MAZDA: ROTARY ENGINES, SAFE CARS AND SUPER FUEL-EFFICIENCY

MAZDA

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Mazda MX5
Mazda is the No. 5 Japanese carmaker. Based in Hiroshima and founded by Matsuda family, it began production in 1931 and produced it 40 millionth vehicle in July 2007. It has about 9 percent market share in Japan and a presence in the United States.

Mazda is Japan's fifth-largest car maker Based in Hiroshima, it first became widely known in the United States after it introduced it the world’s first rotary engine cars. Mazda made its first rotary engine car in 1967 and was the only automaker in the world that still made rotary engine vehicles in 2012, when production of them stopped. Such engines have fewer moving parts and are quieter than comparable piston engines but are more expensive to manufacture and consume more fuel. [Ibid]

Mazda is probably known best launching its innovative but gas-guzzling rotary engine in the United States around the same time the Energy Crisis hit in the 1970s. It got in over its head and posted huge losses when it tried to enter the U.S. luxury car market. Ford came to its rescue and pressured Mazda to restructure.

For a long time Ford owned a 34 percent stake of Mazda. The partnership began in 1979 when Ford purchased 25 percent of Mazda for $140 million to gain access to Japanese markets and Mazda technology but mostly ignored the company itself. Ford took a greater role in Mazda when it spent $484 million to increase its stake to 33.4 percent. Mazda engineers designed the Ford Couriers. In November 2008, Ford said it would reduce its stake in Mazda from 33.3 percent to 13 percent to raise cash during the global financial crisis. Mazda bought back 96.8 million shares at ¥184 per share.

When Scottish-born Henry Wallace took over Mazda in 1997 he became the first foreigner to run a major Japanese company.

Mazda Business

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Mazda hydrogen rotary engine
Over the years Mazda has mostly lost money. In fiscal 2011, Mazda posted a consolidated after-tax loss for the fourth consecutive year. Mazda has struggled with a strong yen, which makes its cars less competitive overseas. It builds most of its cars in Japan and exports almost 80 percent of that output. Mazda sales rose in the United States in 2011 rose 9.1 percent to 250,426 units.

Mazda lost about $700 million in fiscal 2010-2011 due to damage from the earthquake and tsunami in 2011 and other factors. Production in terms of domestic output fell by 54 percent in March 2011, when the earthquake and tsunami occurred. Mazda lost about $70 million in 2009-2010.

In 2003, it announced healthy profits, a reasonable balance sheet and line of cars that was selling well. In fiscal 2004, Mazda posted a record profit of $425.8 million. Its stock rose 35 percent even though sales dropped 1.2 percent to 231,677 vehicles in Japan. Mazda lost $715 million in fiscal 2008-2009 during the global financial crisis.

In November 2010, Ford said it would reduce its stake in Mazda from 11 percent to 3.5 percent. In June 2011, Mazda said it would end production at its unprofitable U.S. venture with Ford. Ford bought 25 percent of Mazda in 1979, raising it to 33.4 percent in 1996. But Ford began cutting ties in 2008, and last year lowered its ownership to 3.5 percent.

Mazda has plans to open a car plant in Mexico in late 2013 that will churn out 100,000 small and family cars a year mainly for sale in Mexico and Brazil.

In August 2010, Mazda recalled 329,000 cars in the United States, Canada and Taiwan over possible power steering failure. In March 2011, Mazda 65,000 cars were recalled in North America after spider webs were discovered in some vents, The company worried that spiders could weave webs in a vent connected to the fuel tank system and clog the tank’s ventilation system, creating a fire risk.

Mazda’s Improvement Efforts Overshadowed by High Yen

In December 2011, the Yomiuri Shimbun reported: “There is handmade equipment to automatically fasten engine bolts at Mazda Motor Corp.'s engine manufacturing plant in Hiroshima. An electric screwdriver moves to three positions in succession, driven by the power that propels the production line. Devised by Mazda employees and produced for just 70,000 yen, the device has cut energy costs by about 5 million yen a year. Mazda has been putting a great deal of effort into its "karakuri kaizen" campaign, which seeks to make production more efficient by collecting and introducing innovative ideas from Mazda employees. Karakuri are traditional mechanical dolls that move without power, while kaizen means improvement. [Source: Yomiuri Shimbun, December 6, 2011]

