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Mazda: A new trajectory after having regained independence from Ford again?
Submitted by Holger Bungsche, School for International Studies, Kwansei Gakuin University on 30 mars 2015 - 20:49
Type de publication:Conference Paper
Source:Gerpisa colloquium, Paris (2015)
Mots-clés:Japanese automobile industry, Mazda, trajectory
Mazda is in many respects a very typical Japanese car manufacturer. Deeply rooted in the prefecture of Hiroshima in Western Japan, Mazda established its business in 1920, first producing various cork products before diversifying into the auto industry, where since the 1930s the company grew into one of the largest manufacturers of three-wheel small trucks. As a result of the People’s Car Initiative of the MITI, Mazda in 1960 entered the passenger car industry with the Madza R 360.
Like other Japanese manufacturers as well, Mazda traditionally has always been very much focused on engineering and production, less on design, marketing, sales or brand management. Mazda, however, never succeeded to grow into a multinational company like for instance Toyota or Nissan, which, on the basis of a strong position in the home market, expanded their business abroad. In fact, with the exception of the local Hiroshima region, Mazda never held a strong market position in Japan. Other than Honda, however, which from a very early stage in company history established production sites in foreign countries, Mazda remained a local manufacturer developing its international business model on the basis of extensive exports.
Therefore Mazda’s trajectory path is very specific and different from other Japanese manufacturers. When looking at this specific Mazda trajectory, there are three constants that are determining the development of the company since its beginnings.
This is first and foremost, a permanent threat to loose its independence, because over long periods of time Mazda feared to be merged with or taken over by another company. This threat indeed continues since the 1950s when the MITI intended to concentrate the Japanese auto industry on about 3 companies and merge Toyota with Mazda, as Prince merged with Nissan. In order to stay independent, Mazda at some time in company history accepted extremely high risks radically changing company strategy several times like or instance in the 1960s as Mazda bet the future of the company on the successful development of the rotary engine technology. Secondly, Mazda’s business has always been considerably more volatile than the other manufacturers’ ones. This is at least partially attributable to Mazda’s relatively weak position in the Japanese market and its high dependence on exports, which made the company especially vulnerable to macroeconomic changes at home and abroad. And thirdly, because of the two above mentioned factors and its relatively small size Mazda became more and more dependent on outside capital, first from the Sumitomo Bank since the end of the 1960s and then from Ford since the late 1970s, which restricted especially its ability to pursue an independent and consistent product and globalization strategy. So the dependence on outside capital also led to an often rather inconsistent product and brand strategy.
Mazda’s history therefore can be divided in five stages. First the development stage from the company’s foundation in 1920 until the mid 1950s is the time where Mazda was mainly manufacturing robust, but technologically simple three wheel trucks. In the second development stage between the mid 1950s and 1973, Mazda first shifted its focus to the passenger car market and secondly put all its energy in developing the rotary engine in order to gain technological leadership and by this evade to be merged with Toyota, which presumably were the plans of the MITI at that time. The third stage is marked by the oil crisis and the almost complete collapse of the market for rotary engine cars, which brought Mazda increasingly under control of the Sumitomo bank. During that time Mazda more and more lost ground with regard to the other Japanese car manufacturers and finally, the fourth stage, Mazda came under full control of Ford as the company suffered much more from the macro-economic changes caused by the burst of the Japanese bubble economy in the 1990s and was facing the threat of bankruptcy. Increasing its share to 33.4%, Ford took over management of Mazda in 1996.
Under Ford leadership Mazda underwent a profound restructuring process, during which many old management procedures like decision making, evaluation, seniority principle etc. were abolished. Mazda accepted the Ford leadership on the basis that there were only two alternatives ‘Change or Die’, a slogan that became almost proverb at Mazda. (See also the chapter written by Daniel Arturo Heller in ‘The Second Automobile Revolution’).
In 2008, the financial crisis hit the American car manufactures that were already not in good shape before the crisis especially hard. GM and Chrysler were restructured under the regulations of chapter 11. Ford survived without government help, but sold almost its entire financial investments it held in Jaguar, Land Rover, Volvo and Mazda. According to Alan Mullaly, Ford CEO at that time, the financial crisis provided the opportunity to pursue a ‘One Ford Strategy’ and shares the company held in Mazda, which would have been certainly been a very disputed issue within Ford under different circumstances.
Interestingly, all former daughter companies of Ford experienced an unbelievable revival after they got independent from Ford. This holds especially true for Mazda.
In 2011 Mazda revealed a series of engine injection, transmission, and light weight body technologies under the brand name ‘SkyActive technology’ that were subsequently built into the new generation of the Mazda’s model line. Simultaneously, all new models received a distinctive, modern, consistent design that reminds more of European car manufacturers than of the often inconsistent and not very courageous mainstream design of Japanese manufacturers. These technological and design innovations were accompanied by a considerable upgrading of the interior fittings of the cars, giving them even a taste of premium cars.
Based on previous interviews, a profound review of Japanese newspaper, trade magazines and scientific articles the paper will give an overview over the trajectory of Mazda, which has not been in the focus of GERPISA so far. The main part of the paper then will concentrate on the company development of Mazda after having regained independence from Ford again.