Mazda eyes record U.S. sales, despite pandemic
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November 16, 2020 12:00 AM

Mazda eyes record U.S. sales, despite crisis

Hans Greimel
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    Editor's note: Mazda will offer a setup that uses a new longitudinal inline six-cylinder powertrain for bigger vehicles. A pervious version of this story misidentified the type of powertrain.

    TOKYO — Even as Mazda braces for waves of COVID-19-related red ink this year, the Japanese carmaker is anticipating a surge in U.S. volume not seen in three decades after the pandemic clears.

    Mazda Motor Corp. CEO Akira Marumoto says that in three years' time, the automaker will be in position to pursue annual U.S. sales of 450,000 vehicles, an impressive 62 percent increase over last year's result.

    REUTERS

    Mazda Motor Corp. CEO Akira Marumoto sees sales ramping up “post-2022.”

    Marumoto didn't give an exact timeline for the jump, saying only that sales will ramp up "post-2022" as the automaker shifts into a period of "strong growth." But his new target would surpass Mazda's previous U.S. sales high-water mark of 379,843 vehicles back in 1986.
     

    Marumoto announced the target last week at the same time he delayed by a year Mazda's time frame for achieving his midterm plan. He said the company now expects to reach its goal of 1.8 million global vehicle sales and an operating profit margin of 5 percent in the fiscal year ending March 31, 2026.

    That adjustment came as Mazda reported a second straight quarter of losses in the July-September period as the COVID-19 pandemic depressed global deliveries.

    Mazda booked an operating loss of ¥7.6 billion ($72.0 million) in the quarter ended Sept. 30, compared with an operating profit of ¥18.8 billion ($178.0 million) the year before. At the net level, Mazda plunged to a loss of ¥26.3 billion ($249.1 million).

    Mazda also booked operating and net losses in the April-June fiscal first quarter and warned it would notch a ¥40.0 billion ($378.8 million) operating loss for the full fiscal year ending March 31, 2021, reversing a ¥43.6 billion ($412.9 million) operating profit in the year earlier.

    It also projected a ¥90.0 billion ($852.3 million) net loss for the current fiscal year.
    Revenue slid 14 percent to ¥739.1 billion ($7.00 billion) in the July-September period. Global retail sales declined 12 percent to 334,000 vehicles; wholesale volume fell 18 percent to 255,000.

    But Mazda expects its business worldwide to start rebounding in the second half of this fiscal year.

    Citing a gradual recovery from the pandemic, Mazda modestly raised its North American retail sales target by 5,000 vehicles to 388,000, a decline from 397,000 last year.

    As with the rest of the industry, widespread U.S. lockdowns torpedoed early sales momentum for Mazda this year.

    Related Article
    Here's our annual ranking of the largest U.S. dealership groups

    Until then, the brand's U.S. sales were up 18 percent through February on growing demand for its crossovers.
    But Mazda chalked up a 6.9 percent U.S. sales increase to 74,411 vehicles over the July-September quarter, in an overall market that was down 9.5 percent. The uptick raised Mazda's U.S. market share to 1.9 percent for the quarter, compared with 1.6 percent a year earlier.

    "In the U.S. market, our sales growth has surpassed that of the overall market. I personally don't think that we have suffered a huge loss in the U.S.," Executive Vice President Kiyoshi Fujiwara said at last week's earnings conference. "Despite a drop in sales in the first quarter, I think we are on the recovery track to the end of this fiscal year."

    The company expects several factors to drive its U.S. sales resurgence.

    One is the opening of a vehicle assembly plant in Huntsville, Ala., that Mazda will jointly operate with Toyota. It will have capacity for 300,000 vehicles, half for Mazda. Mazda will build a crossover model there that uses a hybrid drivetrain from Toyota.

    Mazda expects to get another boost by from a gradual product shift to crossovers, as Mazda rolls out more offerings, including a setup that uses a new longitudinal inline six-cylinder powertrain for bigger vehicles.

    Finally, Mazda sees U.S. sales rising on the back of improved customer loyalty.

    The automaker intends to move the brand upmarket through such activities as an overhaul of its U.S. dealer facilities. Mazda has renovated about 150 outlets to a new brand look, and those sites are now generating about 40 percent of the brand's U.S. sales, Executive Officer Ryuichi Umeshita said. More than 300 should be converted by around 2022.

    Naoto Okamura contributed to this report.

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