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post #1 of 3 (permalink) Old 04-09-03, 06:51 AM Thread Starter
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Mazda bets rotary sports car will raise image and profit

Wednesday, April 9, 2003
By Lindsay Whipp / Bloomberg News

TOKYO -- Mazda Motor Corp. salesman Hideyuki Egami hopes the number of visitors to his Tokyo showroom will triple after the new RX-8 sports car goes on sale in Japan, helping the automaker win back business lost to bigger rivals.

The buzz created by the car, which Mazda unveiled today and will start selling in May, will also help Egami sell Atenza and Demio cars once customers stop by, he said. His dealership vies with nearby outlets run by Nissan Motor Co. and Toyota Motor Corp. and attracts about 20 visitors on weekend days.

Mazda, a third owned by Ford Motor Co., needs every new model to be a hit to help extend its return to profit in the year ended March 2002 from the previous year's record loss, investors said. Success with the model may also boost its shares, the worst performer on the Topix Transport Index after dropping 38 percent in the past year.

"Mazda doesn't have as many models as rivals, so it's a much bigger impact on their earnings if one of those models doesn't sell," said Akihide Kinugawa, who helps manage 20 billion yen ($167 million), including Mazda shares, at T&D Asset Management Co.

Mazda plans to sell 1,000 RX-8s a month at home and will unveil the car later this year in Europe and the U.S., markets that together with Japan account for more than half of total sales. The company already has 5,000 orders for the car in its home market, it said.

Mazda expects global sales of 60,000 units a year, of which half will come from the U.S. and the rest from Japan, Europe and possibly other markets such as Australia, the company said.

Mazda's first sports car since 1991 will be powered by a rotary engine and have four doors to appeal to sedan owners and those with children, Kenichi Yamamoto, managing executive director at Mazda, said in an interview.

Yamamoto said appealing to sedan as well as sports car drivers will help add sales given the domestic sports car market has shrunk to less than 3,000 units a month, compared with a decade earlier when it was seven times bigger.

The carmaker's latest model, the Demio, went on sale in Japan in August.

A sales spurt may encourage investors and raise Mazda's share price, which is also being hurt by parent Ford's struggle with pension and incentive costs. Shares of the world's No. 2 automaker have lost almost half their market value in the past year. Mazda shares closed down 3.2 percent at 209 yen.

Mazda is selling the RX-8 for between 2.4 million yen and 2.75 million yen, or about two-thirds what it charged for the RX-7 12 years ago. The sticker price compares with Nissan's new Z-car which sells for between 3 million and 3.5 million yen, and Honda's S2000, which sells for between 3.4 million yen and 4.3 million yen.

"The car isn't just a brand icon, so if we don't have a certain level of volume, then that has an impact on the profitability of the car," said Masazumi Wakayama, Mazda's general manager of marketing. "And the young family market we're targeting doesn't have the disposable income to spend so much."

The success of the RX-8 will not just be gauged by sales.

"In terms of burnishing their brand, (the RX-8) is extremely important," said Norihito Kanai, who helps manage $2.5 billion of assets at Meiji Dresdner Asset Management Co., including automakers. "In that sense it's like Nissan's Z-car."

Mazda is also banking on the RX-8 to maintain its separate identity within the Ford group, Mazda's Yamamoto said.

"Just as Jaguar has to be Jaguar, Volvo has to be Volvo, Mazda has to be Mazda," Yamamoto said, referring to luxury brands owned by Ford. "We have to send that message to our customers very clearly, and we can do that through our rotary engine and sports cars."

The promotional campaign includes making the RX-8 a central prop in News Corp.'s film sequel, X-Men 2, starring Oscar-winning actress Halle Berry. The film will be released in May.

Mazda's output of RX-8 will be limited by the 70,000-unit annual capacity at its rotary engine plant, said Steve Usher, an analyst at JP Morgan Asia Ltd. Usher predicted, prior to today's announcement, monthly RX-8 sales of about 1,000 units each in Japan and Europe, and about 3,000 in the U.S.

The RX-7 failed to meet initial sales targets of 3,000 a month by its second year of release probably because it cost too much, said Mazda spokesman Katsumi Yoshitake.

Mazda kept a lid on costs of the RX-8 by upgrading only 30 percent of its 20-year-old rotary engine plant at the company's headquarters in Hiroshima.

"Mazda's ability to reuse old facilities and introduce new models like the RX-8 with very low new capital expenditure does translate into our ability to offer the RX-8 at an attractive price," Mazda Chief Financial Officer Gideon Wolthers said in an interview.

JP Morgan's Usher said the model will probably be Mazda's most profitable, with an operating margin of between 10 percent and 12 percent, compared with between 4 percent and 5 percent for the Atenza.

The RX-8's new Renesis rotary engine, stripped of its turbocharger, will be a third of the size and 25 percent lighter than the previous model, Mazda said. It cost a third as much to develop as Mazda's I4 reciprocating engine, which Ford also uses.

