The Cost of Going Upscale: Mazda Mulls Its Compact Car Strategy
12-26-19, 08:18 PM
#1
Lexus Fanatic
Thread Starter
The Cost of Going Upscale: Mazda Mulls Its Compact Car Strategy
The Cost of Going Upscale: Mazda Mulls Its Compact Car Strategy
https://www.thetruthaboutcars.com/20...-car-strategy/
One of the bigger stories this year, albeit one that occurred mostly in the background of splashier news, concerned a fun-to-drive compact car that did pretty well for itself over the past decade. For 2019, that car got a makeover and a push upmarket, aligning it more closely with other models in the lineup. That car was the Mazda 3 — and the 2019 model year brought big changes not only to its content, but also its price.
Gone was the American-market’s base 2.0-liter engine and most of the model’s manual transmission availability, and these omissions played an obvious role in inflating the model’s entry price by roughly three grand. Looking back on the sales decline that marked the new 3’s entry to the market, Mazda’s leadership is expressing regret.
Speaking to Automotive News, Mazda CEO Akira Marumoto’s Christmas wish seems to be the ability to turn back the clock.
“The price jump for the entry-level could have been too large — that is something we are reflecting on right now,” he said. “The people in that market are pretty price-conscious.”
Despite greater standard content, two bodystyles, and the (new) option of all-wheel drive, Mazda 3 sales dived in the U.S., failing to recover in the months following its introduction. While Mazda stands to earn more profit for each model sold, the reduction in volume is significant and cannot be ignored. At the halfway point in the year, 3 sales were down 20.3 percent. Through November, volume declined by 19.9 percent.
As it seeks to stand apart from the likes of Honda and Toyota, Mazda’s premium strategy has hit a snag in the 3. While the model’s updated Kodo design language and fairly ritzy cabin is capable of turning heads, not enough buyers are shelling out the boosted bucks for one.
“I asked everyone to achieve three things. We’ve increased the pricing slightly while decreasing incentives. But our sales volume hasn’t reached the targeted level,” Marumoto said. “So, we achieved only two of the three.”
Mazda’s problem isn’t solely the result of its pricing strategy. As the compact car segment dwindles, the ability of any automaker to besting the previous year’s standing is growing ever more difficult to achieve.
In Canada, Mazda opted for a different strategy. The base 2.0L was retained, as was the manual transmission on several low-tier trims. Entry price remained much the same as before. Year-to-date sales through November? Down 19.7 percent.
It’s something of a Catch-22 for Mazda. If the company stayed the previous course and positioned the 3 as a sporty also-ran challenger to the Civic and Corolla, the far greater volume and visibility of its rivals could relegate it to the back of the pack. Do something different by moving forward with a premium strategy, and the same could occur.
And Mazda yearns to be different, as it’s part of the brand’s appeal.
“We can be unique, in terms of product, technology, pricing and customer experience. If we don’t do that and do the same thing as big players, I’m afraid it will be hard for Mazda to survive,” the CEO remarked, adding that the 2020 model year brought additional content to low-end 3s in a bid to boost appeal.
Without reducing the model’s entry price, Marumoto said, “We’re going to add easy-to-understand value.”
https://www.thetruthaboutcars.com/20...-car-strategy/
One of the bigger stories this year, albeit one that occurred mostly in the background of splashier news, concerned a fun-to-drive compact car that did pretty well for itself over the past decade. For 2019, that car got a makeover and a push upmarket, aligning it more closely with other models in the lineup. That car was the Mazda 3 — and the 2019 model year brought big changes not only to its content, but also its price.
Gone was the American-market’s base 2.0-liter engine and most of the model’s manual transmission availability, and these omissions played an obvious role in inflating the model’s entry price by roughly three grand. Looking back on the sales decline that marked the new 3’s entry to the market, Mazda’s leadership is expressing regret.
Speaking to Automotive News, Mazda CEO Akira Marumoto’s Christmas wish seems to be the ability to turn back the clock.
“The price jump for the entry-level could have been too large — that is something we are reflecting on right now,” he said. “The people in that market are pretty price-conscious.”
Despite greater standard content, two bodystyles, and the (new) option of all-wheel drive, Mazda 3 sales dived in the U.S., failing to recover in the months following its introduction. While Mazda stands to earn more profit for each model sold, the reduction in volume is significant and cannot be ignored. At the halfway point in the year, 3 sales were down 20.3 percent. Through November, volume declined by 19.9 percent.
As it seeks to stand apart from the likes of Honda and Toyota, Mazda’s premium strategy has hit a snag in the 3. While the model’s updated Kodo design language and fairly ritzy cabin is capable of turning heads, not enough buyers are shelling out the boosted bucks for one.
“I asked everyone to achieve three things. We’ve increased the pricing slightly while decreasing incentives. But our sales volume hasn’t reached the targeted level,” Marumoto said. “So, we achieved only two of the three.”
Mazda’s problem isn’t solely the result of its pricing strategy. As the compact car segment dwindles, the ability of any automaker to besting the previous year’s standing is growing ever more difficult to achieve.
In Canada, Mazda opted for a different strategy. The base 2.0L was retained, as was the manual transmission on several low-tier trims. Entry price remained much the same as before. Year-to-date sales through November? Down 19.7 percent.
It’s something of a Catch-22 for Mazda. If the company stayed the previous course and positioned the 3 as a sporty also-ran challenger to the Civic and Corolla, the far greater volume and visibility of its rivals could relegate it to the back of the pack. Do something different by moving forward with a premium strategy, and the same could occur.
And Mazda yearns to be different, as it’s part of the brand’s appeal.
“We can be unique, in terms of product, technology, pricing and customer experience. If we don’t do that and do the same thing as big players, I’m afraid it will be hard for Mazda to survive,” the CEO remarked, adding that the 2020 model year brought additional content to low-end 3s in a bid to boost appeal.
