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Mazda fell under effective control of Ford in 1996. The two companies had been running joint ventures in the US and Thailand, and the increased alliance seemed logical at a time when Mazda was struggling and Ford was building a global portfolio of brands.

But the arrival of Alan Mulally as Ford president saw the US automaker’s strategy shift toward “One Ford”, resulting in the disposal of all other brands bar Lincoln. The Mazda stake was reduced initially in 2008 from 33.4%, which gave Ford management control under Japanese law, to just 11%. A further disposal took place in November 2010, reducing Ford’s stake to just 3.5%.

All US senior management influence has now departed from Mazda, and while some JV elements remain in place, new Mazda vehicles are now 100% Mazda, starting with the CX-5 crossover and the new Mazda6, just launched in Europe, which have become a major element of Mazda’s fleet offering.

1.25 million vehicles in 2012

Mazda sold 1.25 million vehicles worldwide in 2012, up 3.5% on the previous year. This represents a strong performance against a continued depressed global auto market. In particular, Mazda performed well in the US market with full-year sales of 277,046 vehicles in 2012, exceeding 2011 by 10.6%, and representing the company’s best full calendar year of sales since 2007.

Mazda performed well in Japan during 2012, with full-year domestic sales volume up 14.9% compared with the same period in 2011, due to increased sales of both cars and commercial vehicles.

Indeed, analysts believe that of the Japanese car makers, Mazda is best placed to benefit from the weakening Yen, as it is more reliant on exports than Nissan, Toyota or Honda, which have more local assembly in major markets.

Its higher domestic production and export ratios puts Mazda in a strong position to take advantage of a Yen that has lost around 20% of its value versus the US Dollar since October 2012. Mazda makes 71% of its vehicles in Japan and exports about 80% of them. It does not have a European production base and has recently ceased all production in the US.

Mazda, the fifth biggest Japanese carmaker by sales, raised its operating profit outlook for the year ending in March by €162m to €364.3m, which would be its highest since the pre-recession year ended March 2008, with the softer Yen accounting for €145.7m of the increase.

Mazda’s export volume in the period from January to December 2012 increased 3.3% compared with the same period in 2011, reflecting increased shipments to North America and Oceania. European exports were down, largely as a result of an ongoing recession and the model change of the Mazda6.

Mazda’s overseas production volume in the January-December 2012 period decreased 2.4% compared to the same period in 2011, due to reduced production of passenger cars, in particular the ending of Mazda6 production at the AutoAlliance International (AAI) plant at Flat Rock, Michigan, US.

Mazda is exporting the replacement Mazda6 model for North American markets from its Hofu 2 plant in Japan. AAI, which started operations in 1992, will now build only Ford cars, though it remains a 50:50 joint venture between Ford and Mazda. The factory currently produces the Ford Mustang and a further €411m has been invested to add production of the Ford Fusion sedan from 2013.

Despite this move, Mazda is expanding its overseas production network, with new plants in Asia, Russia and Latin America all part of its plans.

New models and SKYACTIV technology

The two most recent Mazda models, the CX-5 crossover and the Mazda6 large saloon and estate, are the first cars to have been designed around a new Mazda approach, which the company calls SKYACTIV. This covers engines, gearboxes, stop-start and alternator systems, and the construction of the body. So Mazda refers to its new engines as SKYACTIV engines; the chassis is a SKYACTIV chassis, and so on.

The concept is based around sticking with internal combustion engines, but trying to be as innovative as possible – hence SKYACTIV petrol engines have the highest compression ratios in their class, while the diesels have the lowest. Other innovations include an advanced stop-start system – Mazda’s i-Eloop technology, using a capacitor as an energy storage device, thus bypassing the lead-acid starter battery. The capacitor can store enough energy to power the car’s systems for a minute just during normal deceleration. The i-ELOOP system can boost economy by up to 10%, depending on driving conditions.

The two new cars look like being major successes for Mazda. They signal a further change of the company’s model offering, concentrating on mainstream sectors rather than performance cars. Production of the rotary-engined RX-8 ended last year, bringing to a close 45 years of Wankel engine use by Mazda. The technology is not dead, but is only likely to reappear in the future, possibly as a hydrogen rotary concept.

Meanwhile, Mazda is ramping up production of the CX-5 crossover and doubling output of the SKYACTIV engines launched with it. Last year Mazda said it would increase CX-5 capacity from 200,000 units to 240,000 units a year, adding assembly at a second line at the Ujina Plant in Hiroshima.

Mazda also doubled SKYACTIV diesel and petrol capacity at its engine plant in Hiroshima from 400,000 units to 800,000 units a year from October 2012.

Meanwhile Mazda is aiming to sell 240,000 units of the Mazda6 worldwide this year. The third-generation Mazda6 (called Atenza in Japan) will be launched in over 120 countries in total. It is currently manufactured at Mazda’s plant in Yamaguchi Prefecture, western Japan.

Fleet business

Only around 15% of Mazda’s European sales are classified as fleet business – around 25,000 cars last year. But this leaves plenty of room for expansion, and the company has been ramping up its fleet structure for the past couple of years.

