On March 31st, the Japanese OEM Mazda ended its 2013 fiscal year, one which it hailed as the best in its 94 year history. In fact, profits for the company were up an incredulous 238% up to $1.88 billion. Earnings, revenue, and global sales value all saw a jump in this fiscal year.
This huge jump, however, was not due to Mazda’s operations in the United States, which may surprise many. While Mazda did report gains in the North American market, up about 5% to 391,000 units from last year, it did not even hold a flame to Mazda’s profits in the the European market. Sales increased 25% to 163,000 units in Europe, hallmarked by a 35% increase in the Great Britain market. Another good sector for the Japanese company were domestic sales, up 13%, and sales in China, up a respectable 12%.
While Mazda is not too concerned about the North American market, they are a bit disappointed in the lack of jump that they saw in other markets. North America is still Mazda’s largest market consisting of 391,000 units sold last year. This disappointment comes right on the heels of the launch of the new Mazda3, Mazda6, as well as the CX-5, three products that were hailed as huge successes. CEO Masamichi Kogai is not too concerned about the North American market, and has promised to get US sales up to 400,000 units.
The Mazda, typically seen as an average car for those on a budget, is seeing a surge in sales. Is this bump in sales due to the change in style that Mazda has experienced in the past few years? Or is this a sign of an improving economy, allowing lower socioeconomic classes to afford new cars such as the Mazda3, which starts at $16,945? It will be interesting to see how Mazda can follow up these incredible sales of this fiscal year.
– Zac Durkin
Source: http://www.autoblog.com/2014/04/25/mazda-record-profits-highest-94-years/
Why do you think this growth is taking place in almost exclusively Europe?
The 2014 Mazda M6 represents a fuel efficient car (city 26 mpg, highway 38 mpg) and the Mazda M3 represents an even more fuel efficient car as well (city 30 mpg, highway 41 mpg). On top of that the cars are both cheap (M6 $20,000, M3 $16,000), which allows people of lower incomes to purchase a brand new car for a fairly reasonable price.
In my opinion the jump in profit, especially in Europe, can be attributed to how the new Mazdas, specifically the M3, are very cheap and fuel efficient. Europeans love compact, fuel efficient cars, and the M3 represents just that. On the other hand, the M6 is another car that is fairly cheap, with a very sleek and modern design. It looks like a luxury sedan, similar to a BMW or Lexus, which definitely attracts lower income consumers to purchase the nice, practical M6.
The Madza is your prototypical European car, a small vehicle that can easily maneuver around the tight European streets. The overall increase in sales is most likely due to the change in style. When a car is created to look like a BMW or a Lexus and it costs less than 20,000 dollars, consumers are much more attracted to it. When that is combined with the fuel efficiency, Madza was sure to see an increase in sales.
This marketing tactic reminds me of what Ford did with the Ford Fusion. The Fusion is designed to look like a Masserati or a luxury vehicle and it is reasonably priced. Similar to Mazda the Ford Fusion has seen success.
I wouldn’t call the Mazda the “prototypical European car”. Neither the Mazda3 nor the Mazda6 are small in comparison to the European cars. They’re about the size of any average American sedan. I certainly wouldn’t call them a European car though.
If you look at the difference between the quality of their product and the sales volume. Mazda 3 and CX-5 could be the best selling car in their classes. Mazda 6 is also a great car that is sportier. But the sales numbers in the US does not reflect that. I think it is partially because the Mazda dealership networking in the US is nowhere near its competitors’ such as Toyota and Honda.
I had no clue that Mazda had such an incredible fiscal year in 2013 (by their financial statements), but it seems to make sense when looking at the business model. Europe is lagging a bit behind in its economic recovery, but it is still growing more and more each quarter. Perhaps, consumer opinion of model coupled with its reasonable price point have lead to its widespread acceptance in Europe. Mazda, in my mind, is a very solid car with respectable gas mileage and other driving specs and at a sales price under $20,000 its a good deal. Per the consumer opinion aspect, Mazda’s price point puts it in competition with carmakers like Kia, Hyundai, and other affordable car companies, but the brand name (in my opinion) resonates with a higher quality and respect than the aforementioned companies.
For people on small incomes Mazda have amazing affordable cars and that’s why they have had such a surge in sales in Europe. Europe has only just about recovered from recession i think.
Europe’s still at very low volumes – rising, but as in the US “recovery” is anachronistic, as until now it implied a quick return to normal levels of employment and so on. Not now in the US, nor in the EU, nor (after its bubble) Japan. But the info on differential performance in the EU is helpful. Thanks!