Without reducing the model’s entry price, Marumoto said, “We’re going to add easy-to-understand value.”
12-27-19, 07:59 AM
#3
Lexus Champion
That's a nice looking compact sedan. The soul red in the picture sets it off nicely. Too bad that Mazda is in this tough situation. If it wasn't for the CX-5 they'd be in real trouble here in the U.S.
12-27-19, 08:12 AM
#4
Lexus Fanatic
12-27-19, 08:26 AM
#5
drives cars
For my next car, I'm strongly debating whether I should move a bit downmarket (two possibilities - one, I get something similar to what I have now, or two, I get something cheaper, pay it off, and then save for something better), and the new Mazda3 is very much in the running. CPO, the new ones, even well-equipped with under 10k miles, are under $25k easily. For that price, the interior looks amazing. And, having just driven a rental Jetta, I can say interior quality matters a lot to me. That car is the polar opposite of the Mazda, where the real value of the Jetta is the space efficiency for the money, where cost-cutting on interior trimmings is obvious thanks to its abundance of the black scratchy stuff. Every Mazda3 example I've looked at online, however, just has this upscale look with very little obviously-cheap plastic. So, for me, the Mazda3 is appealing, but having been used to an IS, I am probably an outlier customer.
12-27-19, 08:45 AM
#6
Lexus Fanatic
For my next car, I'm strongly debating whether I should move a bit downmarket (two possibilities - one, I get something similar to what I have now, or two, I get something cheaper, pay it off, and then save for something better), and the new Mazda3 is very much in the running. CPO, the new ones, even well-equipped with under 10k miles, are under $25k easily. For that price, the interior looks amazing. And, having just driven a rental Jetta, I can say interior quality matters a lot to me. That car is the polar opposite of the Mazda, where the real value of the Jetta is the space efficiency for the money, where cost-cutting on interior trimmings is obvious thanks to its abundance of the black scratchy stuff. Every Mazda3 example I've looked at online, however, just has this upscale look with very little obviously-cheap plastic. So, for me, the Mazda3 is appealing, but having been used to an IS, I am probably an outlier customer.
If you can spend a little more, you'd probably like the Mazda6's interior even more (I recently reviewed one), particularly the models with the cloth seats, which are soft, well-padded, and have a cushy feeling that has been missing from a lot of vehicles for decades. Too many seats today sacrifice comfort for sport-orientation and firmness/support.
12-27-19, 09:13 AM
#7
drives cars
If you can spend a little more, you'd probably like the Mazda6's interior even more (I recently reviewed one), particularly the models with the cloth seats, which are soft, well-padded, and have a cushy feeling that has been missing from a lot of vehicles for decades. Too many seats today sacrifice comfort for sport-orientation and firmness/support.
Don't want to have too many options by including midsize cars, but the 6 isn't actually too big...
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12-27-19, 04:54 PM
#9
I could not help but observe in CA every Mazda 3 I saw would try tp pass me no matter what I was driving or where. Zoom-Zoom!
12-27-19, 05:08 PM
#10
Lexus Champion
Very unfortunate for Mazda, but for discerning buyers looking for sporty sedans and crossovers with great styling - these are the vehicles to buy. Mazda's styling is easily the most well rounded vs the bizarre overdone nonsense that you see with a lot of mass market car manufacturers. Interior materials and craftsmanship: again Mazda does very well here.
The moral of the story is that, just because a product doesn't sell in large volumes does not mean that it is not good. In fact, you buy a 3, 6 or CX5 because you are not looking for an appliance.
The moral of the story is that, just because a product doesn't sell in large volumes does not mean that it is not good. In fact, you buy a 3, 6 or CX5 because you are not looking for an appliance.
12-27-19, 05:22 PM
#11
Lexus Fanatic
12-27-19, 05:33 PM
#12
Lexus Fanatic
Thread Starter
This car needs to sell in large volumes to be successful.
Yeah. Was very sporty. Just not my thing.
They all drive very sporty & the last 2 years they all had a big rotary **** on the console to control stereo, & navi. You have to go thru many steps which is annoying but once you get used to it it's not so bad & you can do everything without taking your eyes off the road.
I could not help but observe in CA every Mazda 3 I saw would try tp pass me no matter what I was driving or where. Zoom-Zoom!
I could not help but observe in CA every Mazda 3 I saw would try tp pass me no matter what I was driving or where. Zoom-Zoom!
12-27-19, 05:56 PM
#13
Lexus Fanatic
Re-read what he said. Excellent vehicles do not always sell well. That does not change or negate their excellence. I can think of several superb sedans that sat in showrooms and went essentially nowhere...among them the VW Phaeton, Kia K900, Hyundai Azera, and the latest Continental.
12-27-19, 06:15 PM
#14
Lexus Fanatic
Thread Starter
I disagree
Perhaps the new Mazda 3 is not superb or excellentt IMO. I certainly do not think it is. Good-Very Good perhaps. There is so much more than just driving impressions to achieve product excellence
None of these vehicles are excellent IMO. A KIA Telluride right now has all the hallmarks of product excellence. A Dodge RAM would qualify too. A Tesla 3.
Just my opinion.
Perhaps the new Mazda 3 is not superb or excellentt IMO. I certainly do not think it is. Good-Very Good perhaps. There is so much more than just driving impressions to achieve product excellence
Just my opinion.
Last edited by Toys4RJill; 12-27-19 at 06:25 PM.
12-27-19, 06:34 PM
#15
Lexus Fanatic
None of these vehicles are excellent IMO. A KIA Telluride right now has all the hallmarks of product excellence. A Dodge RAM would qualify too. A Tesla 3.