HIROSHIMA, Japan — Mazda Motor Corp. has been pressing for better profitability through more upscale models with higher sticker prices for years.
But now that the Japanese automaker is finally road-testing that strategy with its redesigned Mazda3 sedan, CEO Akira Marumoto concedes some of the stickers are maybe a little too high.
Fortunately for Mazda, customers are snapping up pricier, higher-trim models of the overhauled Mazda3, which was introduced in March to critical acclaim. But the car's sales have slumped 20 percent this year because people are shunning the higher prices of its lower grades.
"The price jump for the entry-level could have been too large — that is something we are reflecting on right now," Marumoto told Automotive News at the carmaker's global headquarters here this month. "The people in that market are pretty price-conscious."
The misfire shows how Mazda is still fine- tuning a game plan it has bet its very survival on.
As a comparatively small player — with global sales of just under 1.6 million vehicles a year — Mazda sees no option but to carve out a space all its own, somewhere above the mass-market Toyotas and Hondas but still below the established premium brands. That strategy partly hinges on getting the price right.
"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," Marumoto said. "If we do the same thing as big players, we will have no chance of winning."
Mazda's strategy banks on a three-prong approach. The first is reducing incentives. The second is raising prices. The third is growing volume. It's the critical third result that remains elusive.
"I asked everyone to achieve three things," said Marumoto, who took the CEO job last year. "We've increased the pricing slightly while decreasing incentives. But our sales volume hasn't reached the targeted level. So, we achieved only two of the three."