Mazda to Move Upmarket, Reduce Incentives

Posted on: November 27th, 2012 by Daniel Sherman

Mazda intends to take on a more upscale brand image, internally dubbed “Japan Premium,” according to CEO Takashi Yamanouchi.  Short of all-out luxury like Mazda’s 1992 stillborn Amati marque, Mazda will usurp a premium niche within the mainstream sector.

The shift toward premium results from an epiphany about the company’s position in the global auto market as an independent automaker with under 2% market share.  In March, the strong yen and mounting global losses forced Mazda North American Operations to downsize.  They hope that this change will help to push over 400,000 units in the US market, a 40% upgrade over forecasted 2012 levels, come 2016.

A key factor in the brand shift—and a potential challenge to achieving those ambitious sales targets—is a stronger focus on residual values.  Mazda will de-emphasize visible incentives, lending greater focus on the product.  If all goes smoothly, the upshot is organic growth.

Residual value is perhaps the most salient available indicator of automotive brand health.  We at ALG, the industry benchmark provider of residual values, applaud Mazda’s goals, recognizing that incentive reduction is directly correlated to higher residual values.

A revamped product portfolio, led by the 2013 CX-5 and 2014 Mazda6, will lead the charge into a luxury niche within the mainstream sector.  SKYACTIV platforms and powertrains promise to increase fuel economy without dampening sportiness.  Kodo design language, active safety technologies, improved retail customer service, and SKYACTIV turbodiesel availability will deliver the pseudo-luxury message.

If priced and branded properly, availability of torquey diesel powertrains can boost residual values. In some cases, ALG has discovered that Volkswagen’s TDIs retain over 100% of their MSRP premiums over equivalent gas-powered variants.

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[Source: Autonews]

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