can fully realize those potentials will dictate whether we can truly achieve recovery, resuscitation, revitalization or whatever. I believe our company is a superb one, with superb people.
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