Mazda’s European boss James Muir is interested in developing smaller, lighter SUVs, possibly using the iconic MX-5’s rear-wheel drive platform, and he also sees the environmental issue as the best thing to have happened to the automotive industry in years.
The propagated image of SUVs as pariahs of the environment makes it a segment ripe for reinterpretation, according to Muir. The trend towards downsizing of SUVs is an area he wants the company to explore. “I do see SUVs getting smaller and being more car-like in their behaviour.
Go deeper with GlobalData
“Maybe we can look at rear wheel drive platform sharing and we have a rear-wheel drive platform with the MX-5. That’s an opportunity for us to look at how we might develop a lighter-weight product.
“We have done a lot of work on the technology side with high tensile steel, which is much more lightweight. We are also looking at lighter weight power trains and there is a lot of scope there particularly with diesel power trains to see how we can create lighter engine blocks using different alloys and metals.
“I’m interested how these technologies combine together,” he said. “I tested the new diesel engine we will launch next year in Japan in the CX-7 and it was really outstanding with surprisingly good fuel consumption.”
That new diesel is likely to be the 2.0 litre engine shared with the Mazda6 and Ford Mondeo ranges.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“We are getting ourselves into a position, within the limits of our capabilities, where we can offer some serious competition with environmental credentials as we go forward,” asserted Muir.
Muir is the product of a tranquil upbringing in rural North Wales, but is currently energised by future patterns of urban living, cars built for four, not five people, and how to sustain the growth of sales when the Japanese manufacturer’s fortunes are so closely tied to the yen. Fortunately the very weak yen is aiding recovery but as he acknowledged that situation is not going to last forever.
As Managing Executive Officer at Mazda Motor Corporation and its European President Muir, now based in Germany, leads on sales and marketing with a product range promoted as stylish and affordable as well as inspiring and fun to drive. He also directs the distribution strategy, heads government relations and specialises in thinking outside the box.
“I’m interested in vehicles that deal with the restrictions that have been placed on urban drivers, parking, parking footprints and taxation on CO2 emissions. I can’t tell you what it is but we are taking a project that I have initiated to the motor show in Paris next year. That will be our response to this trend.”
Environmental responsibilities
The environmental issue is the best thing that has happened to the automotive industry in the past 50 years, he said, scenting accelerated conditions for growth benefiting smaller, and as he sees it, more nimble and responsive manufacturers.
“The order is being changed. People are worried about the new order and what it is going to look like. There had been a period of stagnation in production development. This is going to alter the balance of power. So for Mazda that’s an opportunity.”
Mazda continues to hold faith with the internal combustion engine in differing forms, linked to short, medium and long-term strategies that recognise the necessity, and, to be fair, corporate desire, to face up to environmental responsibilities and engage customers.
The dual fuel RX-8 Hydrogen RE and green-minded Premacy/Mazda5 hybrid variant is powered by the same bi-fuel, two-rotor hydrogen RENESIS engine. This, happily for the research and development budget working on the next generation, allows an easier marriage between petrol and the compressed gas as the engine already has two injectors.
Norway has taken limited steps towards building a hydrogen society and a utopian hope of zero C02 emissions. But elsewhere, outside of Japan, any meaningful infrastructure to run such cars is tiny or non-existent and would require massive investment by the energy companies to create a supply network.
So in real-time Mazda sees smaller, lighter vehicles as the more immediate answer, giving consumers viable alternatives through its ‘gram strategy‘, essentially cutting weight, combined with fuel-saving technologies such as smart start, idle systems.
Muir said: “The future is about developing products that provide a responsible response to issues that we face with carbon emissions and ever more limited fossil fuel resources.”
Muir, this year’s winner of the Tom Pryce Trophy awarded by the Welsh Motoring Writers group, added: “Specifically, for us it gives definite room for expansion into models that are targeting consumer needs, and smaller and lighter than the ones being sold today.”
One of Muir’s traits is to open, not close down debates and he’s also championing four-seater cars. In his rugby playing days he used to chuck balls into the line-out. Intellectually, he may be doing something similar by lobbing some challenging ideas onto a global field of play.
Concept cars
“Mazda has already shown concept cars with four seats. Why are cars being built with five seats if there is a demand for just four?” he asked.
However, to achieve the scale necessary for sustained growth Mazda needs to increase production in Europe to at least 400,000 units. It could then look at building a new factory – the site as yet unknown – capable of fully capitalising on maximising output against fixed costs, and lessening its vulnerability to currency value fluctuations.
