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Home / US Business / Mazda goes from doing its best to doing what it takes (OTCMKTS: MZDAF)

Mazda goes from doing its best to doing what it takes (OTCMKTS: MZDAF)



NOTE: A version of this article was first published on June 2, 2020 or on the My Seeking Alpha Marketplace website.

If there was a headline from the automotive world that stood out on June 2, 2020, this was: Mazda (OTCPK: MZDAY) reported sales of unit sales in the United States in May 2020, down just 1% (!) From the year for.

Here are US unit sales results from May, from automakers who still report monthly results:

Toyota: -26%

Honda -27%

Hyundai: -14%

Kia: -24% [19659003] Subaru: -19%

Mazda: -1%

Data Sources: Sales decline easily at Toyota, Honda, Hyundai, Subaru and each company's press relations website

Yes, you read correctly: Mazda was only 1% down. In the middle of turning off the virus. How did Mazda pull it off? To get there, we must take the shortest detour to what a famous person said at another moment of the world's crisis, 80 years ago.

“It is not enough that we do our best; sometimes we have to do what it takes. ”

A quote by Winston S. Churchill

– Winston Churchill

Let me explain. In 2020, this applies very Mazda (OTCPK: MZDAF). 2018 had been a disappointing year for Mazda in the US, but the company had reason for optimism to go into mid-2019. Why? Because the first Mazda on its all-new architecture, the Mazda 3, was launched in the United States around March 2019. It should turn Mazda's disappointing US sales figures and begin closer to the midpoint of 2019.

Let's take a look at the Mazda 3 sales figures: [19659017] Mazda 3

2018

2017

change

TOTAL

64638

75018

-14%

Mazda 3

2019

2018

Jan

4596

5825

-21%

February

4610

6070

-24%

Mar [19659018] 6009

7760

-23 %

April

4351

4725

-8%

May

4967

5983

-17% [19659021] June

3990

5433 [19659018] -27%

July

3651

5266

-31%

August

4825

5597

– 14%

September

3507 [19659018] 4635

-24%

October

3481

4093

-15% [1 9659021] November

3579

3974

-10%

December

3175

5277

-40%

TOTAL

50 741

64 638

-21%

Mazda 3

2020

2019

Jan

2496

4596

-46%

Feb

3759

4610

– 18%

Mar

1863

6009

-69%

April

1492

4351

-66 %

May

3368

4967

-32%

TOTAL

12978

24533

-47%

Data Source: Sales News Archives | Inside Mazda

As you can see in the table above, it couldn't get any worse, at least as a guide. Mazda 3 sales were down 14% in 2018, 21% in 2019 and 47% so far in 2020. US unit sales have been down every single month in 2019 and 2020 for Mazda 3.

That's exactly the opposite of what's going to happen when a new generation of a vehicle is introduced. Sales of the old generation had been discontinued due to age and reduced inventory levels, but then the new generation should have lifted demand and fresh inventories, starting in the second quarter of 2019.

Still, there was only continued decline in the second half of 2019 too. The all-new Mazda 3 showed very little, if any, statistical evidence of a slowdown.

We obviously know part of the explanation: Mazda 3 comes in two body styles: Hatchback and sedan. They are not "SUVs" or "crossovers", which means they are sailing against the decades-long headwind in the US light vehicle market, which will have SUVs, crossovers and pickups.

But what about the Mazda 3 itself? [19659113] I was one of the first to drive the all-new Mazda 3 in March 2019. As with all Mazdas in recent years, it has the best exterior design in the industry. This time, the interior also made a big leap forward.

Mazda's interior jumped forward with the CX-9 released in May 2016. It raised the level of materials used, and of course as a larger vehicle more property to play with. However, the CX-9 was also full of glossy chrome trim pieces that reflected sunlight and pierced a hole in my eyes. I liked almost everything else about the CX-9, except this one.

In contrast, the CX-5, which was 56% of Mazda's US unit sales for 2019, has almost none of the reflective chrome (the steering wheel logo is a big exception) in the cockpit. However, the CX-5 interior is also less advanced in general, compared to the CX-9.

