NEW YORK — Hoping to reverse five years of disappointing U.S. sales, Mazda Motor Co. on Tuesday unveiled plans to downsize its product line, phasing out some vehicles and rolling out new ones that emphasize an image of sportiness and fun.
Company President Mark Fields said Mazda hopes to double its market share in the United States and Japan by the end of the decade.
"We've set out to rekindle the spirit and competitiveness of doing business," Fields said in unveiling several new vehicles to journalists and Wall Street analysts at a Manhattan event hall.
To do that, Mazda will stop trying to be all things to all people, Fields said. Among the smaller auto makers, with revenue of around $20 billion, Mazda has produced everything from mini-cars with tiny 660-cubic-centimeter engines to full-size sedans and pickup trucks.
Fields hinted that Mazda will drop its full-size Millenia sedan, but also pledged that the company will have a sporty lineup of cars to appeal to young customers, the middle-aged and empty-nesters.
An all-new mid-size sedan, wagon and hatchback will replace the 626 model, and a compact sedan and five-door hatchback will eventually replace the 323 and Protege. Mazda's new models will feature wedge-shaped bodies and sporty fenders, with sleek, narrow headlamps and, on some cars, fog lamps.
An all-new small car for Japan, Europe and other markets replacing the Demio, which is not sold in the U.S., will be produced in Japan and at a Ford Motor Co. factory in Spain to help reduce production costs.
A total of 11 all-new or redesigned products will come to North America over the next three years, Fields said.
Meanwhile, under its new five-year restructuring plan, Mazda will shutter a plant in Japan, transfer some production to Thailand and Spain, import more parts to lessen the effect of currency exchange rates, increase product development spending by 30% and make more use of technology from Ford, which owns a controlling 34% of Mazda.
Mazda, whose U.S. subsidiary is headquartered in Irvine, has been beaten up in recent years. It lost money from the mid-1990s through 1998 before eking out a profit of about $350 million in 1999 and $250 million last year.
Fields said he expects a loss of about $400 million this fiscal year, which ends March 31, and a break-even 2001 before the company heads back into the black.
This year's anticipated loss is due largely to a $300-million restructuring charge and to the strength of the Japanese yen, which has cost Mazda $1.2 billion in profit in the last two fiscal years, Fields said.
But in the end, it's the cars that will make or break the company.
Analysts anticipate the successor to the RX7 sports car with its signature rotary engine--to be known as the RX8--will inject some life into Mazda's brand image when it goes into production, probably by the end of next year.
On Tuesday, Mazda also took the wraps off the MX Sport Tourer, a sleek concept car that's part sport-utility vehicle and part station wagon, which analysts say the auto maker will probably build. The Sport Tourer has a retractable roof and rear seats that fold flat with a single touch.
Fields also showed a computer rendering of a simple, boxy SUV code-named "Secret Hideout" that Mazda is studying as a versatile, cargo-friendly vehicle for young drivers who need lots of storage.
Fields says he hopes the redone product line will lift Mazda's 1.5% share of the U.S. market to 3%, its 2.5% Japanese market share to 5% and its 1.3% of the European market to 3% by 2010.
"This stuff is more of a differentiator than what they've had. The question is, will it still be differentiating when it gets to market?" said Steven Girsky, Morgan Stanley Dean Witter's auto analyst in New York. "From where I sit today, it looks good. Will it look good in three years? Ask me then."
Analysts agreed that Mazda does well with its core products such as the Miata roadster and the RX sports car, and that the Tribute small SUV, the sister vehicle of the Ford Escape, should do well.
"But Mazda is not very well defined, and that gets you locked out of the market," said John Casesa, auto industry analyst for Merrill Lynch. "It's a very cluttered market, and it will be more difficult [to win sales] as the economy slows."
There are some things Mazda does better than its parent Ford, Casesa said: "They make great and inexpensive sports cars. But there's not a huge market for that."
Part of Mazda's "Millenium Plan" for restructuring is streamlining the company's sometimes bloated bureaucracy. Fields said, for example, he got tired of business proposals languishing for weeks as they passed through the managerial ranks, collecting the necessary signatures before arriving at his desk. That's the way such documents plod through Japan's ponderous corporate pathways.
Fields, who became the youngest chief executive of a Japanese auto maker when he was named to the post in 1999 at age 38, decided to put an end to it.
"Part of the issue was we had too many managers; the documents would be a month, month-and-a-half old, and God forbid if you had a question. You'd have to start all over again," he said. "I decided we had to build the company for speed or we'd implode."
So in January Mazda went to a paperless proposal system by putting the documents on the corporate Intranet, with the restriction that they require no more than three approvals.
"What used to take 30 to 40 days now takes three to five," Fields said. "This morning I approved a number of them from my laptop."
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Stuck in a Sales Slump
U.S. sales of Mazda vehicles, which critics say have been lacking a defining image, are creeping back up but remain far below their high in 1994. Mazda wants to double its U.S. market share to 3% by the end of the decade.
Source: Autodata Corp.