Mazda Must Chart New Path to Keep Profit
Tokyo, Nov. 12 (Bloomberg) -- On his 17th birthday, Lewis Booth and his twin brother opened their front door to an Austin Morris car tied with a bow. On his 54th last week, he was settling in as Mazda Motor Corp.'s fourth president in six years.
``I'm making decisions on the basis I'll be here forever,'' said Booth, who joined Mazda's 33 percent owner, Ford Motor Co., in 1978. ``I want to be here long enough to make a permanent difference.''
As Mazda heads for a second annual profit and resumes the release of new models after a two-year pause, investors are looking for more than just management stability. Some want proof Mazda can stay on track as Ford loses money and grapples with how to pay for underfunded pension plans.
``They should come out with some more specific targets about their product rollout schedule,'' said Kerry Goh, who manages about $400 million, including Mazda shares, at AIB Govett (Asia) Ltd. in Singapore. ``There's a drag from Ford.''
Mazda's relationship with Ford is at odds with the situation in 1996, when Ford raised its Mazda stake to 33 percent from 25 percent and took management control. The Japanese automaker had been losing money for two years.
The first set of earnings since Booth became president in June suggests the company is on track for recovery. Mazda, which announces final first-half earnings at 11 a.m. today, said last month net income quadrupled to 5.5 billion yen ($44 million) from 1.3 billion a year earlier.
Mazda shares rose by a quarter in the past year, compared with a 5.9 percent gain in the Topix Transportation Index. Ford shares fell by half in the same period.
To attract buyers, Mazda plans to release 16 models in Japan, 13 in North America and 11 in Europe by March 2005. The automaker has introduced three upgraded and revamped models this year and unveils the RX-8 sports car and the Familia sedan next year.
With much of the cost-cutting accomplished prior to his arrival, investors want reassurance that Booth will push through the new models to battle in a global auto market that is set to shrink. They also want more details on the type of cars the automaker plans to release.
``We've seen a range of new models and that's good, but what are they going to do next?'' said Graeme Maxton, managing director at Autopolis auto con******ts in Singapore. ``Also, they haven't built their share of the market in the U.S. at all, whereas all the other have,'' he said, referring to Japanese rivals.
Mazda hasn't released a new vehicle in the U.S. for two years and its incentives to customers have risen to more than $2,000 per vehicle. The introduction of the Mazda6 early next year comes as the U.S. market is losing steam, analysts and investors say.
``It would always be nice to be launching into a growing market, but life's not that kind most often,'' Booth said.
Booth was brought up in a family of auto buffs. His father was a Ford and Austin Morris dealer, a path his twin brother followed, and his grandfather ran a small trucking business.
``My twin brother and I grew up with cars in the family,'' Booth said in an interview.
Booth was more interested in engineering and wanted to see the world outside his hometown of Liverpool, something the job as a local car salesmen couldn't offer.
After graduating from Liverpool University in 1970 with a degree in mechanical engineering, Booth joined the Austin Morris division of British Leyland.
At Ford, he worked in the U.S., Germany and South Africa. Before joining Mazda, Booth was president of Ford Asia Pacific and Africa.
``The draw of cars was too strong -- I loved the engineering, I loved the business model and I loved the international aspect,'' he said. ``I didn't expect to travel quite this much, though.''