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US:Ford rainbow: Mazda profits

Ford rainbow: Mazda profits

2006 Mazda MX-5 Miata

Niche auto brand posts sales, earning increases from popular roadster and crossover vehicles.

Bryce G. Hoffman / The Detroit News

As Ford Motor Co. struggles with mounting losses worldwide, one bright spot remains: its Japanese Mazda Motor Corp. subsidiary.

Mazda posted a $40 million third-quarter profit to Ford's nearly $2 billion loss in North America. And while Ford as a whole continues to lose market share in the U.S., Mazda's sales are up 4 percent year-to-date.

Sales of its hot-selling MX-5 Miata are up 134 percent. Mazda is counting on a slew of new products -- including a new version of the popular roadster and two new crossover vehicles -- to keep that momentum going without trying to be a full-line manufacturer.

"There were times when we tried to be a lot of things to a lot of people and ended up being not a lot to anybody," said Jay Amestoy, vice president of public affairs for Mazda in North America.

If anything, Mazda's "problem now is that we just can't build enough" of certain vehicles. For example, Amestoy said, the company could sell more of its popular Mazda3 compacts if it could get more to dealers. Sales of the small car are actually down slightly year-over-year, but demand remains high and most stay on the lot for only about three weeks.

"Mazda probably needs more (factory) capacity outside Japan -- capacity in the right places," said Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide. "But Mazda is almost Hondaesque in its cautious approach to increasing capacity or other major investments."

That is a desirable trait in an industry that is reeling from overcapacity issues in many parts of the world, most notably here in North America. Overproduction has forced most American brands to offer big incentives, but Mazda has never offered incentives on the Mazda3 in the three years it has been on the market.

Robinet says Mazda's turnaround is complete, but questioned whether it can be sustained. "They've done about as much as they can with their current portfolio," he said. "Continuing to bring out solid successors in the future will be a challenge."

Analyst Erich Merkle with IRN Inc. says DaimlerChrysler AG's Chrysler brand offers a cautionary tale for Mazda.

Like Mazda, Chrysler was able to turn itself around by providing exciting products that resonated with consumers. "Now, they've kind of fallen on their face," he said of Chrysler.

To avoid a similar fate, he says Mazda needs to maintain an unwavering focus on its core audience: younger buyers who are looking for high performance at a reasonable price, with a healthy dose of in-your-face styling thrown in.

"That's what it's all about for Mazda: giving people bang for their buck," Merkle said.

Sales of older Mazda's, like its bread-and-butter Mazda6 sedan, are beginning to slow, but the company is trying to keep the momentum going with two new crossover utility vehicles: the CX-7, which is already in showrooms, and the larger CX-9, which will go on sale in December.

Mazda's most important contribution to Ford is technology and platform engineering. In fact, most of Ford's newer vehicles -- including the Lincoln Zephyr sedan and Ford Edge -- are built on Mazda platforms.

"Mazda has proven to be a tremendously resourceful product-development house. Competing in Japan has forced them to be exceptionally scrappy and opportunistic. We need more of that in Ford," Ford Chairman Bill Ford Jr. told the Wall Street Journal Wednesday.

My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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