Want To Fix Ford? Look At Mazda
As the first Mazda CX-7s begin showing up in driveways and parking lots this month, and visitors to the New York International Auto Show get a gander at the CX-9, there are bound to be quips about how the student is more talented than the teacher.
Mazda, which is 37%-owned by Ford Motor Co. (F), not only managed to create two crossover sport-utility vehicles that make parent company Ford's own forthcoming crossover, the Edge, look downright dowdy. But it's showing that the more it acts independently of Ford, the better its results. No wonder Ford President Mark Fields, who ran Mazda for five years starting in the late 1990s, and is now leading Ford's current turnaround strategy, calls Mazda "a model for what we have to do at Ford."
A STRING OF HITS.
Yes, Mazda's sales slipped 2% in the U.S. last year -- but that's because it was waiting for new product developed during the Fields years. Along with the critically praised CX-7, the auto maker is launching the bigger CX-9 and the MazdaSpeed3 this year. The Japanese company, long overshadowed by Toyota, Nissan, and Honda, has also won applause for its Miata roadster, Mazda6 mid-sized sedan, Mazda3 sub-compact, and Mazda5 wagon -- all of which were launched in recent months.
The CX-9, which will go on sale early next year, is built directly off the Mazda6 platform and architecture (which Ford also used for the Edge). The biggest difference between it and the CX-7 is the longer wheelbase, which accommodates a third row of seating. Indeed, the SUV is bigger than Mazda's MPV minivan, which has long been the runt in that category. The CX-9 powered by a 3.5 liter V-6 engine. This SUV's ride and performance are very different from the shorter CX-7, which is powered by the same 2.3 liter turbocharged four-cylinder engine found in the MazdaSpeed6 sedan. Starting price is about $25,000.
What else does Mazda have going for it that Ford envies? Young people love the brand. According to auto consultancy Strategic Vision, 25% of Americans aged 18-25 would put Mazda on their shopping lists, up from 8% in 2000. "When a brand's appeal ripens with young customers," says Strategic Vision's Dan Gorrell, "it tends to affect how older, more monied car buyers feel toward the brand as well."
Ford's Fields points to two big lessons he's importing to Ford from Mazda: design and marketing. "The problem with some of our designs is that you wouldn't know it's a Ford unless it ran you over," says Fields. Though he is enthusiastic by necessity about Ford's new designs, he admits that the Edge and the strikingly similar Lincoln MKX were developed at a time, when "marketing and design weren't even talking to each other." A similar problem existed at Mazda until Fields restructured it. The CX-7, says marketing and design consultant Dennis Keene, "does an excellent job of communicating speed and performance in a segment not known for it, and looks totally of a piece with the other new Mazdas."
Mazda could easily have developed the CX-7 jointly with Ford Edge. After all, the Mazda6 serves as the underpinning for the Ford Fusion, Mercury Milan, and Lincoln Zephyr sedans. But with the CX-7, Mazda went solo. "This one's all ours," says a pleased and slightly defiant Mazda North America President Jim O'Sullivan. If O'Sullivan is quick to separate the CX-7 from the Edge, it's because the only crossover Mazda has had for the past several years has been the Tribute, a design snore and a clone of the Ford Escape thrust upon the auto maker by Ford in the late 1990s.
STAYING ON ZOOM.
Marketing is the other lesson Fields is importing from Mazda. The company has consistently marketed "Zoom Zoom" as its brand mantra, from ads and dealership signage to the "on-hold" music at its offices, since 1998. It was Fields who convinced markets outside the U.S. to adopt the same creative strategy hatched by Southfield (Mich.) ad agency Doner. "Get it right and keep feeding it for years, not months," says Fields about his decision to prevent the revolving door of marketing executives at Ford, Lincoln, and Mercury from changing brand strategies and ad campaigns, which he says badly muddied consumers' notions of what each brand stands for.
And Mazda isn't just a branding and design playbook. After six years of laying groundwork, it's finally posting solid financial results. For the year ended Mar. 31, Mazda lifted its operating profit forecast for the second time in three months, to $993 million, 42% higher than the previous year. A weakening Japanese yen has helped, but hot models and lower incentive spending are big factors. "The yen has helped, but it's not all currency," says auto industry consultant Joe Phillippi. Global sales for the year will hit 1.152 million vehicles, up 4.3% from the previous year. Operating margin is 4.1%, up from 3.1%. And its shares have been trading at their highest prices since 1998.
Just five years ago, Mazda was seen as Ford's basket case, an investment that kept on taking. Now, it makes more money on its auto operations than Ford. And it supplies the struggling Dearborn auto maker with some of its most valuable engineering, and a comeback game plan. It appears that the former student has taken over the class.