Next Midsize Mazda Won't Be U.S. BuiltBy Bill Visnic June 6, 2011
After news reports from Japan late last week said Mazda Motor Corp. would discontinue production of its Mazda6 midsize sedan in the U.S., the company confirmed today that the next generation of the Mazda6 will be built at its plant in Hofu, Japan leaving open the possibility that Mazda will pull out entirely from its 50-50 joint-venture assembly plant with Ford Motor Co. at Auto Alliance International (AAI) in Flat Rock, MI.
In a statement today to announce the North American version of its next-generation midsize sedan will be built in Japan, Mazda did not shut the door on future production at the Flat Rock site, saying, Mazda is conducting various studies with Ford on the future of AAI and will announce details at the appropriate time. But the ongoing strength of the yen has mitigated against profiting from exchange rates, while Mazda6 sales volumes also have slipped markedly.
Ford also has signaled it is considering moving out of the Flat Rock site, which currently produces the Mustang ponycar line alongside the Mazda6. Through the economic recession and the current stilted recovery, Ford has had trouble building volumes for the Mustang; last summer, the company cut production from two shifts to one and reassigned 900 workers to other Ford assembly plants.
Our intention is to transfer production of our next C/D (size)-car for North America from AAI and consolidate it at Hofu in order to improve production and investment efficiencies and optimize our business, said Takashi Yamanouchi, representative director and chairman of the board, president and CEO of Mazda Motor Corporation. The decision was made after carefully assessing all risks and opportunities, including global needs, changing demand in North America, and exchange rate exposure. Going forward, Mazda will strive to maintain and grow our business in America.
Tough Segment To Crack
For Mazda, meanwhile, the writing has been on the Flat Rock wall for some time. Production of the Mazda6 midsize sedan was initiated at the site in 2002 and its been a bumpy ride most of the way for a perpetual niche brand battling popular, deeply-entrenched models such as the Toyota Camry and Honda Accord. Mazdas strengths typically have been in the sportier market segments, its image being built largely on low-volume sportscars such as the MX-5 Miata and RX nameplate, while its best-selling model, the Mazda3 compact car, accounts for nearly half of the companys annual sales in the U.S.
For the Mazda6, sales have been inconsistent but never much of a factor in the giant U.S. midsize sedan segment. In January, 2008, for example, data from Edmunds.com indicate a peak share of the U.S. midsize-sedan segment of 3.76 percent. But from there its been mostly downhill: last month, the Mazda6 accounted for just 0.96 percent of the segments sales and the sedans True Cost of Incentives figure was $2,002 and incentives have run as high as $3,152 this year, although the figure has declined steadily since January.
A redesign for the 2009 model year did the Mazda6 no particular favors, as the car was enlarged and appeared so, to the distress of many Mazda loyalists who prized the companys reputation for developing lithe and nimble alternatives to mass-market competitors. Only three times after October, 2009, was the Mazda6s market share to exceed 2 percent.
Mazdas statement did not, so far, indicate when Mazda6 production will cease at the Michigan joint-venture plant, saying only, The current North American Mazda6 will continue to be built at AAI until the end of its current cycle plan, meaning U.S. production of the current Mazda6 could stop by sometime next summer.