Mazda Sees U.S. Sales Growth in 2005

DETROIT January 9, 2005; Reuters reported that Japan's Mazda Motor Corp. aid on Sunday it expected its U.S. sales to grow again in 2005 on increased brand awareness and a stronger dealer base despite stagnant growth overall in the world's biggest car market.

"For us, 2004 was a very strong year in terms of setting up the foundation for future growth," Jim O'Sullivan, chief executive of Mazda's North American operations, told Reuters in an interview on the sidelines of the North American International Auto Show in Detroit.

"Going into 2005, we're anticipating more growth," O'Sullivan said, adding that the scale of growth depended on how much supply of the popular Mazda3 compact the region would be allocated from its headquarters in Hiroshima.

Last year, Mazda -- one-third owned by Ford Motor Co. managed a 2-percent rise in U.S. sales to 263,900 vehicles against initial projections of a 10 percent increase.

O'Sullivan said a shortage in supply of the Mazda3, called the Axela in Japan, was responsible for much of the shortfall.

A slight decline in fleet sales to less than 10 percent of the total was also a factor, he said.

But O'Sullivan said Mazda's sales of passenger cars, a shrinking segment accounting for less than half of the overall U.S. market, were up 14 percent in 2004 even as its spending on profit-eroding sales incentives fell for the year. That compared to a double-digit rise in average incentives offered in the industry.

Mazda's share of the U.S. market inched up a tenth of a percentage point to 1.6 percent in 2004.

The U.S. market -- usually a cash cow for Japanese car makers -- has been the Achilles' heel for Mazda, which has managed to keep incentives in check although it has struggled with swelling inventory.

To boost sales, Mazda has been urging more dealers to go exclusive. Mazda sells 70 percent of its cars in the United States through exclusive dealers, but only 33 percent of the showrooms carry only Mazdas. It aims to boost that ratio to 50 percent by the end of 2006.

Mazda is also looking to beef up its product lineup by launching more products into the popular light-trucks segment, including three new sport utility vehicles over the next few years. It now competes in just half of the U.S. vehicle market due to a dearth of light trucks like SUVs and pickups.

On Monday, Mazda will take the wraps off the MX Crossport concept vehicle -- a cross between an SUV and a sports car -- that O'Sullivan said would be available as a production vehicle in the not-too-distant future. It will also display the Mazda5 & Mazdaspeed6, to be sold for the first time in North America starting this summer.

O'Sullivan said Mazda could also count on more growth given its young customer base, a demographic that many automakers are after to establish brand loyalty early on.

"The average age of our customers is 42, one of the youngest in the industry," he said.