Around half of Mazda’s total fleet sales are in the UK and the Netherlands, traditionally strong “company car” markets. A European Fleet Operations department coordinates international business from its base at Mazda Motor Europe’s headquarters in Leverkusen, Germany, though most fleet business is still won at a national level in key markets, largely because of different attitudes toward company cars in different markets.

At Leverkusen, international tenders are responded to and contracts managed centrally, but vehicles are supplied at a national level. Crucially, almost all Mazda’s national sales companies are subsidiaries of Mazda Motor Europe rather than independent importers.

In the UK, the new Mazda6 will be a major fleet seller, said Mazda’s UK managing director, Jeremy Thomson: ‘The sector’s 75-80% fleet, so fleet is one of the primary areas we’ll target with the Mazda6.’ Thomson said the old models had performed well in the UK fleet sector until a couple of years ago, when stricter taxation on CO2 levels started to affect sales of the old, pre-SKYACTIV models.

The UK is scheduled to receive 7,500 of the 39,000 Mazda6 models destined for Europe in 2013, though Thomson believes it’s ‘highly likely’ that Mazda will sell more of the cars in the UK, pointing out that in its best pre-recession year, 12,000 Mazda6s were sold in the UK.

The new, low-CO2 Mazda6 – it has CO2 emissions starting at 108g/km – gives Mazda ‘an opportunity to re-engage with key fleet customers’, Thomson said. Medium–large fleets of 100 cars plus are the first target, while the 140 UK dealers are being geared up to cope with smaller fleets, through competitive contract hire rates and so on. ‘We’re in a very strong position for both user-choosers and fleet managers.’

Mazda represents a ‘blank canvas’, said Thomson, with new cars and the ability to operate without the need for approval from Ford HQ in Dearborn. The Japanese heritage is being emphasised, for example through the Mazda6’s “Kodo” design.

The CX-5 is also proving popular in the fleet sector, contributing to a growth in fleet business to around 50% of Mazda’s total UK sales in 2013 – a major improvement on 2012, when only around 25% of sales were corporate.

Across Europe, the fleet market is still geared around essential users and daily rental. And prior to 2001, Mazda had almost no presence in fleet, as the focus was largely on private sales of small cars and MX-5 roadsters. Other European markets have looked to the UK for a lead – for example having corporate demonstrator fleets.

Germany remains a strong market for Mazda – in the past Mazda has been the leading Japanese brand in Germany, and the emphasis on SKYACTIV is playing well in the country – CX-5 has sold very well there.

Overseas plant expansion

It might make good financial sense in the short term for Mazda to concentrate on exporting cars from Japan, but the weakness of the yen is unlikely to continue indefinitely. The weaker the yen, the more money Japanese companies make when they convert overseas profits back into their home currency, and products exported from Japan can be sold at more competitive prices abroad. Japanese carmakers with a big domestic production base are more exposed to this move than those who make most of their cars outside Japan.

Mazda chief executive officer Takashi Yamanouchi said the currency situation would not change Mazda’s plans to build more cars in foreign markets where demand is strong, a plan that was set in motion at a time when the Yen was much stronger, thus making overseas production much more favourable.

He said: ‘Mazda is establishing global production footprints in order to achieve our goal of an annual global sales volume of 1.7 million units by fiscal year ending March 2016.

‘We will absolutely maintain our structural reform, even if the strong Yen is being corrected. We do not want to repeat the struggles from recent years.’

Mazda has booked a net loss for the past four years since the global financial crisis in 2008, though looks likely to turn in a profit in the 2012-13 fiscal year.

Mexico

Mazda may have ceased production in the US, but it has not abandoned North America as a manufacturing base. Instead, it is building a plant in Mexico, part of the North American Free Trade Area (NAFTA) but with lower labour costs than across the border in America.

The Mazda Motor Manufacturing de Mexico plant in Salamanca city, Guanajuato state, is scheduled to start production within the fiscal year ending March 2014, initially producing the sub-compact Mazda2 model, followed by the Mazda3. And it has recently been announced that the plant will also produce a Toyota-brand vehicle, to be based on the Mazda2, for sale mainly in North America.

Toyota will invest in production equipment and development costs related to the Toyota vehicle and also an appropriate portion of costs related to the plant’s production capacity increase. The sub-compact Toyota-brand vehicle will start production around the summer of 2015 at a rate of 50,000 units per year.

Through the agreement, TMC aims to strengthen its North American vehicle line-up, while Mazda aims to increase production efficiency and contribute to its profitability. The Salamanca city plant will have an annual production capacity of 140,000 units and will employ around 3,000 workers.

Russia

Mazda Motor Corporation last year established a 50:50 joint venture with Russian automaker OJSC Sollers at Vladivostok, in Russia’s Far East; the first auto manufacturing venture in that part of Russia. The opening ceremony of Mazda Sollers Manufacturing Rus was attended by Russian President Vladimir Putin as well as senior Mazda and Sollers executives.

