Weak sales in China and the U.S. are hurting the automakers’ bottom line.
Times have been tough for Mazda. The fifth-largest Japanese automaker has seen its U.S. sales fall month after month, and July 2019 was no exception. In its first quarter of fiscal year 2020, the company posted a 79 percent drop in its operating profit, precipitated by declining sales in both the U.S. and China. The yen has grown in strength as well, cutting into Mazda’s profitability.
Despite recent updates including the latest Mazda CX-5 with its 2.5-liter turbo engine and an all-new Mazda3, sales for the year so far are still down 14 percent compared to 2018. Automotive News points out that the company has also struggled to recover from flood-related damage to its factories in Japan, as well as its declining sales. Mazda reported 353,000 global sales for this fiscal quarter, down 12 percent from a year ago. And so the story goes on in the U.S., where sales fell 15 percent to 68,000 units. In China, the company’s down 21 percent, with 54,000 sales.
Monthly U.S. sales show some growth for crossovers
Virtually every automaker is losing sales in some segments at the moment as demand for cars starts to slide. Even among popular crossovers like the Toyota RAV4, sales fell in July 2019. While Mazda’s sales charts still show hemorrhaging sales for the Mazda3 and Mazda6, sales did pick up for the CX-3 and CX-5. Since we’re right in the middle of summer, it also makes sense that sales picked up for the MX-5 Miata.
What we don’t see here (yet) is how the upcoming CX-30 will impact Mazda’s sales. Will it bolster the brand’s presence in the U.S., or will it pull away from the CX-3 or CX-5?
Mazda – July 2019 sales
|Model||July 2019||July 2018||MoM change|
Mazda is taking a different approach to other automakers when it comes to reversing its fortunes and boosting sales. While companies like GM divest slow-selling, profit-sapping models in favor of high-margin vehicles like trucks and SUVs as well as investing in electrification, Mazda is repositioning its brand image and remains focused on refining the conventional engine to be as efficient as possible. Basically, while other companies focus more heavily on future electrification, ideas like the SkyActiv-X engine look to make the technology we have as good as it can be. The Japanese automaker is also launching a new diesel CX-5 in our market, at a time when most others are pulling out.
That’s not to say Mazda is ignoring electrification entirely. The company has been working on Toyota on developing new powertrains. They’ve also broken ground on a new U.S. factory in Alabama, which is also a joint venture with Toyota. As it stands, Mazda currently imports all its vehicles to the U.S., so part of the move is also meant to shore up its presence in the U.S. market. As potential tariffs threaten Mazda’s already thinning profit margin, opening a U.S. factory would help produce models for the North American market — a market that’s crucial to the company’s success.