“Plant manager Junichi Muroi said emphatically, "Racking our brains could improve our technical skills on the production line." Such efforts have combined to reduce Mazda's costs by 11.2 billion yen in the business year ended in March. However, 80 percent of Mazda's production is for export. Therefore, if the yen rises by 1 yen against the U.S. dollar, it will wipe out 2.5 billion yen in profit. In its midterm consolidated settlement of accounts ended in September, Mazda was the only company among the nation's top eight carmakers to suffer an after-tax loss. Mazda President Takashi Yamanouchi said, "Our perseverance has almost been exhausted.” [Ibid]

“Mazda has launched an attempt to review its car manufacturing from the bottom up. On engine processing lines, for example, 45 special machines for holing and scraping metal have been replaced by general-purpose machines, the same type as often seen in small factories. Investment was also cut by 60 percent by introducing an innovative idea for plant design that allowed different types of engines to be placed on the same line. [Ibid]

“Toyota Motor Corp. is a pioneer of the kaizen methodology for constant improvement. At a Toyota subsidiary's plant in Ohiramura, Miyagi Prefecture, car bodies are placed side by side as they move on the production line. This makes it possible to shorten the line by about 33 percent from the time when car bodies were placed end to end. After repeatedly reviewing the way car bodies run on the line, investment costs have been cut by 40 percent compared with conventional plants. [Ibid]

“Kohei Nakashima wrote in the Yomiuri Shimbun: “Mazda Motor Corp. began producing four different types of gasoline engines and one type of diesel engine on a single production line in January at its flagship plant in Hiroshima. The critical process of engine assembly differs greatly between types, and it has long been considered difficult to produce different engines on a single assembly line. However, the Hiroshima plant has succeeded in unifying the production line to adapt to different engines, according to a plant official in charge of the production line, with the company tackling the challenge from the design stage. The same production line is also capable of producing eight different vehicle bodies, ranging from the compact Demio to the MPV minivan. [Source: Kohei Nakashima, Yomiuri Shimbun, July 6, 2012]

Mazda and Fiat Form an Alliance

In May 2012, Mazda and Italian autmaker Fiat announced plans to form an alliance. Chang-Ran Kim of Reuters wrote: “Fiat has been especially vocal about looking for more automotive alliances, particularly with an Asian partner, after taking control of Chrysler to help it reach global sales of 6 million vehicles in 2014. Both Mazda and Fiat played down the possibility of an equity alliance, saying their non-binding memorandum of understanding did not involve such talks. The companies will, however, discuss further opportunities to cooperate in Europe, they said in a statement. Mazda's shares jumped as much as 4.7 percent at one point in Tokyo after Japanese public broadcaster NHK reported the tie-up plans before the market closed. Before the announcement, Mazda closed up 0.9 percent, giving up much of the gains in a broad sell-off of exporters as the dollar dipped against the yen. Shares in Fiat were down 0.7 percent in Milan. [Source: Chang-Ran Kim, Reuters, May 23, 2012]

“Mazda and Fiat have agreed in principle to develop and build two-seater sports cars for their respective Mazda and Alfa Romeo brands based on Mazda's MX-5 model, the companies said in a statement. The deal does not include a capital tie-up. Mazda is among the few automakers with no strategic capital alliance after Ford sold down its controlling one-third stake starting in 2008. After a nearly $2 billion share offering earlier this year, Ford's stake has fallen to a nominal 2 percent. Some analysts were sceptical the cooperation of this scale with Fiat would do much to fix Mazda's ills in the short-term. "The fundamental problem at Mazda is its currency exposure," JP Morgan auto analyst Kohei Takahashi said. "The tie-up with Fiat won't do anything to alleviate that.” [Ibid]

“Hideki Kishimoto wrote in the Yomiuri Shimbun: “Mazda Motor Corp. aims to prop up its European business through a tie-up with Fiat. Mazda plans to jointly develop and supply a new vehicle--based on technology from its MX-5 roadster sports car--to Fiat as early as 2015. Two types of cars, to be sold under the Mazda and Alfa Romeo brands, will be manufactured at Mazda's plant in Hiroshima. Alfa Romeo is under Fiat's umbrella. [Source: Hideki Kishimoto, Yomiuri Shimbun, May 25, 2012]