In the Mazda 3, the exclusive interior of the much larger CX-9 got married – even the bar lifted a few notches in some areas – but without most of the reflective chrome, just like the CX-5. I don't think there's any interior that's so elegant in this Mazda 3 price range. The closest competitor may be the Nissan Sentra in 2020, which I know will surprise many – but it has a superb interior in the highest finishes.

Mazda 3 also ran really well, with just enough power to be fun, but no more. More importantly, the Mazda 3 had a very linear power delivery and natural feel calibration in general. In these areas, it is tied to the best in class, or the best outright.

In other words, to quote Winston Churchill, Mazda had done its best with the 3. It left nothing to be desired.

Nevertheless, Mazda 3 sales continued to fall throughout 2019. What do you do when you do your best is not enough?

Enter Mazda CX-30

The answer is that you do what it takes. What does it mean in the US auto industry in recent years? You take the best you can in a sedan / hatchback and you make a crossover / SUV version out of it. It's the Mazda CX-30, developed from the Mazda 3.

Mazda really needed this product, size and shape exactly like the CX-30. Mazda had the highest concentration of almost any global carmaker in size, in a single product, with the CX-5 accounting for 56% of US unit sales in 2019. Under the CX-5 was the tiny CX-3, designed for European and Asian preferences. The CX-3 is small in general, and exceptionally narrow for American taste: only 69.6 inches wide.

The CX-30, on the other hand, is large enough to fit a reasonable portion of America's smallest crossover SUV needs. It fits four adults comfortably, with seats for five, and a respectable amount of luggage. At 70.7 inches, it is over an inch wider than the CX-3. Combine it with the 61.7-inch height – one inch more than the CX-3 – and it opens up even more interior comfort. It totally feels like a "real car" with the expanded dimensions, especially for large American people.

I had only the slightest grip with the CX-30:

  1. The driver's seat cushion was a little shorter than I would have liked.

  2. The control of the infotainment system was difficult to use. When you play (audio) content from YouTube and you want to increase the volume, it seems to skip to the next track instead. I must have done something wrong. At least it should have been intuitive.

Overall, the Mazda CX-30 was fantastic in almost every way, but how has it sold since arriving in the US at the end of November 2019? I want to skip the November-December 2019 numbers because they were small in the disaster phase and tried to get enough cars to all Mazda dealers around the US, but here's how sales looked so far in 2020:

Mazda CX-30

2020

2019

Jan

2368

0

Feb

3754

0

Mar

2242

0 [19659021] April

1483

0

May

3538

0

Data source: Sales News Archives | Inside Mazda

As you can see in the table above, we have no comparisons between years and years yet, given that the CX-30 became available only at the end of 2019. In isolation, these numbers do not tell us very much, especially in a big car market like USA

What is really interesting is when you add the CX-30 numbers to the Mazda 3 numbers:

Mazda 3 + CX30

2020

2019

change

Jan

4864

4596

6%

February

7513

4610

63%

Mar

4105

6009

-32% [19659021] April

2975

4351

-32%

May

6906

4967

39%

TOTAL

26363 [19659018] 24533

7 %

Data Source: Sales News Archives | Inside Mazda

As you can see in the table above, when you combine the Mazda 3 US unit sales figures with the CX-30 sales figures, sales are actually up 7% so far in 2020. March and April were down 32% each, but they very strong performance in January, February and May was even greater.

Conclusion: Mazda went from doing her best to doing what was needed

Winston Churchill was right: Sometimes it's not enough to do your best. Sometimes you have to do what it takes. With Mazda 3, Mazda did its best. But that didn't help sales as it continued to decline.

Then came the CX-30. As a crossover SUV, it is not as pretty or elegant as the sedan and combination. But that was what was required. Combined unit sales from Mazda 3 and CX-30 in 2020 are up 7% despite virus shutdowns.

Sometimes you have to do what it takes. With the CX-30, Mazda did just that.

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Disclosure: I am / we are short TSLA. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (other than Seeking Alpha). I have no business relationship with any stock company mentioned in this article.

Additional Information: At the time of submitting this article for publication, the author was briefly TSLA. However, positions can be changed at any time. The author regularly attends press conferences, new vehicle launches and the like, which hosts most major automakers. Mazda hosts product intros.

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