"The engine's the most important and the most expensive component in a car, so if it's not very expensive to put those rotaries into the car then it's going to be quite a high margin," Usher said.

Rotary engines run with less vibration than reciprocating engines, and the Renesis is half the size and has only two-thirds as many parts as an equivalent conventional motor.

"Mazda's famous for its rotary engines," Egami said. "As Mazda stopped production of the RX-7 last August there's been a gap where we haven't had a rotary-engine powered car to sell."

The only drawback may be the engine's fuel consumption, because rotary engines typically consume more gas than equivalent reciprocating engines, analysts said.

"There could be a negative connotation attached to rotary engines consuming more gas," said Mashu Kato, an analyst at Nikko Asset Management, who expects the company to sell about 20,000 RX- 8s a year in North America. "It's very cheap and I think they are trying to appeal to consumers through the price."

For Mazda's Yamamoto, the rotary engine will be crucial in setting the sports car -- and the company -- apart from rivals competing for the attention of new car buyers.

"The RX-8 is symbolic of what Mazda stands for," Mazda's Yamamoto said. "It's the essence of Mazda technology."

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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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post #2 of 3 (permalink) Old 04-09-03, 09:40 AM
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Turbocharge it, and also release a 2005 RX7 (500 hp, please).
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post #3 of 3 (permalink) Old 04-10-03, 09:39 AM Thread Starter
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Mazda aims for image boost from new RX-8

Reuters / April 10, 2003

TOKYO -- Mazda Motor Corp. is hoping for great things from its new RX-8 sports car -- if not in terms of sales, then certainly in terms of a boost to its image.

After spending half of the 1990s in the red, Mazda, owned one-third by Ford Motor Co., has been trying to rebuild itself by crafting a fresh identity as a maker of cars with pizazz.

The muscular RX-8, billed as the world's first true sports car with four doors, seems to fit the bill in that respect and it has won favorable reviews since journalists and analysts started taking it on test drives late last year.

"The RX-8 is great fun to drive, it's very smooth, and a usable, four-door four-seater," said Steve Usher, senior analyst at J.P. Morgan.

"In terms of what it's going to do for Mazda's image, the RX-8 is going to be very important."

The RX-8 was officially launched by Japan's fifth-largest auto maker on Wednesday.

Its launch is being seen as a vital part of Mazda's recovery plans after the firm tumbled to a record net loss in the 2000 business year, but analysts see a long and tough road ahead.

For the business year that ended in March, Mazda expects to have tripled its group net profit to 26.5 billion yen ($221.4 million) from a year earlier thanks to an aggressive five-year growth plan launched in 2000.

"Mazda's marketing strategy is still very weak," Koshi Kumagai, senior fund manager at HSBC Asset Management said. "The RX-8 may be good, but you can't change Mazda's brand image overnight."


Mazda is betting on the RX-8's four doors appealing to customers who had previously not considered a sports car.

"It's the ideal car for active customers who wanted a sports car but had been unable to own one because of the needs of their families and friends," Mazda President Lewis Booth told a news conference at the launch.

Powered by the auto maker's "Renesis" rotary engine, the RX-8 is 20 percent more fuel efficient than its predecessor, the RX-7, but has upwards of 210 horsepower.

The RX-8 is priced at $25,180 in the United States and as low as 2.4 million yen ($20,050) in Japan.

That's much cheaper than most industry watchers had expected, and compares with more than three million yen for the Fairlady Z, made by Nissan Motor Co., and about four million yen for the Audi TT from the luxury unit of Volkswagen AG.

Customers may also be drawn by the lower insurance costs that come with having four doors instead of the conventional two for sports cars.


The RX-8, being built in Mazda's home of Hiroshima in western Japan, goes on sale in Japan later this month and the rest of the world this summer. It will be sold in about 30 countries.

Due to the relatively low production size -- Mazda aims to sell about 60,000 units a year globally, with half the sales coming from the United States -- analysts said the RX-8 won't contribute much to Mazda's overall sales volume.

But it is strategically important because of the possible boost to Mazda's image and showroom traffic.

In Japan, where Mazda hopes to sell about 1,000 units a month, the RX-8 has already collected 5,000 pre-launch orders.

In North America, more than 130,000 potential customers have requested information on the car, a company official said.

If that keeps up, the RX-8 could do for Mazda what the Miata did for the struggling company in 1989. That roadster was an instant hit in the United States, helping the small auto maker gain recognition and status in the world's biggest car market.

"There's a very clear product strategy that's now in place at Mazda, not only in terms of design but in terms of technology and performance," Usher said.

"We remain confident that Mazda will deliver slightly ahead of expectations (in the just-ended business year) and that this year, they're going to take the next step in restoring more competitive levels of profitability."

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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