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Tokyo Motor Show:Mazda looks to Ibuki sports car to raise profile

By Lindsay Whipp / Bloomberg News

TOKYO -- Mazda Motor Corp., maker of the world's top-selling two-seater sports car since 1989, Wednesday unveils a new design it's betting will help keep that lead and raise the company's profile and sales in Japan, where Toyota Motor Corp. and Nissan Motor Co. dominate.

Mazda, Japan's No. 5 automaker, will unveil the Ibuki Roadster concept car at this week's Tokyo Motor Show as a potential successor to its original Roadster.

The Hiroshima-based company, one-third owned by Ford Motor Co., needs new models to enhance its brand at home and stand out from rivals such as market leader Toyota, which sells seven times more cars in Japan than Mazda and spends more than seven times as much on research and development.

"They have good cars, but the problem is they still don't have a strong brand," said Norihito Kanai, who helps manage the equivalent of $2.5 billion at Meiji Dresdner Asset Management Co. in Tokyo. "The only way they can build their brand is by continuing to introduce good new models and they probably need about five to ten years."

The Ibuki features a new body and powertrain, with parts of the chassis and suspension from the four-seat RX-8 sports car, which has beaten sales targets since it was introduced in May.

Difficult Market

Mazda's domestic sales, excluding minicars, rose 8.3 percent to 170,973 units in the nine months to Sept. 30, beating larger rival Mitsubishi Motors Corp.'s 135,440 units.

Mazda shares, which have gained a third this year, were unchanged 293 yen in Tokyo.

Japan's auto market has shrunk by about a quarter since its record high of almost 8 million vehicles in 1990, analysts including Goldman Sachs Japan Inc.'s Kunihiko Shiohara have said. It will probably shrink 2.2 percent this business year to 5.74 million units, Shiohara said. With twelve domestic vehicle makers, Japan is also one of the world's most competitive auto markets.

A shorter product life cycle than most other markets also makes it difficult for a company like Mazda, with a limited budget for new models, to keep up with larger rivals, analysts said. Mazda plans to spend 91 billion yen ($829 million) on research and development this year, compared with Toyota's 672 billion yen.

"In Japan you've got to constantly keep the product pipeline full and that's expensive," said Graeme Maxton, managing director of auto industry research company Autopolis.

Mazda is cutting the time it takes to bring new products to the market by developing models based on the platforms of its four main models: the Atenza/Mazda6 sedan, the Axela/Mazda3 small sedan, the Demio/Mazda2 compact and the RX-8 sports car.

Wider Margin

Mazda is considering developing cars based on higher-volume models such as the Axela, which have a wider profit margin than the original, said Joseph Bakaj, a Mazda executive officer in charge of product development.

Axela derivatives will take 12 months to reach production after the design is approved, Bakaj said. The Axela itself took about 18 months, he said.

The company plans to increase the number of its domestic sales outlets by 80 to 970 in the next three years to boost sales. Mazda closed one-fifth of its outlets and halved the number of its dealers between 1998 and 2003 to improve efficiency after it tried to compete with Toyota in the late 1980s by expanding into luxury vehicles.

The plan backfired after Japan's economy slumped in 1991 and Mazda reported losses between 1994 and 1998, damaging its brand image. It then strengthened its alliance with Ford to start joint product development.

Alliance Benefits

The success of Mazda's innovation strategy depends on the extent of its cooperation with its main shareholder Ford, Meiji Dresdner's Kanai said.

"Smaller makers like Mazda don't have the volume to achieve the same kind of efficiencies as Toyota," Kanai said. "So it's key for Mazda and its alliance partner to work closely to cut procurement costs."

Mazda's cooperation with Ford, the world's second-biggest automaker, and its brands such as Volvo has increased with the development of new platforms.

Mazda's Atenza/Mazda6 sedan will be the basis for the Ford Futura and as many as nine other Ford, Lincoln and Mercury models, eventually contributing as many as 800,000 unit sales a year. The Futura is scheduled for release in 2005.

Mazda doesn't disclose savings from its collaboration with Ford, which also includes shared investment in the Mazda-led development of the MZR four-cylinder engine with the Dearborn, Michigan-based company. The companies will make a total 1.5 million engines annually.

The strategy of innovation has so far been successful, Autopolis's Maxton said.

"Give Mazda its due, it's produced a new generation of visually different products," Maxton said. "They're not 'me too' products: they stand out."

"The question remains" whether the company is financially strong enough to keep doing that, he said.

(Photo)Mazda's Ibuki concept car

Attached Images
File Type: jpeg ibuki.jpeg (15.8 KB, 2 views)

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