Mazda’s CEO, Takashi Yamanouchi, said: ‘The Russian automotive industry is rapidly growing with annual sales closing in on three million units. Mazda is at the vanguard of the auto industry in establishing a plant at Vladivostok, and it is expected to grow as an important hub, especially within the East Asian Economic group. Through this joint venture, Mazda aims not only to ensure its own further growth in this market, but also to make a contribution to the future of this industry in Russia.’

Operations began at the company’s production facility in October 2012 and in the beginning will be limited to CKD assembly with an annual production capacity of 50,000 units. Moving forward, Mazda aims to establish a body shop and paint shop, and increase capacity to 100,000 units. Mazda will produce two models in the new facility, the CX-5 from the start of production and later, the all-new Mazda6. A total of €202m has been invested, and the plant will eventually employ 3,000 workers.

China

A major outcome of Mazda’s independence from Ford has been a major restructure of the automakers’ joint ventures in China involving Changan Automobile Group.

The three-way joint venture ended recently following a lengthy procedure that began in 2010, when Ford reduced its Mazda shareholding to 3.5%. The restructuring plan for Changan Ford Mazda Automobile (CFMA) has now received final approval from the Chinese government.

Under the old structure, Ford held 35% of CFMA and Mazda 15%. Under the new structure, CFMA will be restructured into two separate joint ventures, Changan Mazda Automobile (Changan Mazda) and Changan Ford Automobile. The partnership between Ford and Changan will retain the Chongqing plants from the former three-way venture, as well as a plant under construction in Hangzhou.

Changan Mazda, a 50:50 joint venture, has been incorporated in Nanjing and will assume all of CFMA’s Mazda-related business, including vehicle development, manufacturing, marketing and sales in China. Changan Mazda will manufacture Demio (Mazda2) and Axela (Mazda3) subcompacts. It also intends to make the CX-5 SUV in China, starting in 2013.

Ford’s Fiesta model will continue to be built at the Nanjing plant in the short term, as Mazda sales in China have been hit by a wave of anti-Japanese sentiment in the country. Mazda had to reduce its China sales target for 2012 from 250,000 units to 185,000 units.

Mazda China CEO, Noriaki Yamada, is optimistic that Chinese sales will recover in the first quarter of 2013. ‘We hope that demand for Japanese vehicles in China will recover to normal levels by next April,’ he said at the recent Guangzhou motor show.

Changan Mazda is to build an R&D centre at Nanjing in 2016 – having such a facility is one of the conditions of the split. The centre will aim to develop fuel-efficient vehicles for the local market as well as electric vehicles and other alternative-fuel models. Mazda and Changan will invest around €59.8m in the R&D centre.

Brazil

As well as its new plant in Mexico, Mazda could open a second manufacturing base in Latin America. It is considering assembling vehicles in Brazil to sidestep import restrictions due from 2015.

‘We are in talks with several Brazilian automakers on possible local knockdown production,’ said Takashi Yamanouchi at last year’s Los Angeles Auto Show.

Mazda had originally planned to use the 140,000-capacity Mexico plant, due on stream in 2014, to export to both North and Latin America, as Mexico has a free trade agreement with Brazil. But the Brazilian government has decided to restrict imports of finished vehicles, in a bid to protect the domestic car industry, which are forecast to reach four million units this year.

Elsewhere in South America, Mazdas are assembled in Colombia at a CKD plant in Bogota, which has a capacity of 15,000 units a year.

Malaysia

Mazda Motor Corporation and Bermaz Motor Sdn Bhd (Bermaz) have established a joint venture company in Malaysia called Mazda Malaysia Sdn Bhd, based at Shah Alam, Selangor. Mazda owns 70% of the JV and Bermaz has 30%.

Mazda Malaysia’s main role is to oversee production and distribution of locally assembled models by Mazda’s local distributor Bermaz. Malaysian Mazda3 assembly form CKD kits started in January 2011, and the Mazda CX-5 SUV will be assembled at the Inokom plant in the Malaysian state of Kedah starting from spring 2013. Production target is 3,000 units of each model.

Thailand

Thailand is already well established as Mazda’s biggest overseas production base. The AutoAlliance Thailand (AAT) plant, a continuing JV with Ford, builds the BT-50 pick-up for global markets, alongside the similar Ford Ranger. Mazda3 cars are also produced, and total AAT capacity is 275,000 units. Last year Mazda announced it would construct a transmission plant with an annual production capacity of 400,000 units in the Chonburi Province at an investment of €210m.

Mazda has decided to establish the wholly-owned Mazda Powertrain Manufacturing Thailand (MPMT) plant in order to respond to increasing demand for models featuring SKYACTIV technology and to strengthen its global production footprint. Operations at the new plant will commence in 2015 and it will employ 500 workers.

The transmission plant will be located approximately 5km north of AAT and will supply automatic transmissions for models produced at AAT and other Mazda production facilities around the world. The Hofu Plant in Japan will remain the chief production facility for transmissions, but the second plant is designed to enable Mazda to cope with the rapidly increasing demand for SKYACTIV models.