It is closely tied to the fortunes of the yen because all its sourcing currently stems from Japan, 96 per cent, and Thailand, which makes up the remaining 4 per cent. Muir conceded that even 400,000 units would not be enough to protect against the influence of the exchange rates.
“We are not ready yet, and neither will we be at 400,000 units, to mitigate the significant exchange rate risk that we have today.”
Muir said greater stability would come from creating sourcing in Europe with a supply base around the plant – again the key is upping scale.
“We are wholly exposed to exchange rates. For a sounder and more secure business base we need to ultimately have some of our sourcing in Europe and for that Mazda needs scale.
“In my view we will need to offer up a sourcing capability for Mazda of 200,000 units or more of a common architecture. We can’t have a factory that builds 40,000 of something, and 50,000 of something else. We need a common architecture that looks like say the Mazda3 or maybe a Mazda5 where you can source common components and establish a supply base close by, and offer that supply base a scale to support a sensible business case.
“And that‘s not what we had with the old Mazda2 when it was being built in Valencia. We produced a great product there with outstanding quality comparable to Japanese standards. But Ford could only offer 40,000 or 50,000 units of its capacity and that is not a scale where we could established a supply base, sensibly large supply base, or a volume for us to optimise the fixed costs associated with the investment in developing new products.
“We’re at the stage of looking at a lot more growth and in the process of recruiting another 400 engineers. We have 2,000 engineers, to put in context as to what we have as an engineering capability, and 75 per cent of those are going to be invested in product development. We are building the capability to develop a lot more product and which we want to realize by around 2010.
“We have today fixed manufacturing capacities which have got some small scale expansion capability and we basically know that between now and 2010 that our product cycle plan is fixed. What we are working on, and within that cycle plan, we will look to realise upwards of 400,000 units in Europe by that time.
“I am really interested in what sort of product we can add to our portfolio that will enable Mazda to generate an even bigger footprint in Europe post 2010 and in that way secure the capability to secure some of our product in Europe in the long-term.
“Mazda has other priorities that we need to fix yet and so that means the factory site has to be part of a study. There are lots of possibilities. One possibility is doing it on our own, or with our partners or even one partner”
Ford has a 33.4 per cent stake in Mazda.
“Mazda already has some manufacturing capability outside Japan. Recently we announced that we are increasing the capacity of our plant in Thailand with Ford to build Mazda2s. We also have a plant in North America which is a joint venture with Ford. As yet no decisions have been made on how we are going to work with that plant or what the future of that participation is in the long-term. And I think the answer for that has to be reached first before we tackle what we are going to do in Europe because we are a small company.
“When you are a successful company like Toyota you can buy more tickets for the train. Unfortunately, Mazda is in the position of buying one ticket and has to make sure that that ticket gets it to the next station. But hopefully we will earn the right to make multiple decisions.”
Expansion
Since 2000 Mazda have expanded by controlling distribution. It has 19 national sales companies and over the course of the next year will open another three.
Over 90% of the manufacturer’s volume is directly, allowing for consistent delivery of its brand message, allowing the company, in Muir’s words “to punch above our weight”. An independent distribution system works for Mazda because it is able to generate healthy margins on its business using constant volumes – what is being sold at the moment – to drive the business rather than rely on growth, a strategy underpinned by nailing down lower absolute fixed costs and making efficient use of resources.
“Mazda is a relatively unknown brand and it’s small so in order to have impact and focus we need to be very consistent,” admitted Muir. “Bigger brands get awareness from the numbers of cars that are on the road
“But when we have two per cent, or sub two per cent, of market share and in many countries are still embryonic in our development, then you have to be consistent. We are also able to operate with lower costs in the business. So when we take over business from an independent distributor we are able to generate a higher margin or higher return on the business at a constant volume.”
“Europe generates a significant proportion of the global profit and Mazda has improved its balance sheet significantly and is now able to invest in its future and reduce its debt burden at the same time.
“In Europe we will do 320,000 units this year and that is an all-time record, but as far as I am concerned all that is doing is putting us back to our starting point in 1991.
“The real growth starts now. As a brand we have never been successful in the small car segment. Looking back to the most recent Mazda2, but also the 121, if you like the failed Ford badging project, the quirky looking 121 with the boot, and the Demio, all those were either bridging options or adoptions of a Japanese product we then tried to sell it in a European market.
“In a first for us we have launched the new Mazda2, a B segment car that is specifically designed to penetrate the European market appeal to the European consumer. This is a big leg up in our growth as we will head towards 400,000 units, and that is very important to Mazda in Europe because it gives us some scale,” he said.