“The companies will use their own engines and designs for their respective cars. Mazda also plans to study possible cooperation with Fiat in environmental matters. The two automakers, which have experienced declining performance on weak European sales, aim to bolster business by joining forces. It is urgent for Mazda to return to profitability.U.S. auto giant Ford Motor Co.--formerly Mazda's largest shareholder--sold most of its shares in Mazda in 2010, which forced Mazda to work more independently and work toward various alliances with other automakers. The tie-up will likely help Mazda cut development costs and increase production volume at its plants. [Ibid]

“By taking on the production of Alfa Romeo cars--which enjoy some brand prestige--Mazda is seeking to improve its image. It also hopes to increase overseas sales through Fiat's sales network. Fiat also will benefit by cutting developing costs for sports cars, a shrinking market. Although Fiat is a huge manufacturer--it is Chrysler LLC's main shareholder--the Italian automaker has been suffering weak sales in Europe. The firm also got off to a late start in Asia and is likely looking to make inroads in the market using its tie-up with Mazda as a springboard. However, tie-ups solely in the production of sports cars have little effect on improving business due to the small market. "[Establishing an alliance to produce a sports car] is a key first step in our alliance strategy," Mazda President Takashi Yamanouchi said. [Ibid]

Mazda Goal: Fuel-Efficiency and Sportiness

Mazda does not have flashy green technologies in its lineup that its bigger Japanese rivals do “ such as the hybrids at Toyota Motor Corp. or electric vehicles at Nissan Motor Co. [Ibid]

“In December 2011, Kyodo reported: “Mazda President Takashi Yamanouchi said the company will focus on developing vehicles powered by fuel-efficient engines, a strategy contrasting with those of other major automakers involved in fierce competition over electric vehicles and hybrids."We want to be a brand loved by customers who like the pulse of engines," Yamanouchi said in a group interview, pledging Mazda will enhance its SKYACTIV technology to make fuel-efficient engines and transmissions. "The demand for electric vehicles is limited. Their market share would likely be about 5 percent even after 10 years," he said. [Source: Kyodo, December 3, 2011]

“Mazda is displayed vehicles powered by newly developed diesel engines at the 42nd Tokyo Motor Show in 2011 while many other carmakers are stressing electric vehicles in their presentations at the venue. Yamanouchi said diesel-powered vehicles will contribute to better balance the consumption of gasoline and light oil, both created through the process of crude refining, and has a "significant meaning from the standpoint of energy strategies" in Japan. Mazda launched vehicles powered by diesel engines in spring 2012. [Ibid]

Mazda Safety

In September 2011, Mazda’s anticollision system mounted on its Mazda3-brand vehicles was given a safety technology award at the Frankfurt Motor Show . The prize, dubbed the Euro NCAP Advanced award, established in 2010, is given for new safety technologies that are proactively developed and introduced by carmakers. [Source: Kyodo, August 26, 2011]

The 2011 award acknowledges Mazda’s safety feature, which warns drivers of a possible collision when changing lanes on expressways, as "one of the most outstanding new safety technologies," according to the company's statement. The Rear Vehicle Monitoring system, mounted on the vehicle known in Japan as the Axela, is designed to detect vehicles, including motorcycles, approaching from behind in adjacent lanes, even in bad weather.

In March 2012, Kyodo reported: “Mazda’s CX-5 sport utility won the top rating in a collision safety test by a noncommercial organization of the U.S. insurance industry. Named "Top Safety Pick" for 2012, the highest possible safety rating, by the Insurance Institute for Highway Safety, the vehicle earned "Good" ratings in four safety tests---frontal offset test, side impact test, rear crash protection and roof strength test, Mazda said. The car was released in the United States in February 2012. year. [Source: Kyodo, March 21, 2012]

Mazda Dramatically Improves Diesel Technology

Hideki Kishimoto wrote in the Yomiuri Shimbun: “Diesel-powered vehicles used to get a bad rap for being noisy, dirty and slow. But they have been getting an image makeover thanks to "clean diesel" that emits less pollution--a change that could shake up the race with eco-friendly hybrid and electric vehicles. At the Tokyo Motor Show in December [2011], there were many "oohs" and "aahs" around the displays of two Mazda Motor Corp. vehicles powered by a 2.2-liter diesel engine--a world first. The fuel-efficient engine can reduce emissions that cause air pollution, without an expensive purifier. [Source: Hideki Kishimoto, Yomiuri Shimbun, February 6, 2011]

