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Hell yes Mazda can help Ford - that's what the Fusion is all about!
Of course in the first place, Ford helped Mazda. Turnabout is fair play.


Mazda, Once on the Brink, Now Can Offer Ford Help: Doron Levin

Aug. 16 (Bloomberg) -- Mazda Motor Corp. once longed to be counted among the first tier of Japanese automakers and almost collapsed as a result. Now that it's healthy again, Mazda is helping its biggest shareholder, Ford Motor Co.

Ford, which returned to profit the past two years after losses in 2001 and 2002, could use some help: it earns most of its money by financing cars, not making them. The two automakers share much of their engineering and design work, a relationship that may give Ford a better chance of competing in the U.S.

Mazda's revival can be seen in the kinds of cars it's bringing out. This summer the No. 4 Japanese automaker is introducing the Mazda5, a slick ``multi-activity'' vehicle, to the U.S. market. Mazda5 is based on architecture jointly developed by Ford, Mazda and Swedish automaker Volvo, a Ford subsidiary.

Likewise, Ford in October will start selling a line of cars based on the mid-sized Mazda6, developed by Mazda in Japan, aimed at halting the market-share decline at the No. 2 U.S. automaker.

Moneymaker Mazda

Having scaled back its ambitions, Mazda now earns a steady if unremarkable profit. That's good news for Ford at a time when its debt has been rated as ``junk'' and some are skeptical of its survival. Ford as of July had 19 percent of the U.S. market, Mazda 1.5 percent.

The Hiroshima, Japan-based automaker -- one-third owned by Ford -- posted record profit of 45.7 billion yen ($425.8 million) in the fiscal year ended March 31. Its shares are up 35 percent this year. Ford had 2004 net income of $3.5 billion, with 83 percent of it coming from lending money. Its shares have skidded 31 percent this year.

Mazda unit sales this year are down 2.6 percent in the U.S. through July, mostly due to flagging sales of its aging MPV minivan. The Mazda5 could help stem the decline.

The new model is one of the few small cars with sliding doors on both sides. It resembles a small minivan, though Mazda marketers want to avoid such a designation, freighted as it is with images of drab couples ferrying frenetic kids. Mazda plans to sell 15,000 to 20,000 of its new model in the U.S.

Common Designs

A six-passenger van with three rows of seats, Mazda5 was developed from a common architecture also used on the Mazda3 sedan, the Ford Focus (European version), and the Volvo S40 sedan and V50 wagon.

Ford, in turn, has a great deal riding on the new Mazda- based midsize cars, of which there might be nine or 10 eventually, including the Ford Fusion, Lincoln Zephyr and Mercury Milan. They closely resemble the Mazda6 mechanically, though the styling is different. A turnaround at Ford may hinge on their success.

``It's pretty clear that there's good engineering going on at Mazda and Ford is right to take advantage of it,'' said Csaba Csere, editor-in-chief of Car and Driver magazine and a former Ford engineer.

With the soaring costs of developing new vehicles and technologies, and the rising penalty for failure, many automakers have sought partnerships to hedge risks and to take advantage of competitors' strengths. By sharing engineering and design costs for several models, each model can reach break-even at a lower sales volume.

Clones Needn't Apply

So far, Ford, Mazda and Volvo have avoided the perception among buyers that the carmakers are selling clones. The same can't be said for Jaguar, another Ford unit. The U.K. carmaker's less-expensive models have been seen by some buyers as gussied-up Ford Mondeos, a mid-sized sedan sold in Europe.

Examples of rancor in international auto alliances are many. A five-year accord between General Motors Corp. and Fiat SpA to share costs, designs and technology in Europe ended in a huff in February. The two automakers clashed over whether GM was bound by a put option it had granted that could have forced it to buy all of the Italian conglomerate's troubled automotive operations.

GM originally bought a stake in Fiat Auto for $2.4 billion. It paid another $2 billion to exit, voiding its obligation to buy Fiat Auto and assume $10 billion of its debt.

Ford first joined forces with Mazda in 1970, hiring the Japanese automaker to design its Ford Courier compact pickup truck. Ford bought a 24 percent stake in Mazda 1979, before anyone dreamed that Japanese vehicles could challenge U.S. makes in quality.

Luxury Trouble

Mazda got into trouble in the early 1990s when it tried to break in to the U.S. luxury segment, a market already crowded with Cadillacs, Lexuses and BMWs. The world wasn't ready for Amati, the name Mazda chose for the venture, which eventually was scrapped.

Mazda ``was in bad shape,'' said Mark Schirmer, a Ford spokesman. It ``was trying to chase down Nissan and Toyota. They were heavily in debt.''

Ford came to the rescue in 1996, increasing its stake to 33.4 percent, gaining a controlling interest. Ford began pushing Mazda to restructure, cut costs and drop more grandiose ideas about expansion.

At Ford's prodding, in April 2000 the automaker posted a write-off of 26.9 billion yen ($254 million) for the fiscal year ended April 1 to cover the cost of closing four money-losing Japanese sales operations.

The cost-cutting left Mazda smaller and more efficient, letting it develop new models more quickly. Ford now is undertaking painful cost-cutting measures, including firings and what many expect will be the shutdown of more U.S. factories.

Mazda has introduced ``Zoom-zoom'' as its advertising tagline, announcing its intention to make sportiness its trademark. Whether the utilitarian Mazda5 can live up to that ideal remains to be seen.

It hasn't always been easy to tell which automaker needed the other more. Such balance can be the glue that ensures commitment in a relationship.

To contact the writer of this column:
Doron Levin in Southfield, Michigan at [email protected].
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