Like other carmakers, Mazda is trying to sort out the impact of the March 11 earthquake in Japan. So far Mazda has come through in decent shape, says Jim O'Sullivan, 58, CEO of Mazda North American Operations. But that could change quickly, he concedes.
The uncertainty comes as the company is making big moves. Last year Mazda dumped longtime ad agency Doner and chose WPP Group to handle the brand's advertising and marketing worldwide. Team Mazda, WPP's team formed to handle the Mazda account, launched a national campaign in April to boost brand awareness.
Meanwhile, the first of Mazda's SkyActiv engines and transmissions will debut in late summer on the freshened 2012 Mazda3. A new 2.0-liter gasoline direct-injection engine and new automatic and manual transmissions will help the 2012 Mazda3 achieve 40 mpg on the highway, the company says.
In the first quarter of 2012, all SkyActiv technologies, including new frame construction and chassis technology, will debut on the all-new CX-5 small crossover.
O'Sullivan, Mazda's top executive in North America since 2003, spoke with Staff Reporter Ryan Beene last month at the New York auto show.
Q: What are your goals for the rest of the year?
A: The short-term priority for everybody is to sort out the supply infrastructure and support the recovery effort.
For us, it's continuing to grow our business in North America. We're in the process of getting ready to launch the refreshed Mazda3, which is the first vehicle in North America to feature SkyActiv technology. It's launching later in the year, and we'll be very competitive on fuel economy.
Will your U.S. dealers have adequate vehicle stocks through summer?
Our availability is pretty good. We're in a little bit better position than some of the other manufacturers relative to the overall supply base we have right now.
The headline for us in the industry is what we don't know in terms of the supply base. It's those Tier 2 and 3 suppliers that are impacted significantly. What is their ramp-up going to be? The great thing is the huge level of cooperation that's going on within JAMA -- the Japanese Automobile Manufacturers Association. They're working really closely with OEMs and the supply base for everyone to support one another in this recovery effort.
Right now we're building vehicles. The plants are running. But it literally changes day to day. That's why it's hard to give any predictions. But right now in the short term I think we're OK in terms of availability. We've been going out doing the grass-roots meetings with our dealers. So we've been in constant communication with the dealers. We're watching availability and we've got some vehicles on the water right now that we'll make sure will be fairly allocated to our dealers.
How long can your dealers hold out?
I'm not going to predict anything. But based upon the levels we have now we've got decent availability. We just have to watch it. I'm hesitant to say anything because I could get a phone call tonight and all of a sudden we've got an issue with a supplier.
The other piece of this thing, too, is ... when they do get up and running, what are they going to do about the power grid? In the southern part of Japan, the power grid is different than the power grid in the north. I don't know what the government is going to do relative to allocating power to suppliers.
The issue is not only going to be coming back with production, but what models can you build? And within those models, what trim level can you build?
A car with navigation systems takes a lot more chips than cars without navigation systems. Automatic transmissions versus manuals, and things of that nature. So what you have to do is dial things in depending on availability.
But we have inventory, we have a new brand campaign that we're kicking off and we want to make sure our dealers are competitive in the marketplace.
Are any trim levels or model lines being hit especially hard by parts shortages? Are there certain vehicles Mazda can't build?
Nothing on a trim basis as of yet. It's kind of like getting the heart started. Your whole cardiovascular system starts to run again. When you start taking those line speeds up more, then you'll start experiencing where you're having blockages. As of right now, there are not really any hard-starters that we're seeing.
But I could wake up tomorrow morning and learn that we can't build X, Y or Z.
Team Mazda just launched a brand campaign. What is your advertising plan for the rest of the year?
Our plan right now is to launch the brand campaign, and this is basically the tip of the iceberg for us. The campaign right now is primary brand -- it's across the model lineup, and we're looking now as we continue to work with Team Mazda and push that into individual vehicle lines.
Advertising expenditures for the balance of the year will really come down to [vehicle] availability. If we start seeing any kind of shortages in any particular areas, we'll have to redo our media mix. We've got media going in April, May, June and July and we'll assess it on a quarterly basis, again, depending on availability. It doesn't make any sense for us to be advertising crossovers if the inventory is lean. But on a primary-brand basis, it's important to continue to have a presence.
How would you compare the message in Mazda's new campaign with previous ones?
First and foremost, it's still zoom-zoom. It's still part of the campaign and the Mazda DNA. The one thing that every manufacturer attempts to do, including us, is raise your level of awareness.
The compelling thing for me is that question of "What do you drive?" It's the question that says, "Well, let me think about it for a little bit," or more importantly, "Why wouldn't I consider Mazda, because it is the driver's car."
It addresses that we're not a big car company. It addresses the fact that we do take seriously people that are interested in great driving dynamics, good styling and good fuel economy.
What's the media strategy?
It's going to be across the range. Social media, Web-based, mobile-based, TV-based, cable-based, network-based. It's not going to be just one medium. Big in mobile. That's the strength that Team Mazda brings, with all of their resources they're able to reach out.
What's your product strategy for the next two years?
We feel very strong about where we're going with all the Sky technologies -- platform architecture, gasoline engines and diesel engines, automatic and manual transmissions. It's a good time to be launching this. The industry is continuing to recover.
You couple that with rising fuel prices and with what we're bringing to market and we've got a very strong and compelling story to tell.
The next-generation Mazda3, which is coming to the marketplace later this year, will get 40 mpg. That's on a refreshed model -- not just on an all-new model like our competitors. So that tells you the strength of the SkyActiv technology. It's a minor refresh on Mazda3 with the engine and transmission and it gets 40 mpg, and it's not one teeny model that's got skinny little tires on it. It delivers zoom-zoom with good driving dynamics.
What's the next Mazda vehicle to have SkyActiv technologies?
The full suite of the SkyActiv technologies, from architecture to powertrain, will be in CX-5 that will launch next year.
What is the price premium for SkyActiv?
We haven't decided on or finalized pricing yet. The customers will define what they're going to pay for it. We take a look at all the competitors and their vehicles in that segment and where they price their content, and we do a pricing position in comparison to that. We price according to the market.
There has been talk that Mazda wants to move its brand upscale but not into premium territory. Has that direction been refined?
What we're trying to do does not necessarily mean premium from a pricing standpoint, but a perception of the Mazda brand relative to the competitive set. By that I mean the perception of really strong quality, really good value, great driving dynamics, good EPA. It's the whole cachet of what we represent, and SkyActiv will help get us there.