“The CX-5 sport-utility vehicle, which went on sale in February 2012, runs on 18.6 kilometers per liter of diesel oil, a fuel cheaper than gasoline. The CX-5 is the most fuel-efficient SUV, including minicar SUVs and hybrid SUVs, and packs as much power as a four-liter gasoline-powered vehicle. The Takeri concept sedan stores energy generated during braking as electricity. According to Mazda, it can travel about 1,500 kilometers on a full tank of fuel. "Diesel vehicles had the shortcomings of being dirty and slow. We've conquered those problems," Mazda President Takashi Yamanouchi said. [Ibid]

No More Rotary Engines for Mazda

In October 2011, Yuri Kageyama of AP wrote: “Mazda will stop making cars with its signature rotary engines after a 45-year production run that included powering the first and only Japanese car to win the 24-hour Le Mans endurance race. Poor sales and the high costs of meeting modern emissions standards have made rotary engines uneconomical to produce. At that time the RX-8 was the only model in Mazda's lineup with the rotary engine. The latest edition of the RX-8 went in sale in November 2011 with production ending in June 2012. [Source: Yuri Kageyama, AP October 7, 2011]

“Mazda spokeswoman Michiko Terashima said research and development on the rotary engine will continue, leaving open the possibility that it could make a comeback. But production is now not making sense when considering the costs of meeting safety and emissions standards for new vehicles, she said. Mazda sold only 2,896 RX-8 cars last year, with 1,245 of them in North America and 963 in Japan. Cumulative sales of Mazda vehicles with rotary engines total about 1.995 million as of the end of August, according to Mazda, which also makes the Miata sportscar. [Ibid]

“Mazda Chief Executive and President Takashi Yamanouchi recalled the victory of Mazda's rotary engine at Le Mans 20 years ago, and called the rotary engine "iconic." Mazda's car overtook a Mercedes in the last three hours of the legendary race. "Although R-X production is ending, the rotary engine will always represent the spirits of Mazda, and Mazda remains committed to its ongoing development," he said. [Ibid]

Mazda Cars

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how the hydrogen
rotary engine works
In recent years, with its “zoom, zoom” ads, Mazda has tried aims to portray itself as a sporty carmaker. The Mazda Mate, a pretty sports car, brought about a rebirth in the roadster market. It sells for $20,200. The MX-5 is an iconic car in Mazda's line-up, and the lightweight roadster is part of its heritage as a maker of sporty cars. The MX-5, which debuted in 1989, was declared the best-selling two-seat convertible sports car in history by the Guinness Book of World Records in 2000.

Mazda’s Demio was voted Car of the Year in Japan in 2007 by the Automotive Researchers and Journalists Conference of Japan. It was also voted Car of the Year at the New York International Auto Show in March 2008. The Demio is known as the Mazda2 in the United States. The 2009 Mazda 3 was popular with car critics in the United States.

Mazda began selling a hybrid SUV in California in August 2007. It produces a dual-fuel rotary engine vehicles that can use both gasoline and hydrogen fuel and has developed a clean diesel engine which it plans to introduce in vehicles sold in Europe in 2009.

In 2008, one of the top ten most fuel efficient vehicles in the United States was the Mazda-made Ford Escape, Mercury Mariner and Mazda Tribute (32.2 miles per gallon).

Mazda Eco Cars

Mazda began leasing the first hydrogen-gasoline hybrid in Japan in May 2009. The first car was leased to an energy company for $4,200 a month. The car is equipped with a hydrogen rotary engines. It can run 220 kilometers on hydrogen and 600 kilometers on a tank of gas.

In December 2009, Toyota announced it would supply Mazda with key components to make hybrids. Mazda hopes to begin selling a car made with the components in 2013.

In June 2011 Mazda unveiled a new super efficient version of its Demio subcompact car with a gasoline engine that gets 30 kilometers to the liter (75 miles per gallon), making it just as efficient as hybrids. The car costs less than a hybrid and has the world’s first system to improve fuel efficiency by displaying a real time evaluation of the river’s driving style on the dashboard. It will go on sale in Japan in June 2011. Image Sources: Mazda

Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2009 Jeffrey Hays

Last updated October 2012

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