How do smaller mainstream brands broaden their appeal? Subaru doubled their sales between 2008 and 2018 by offering customers affordable all-wheel drive in segments where four wheel traction didn’t previously exist. Similarly, Volkswagen created a following with their diesels until all that fell apart in 2016. By contrast, Mazda relied on their sporty driving dynamics and sexy styling to woo buyers. At least until recently. With its push towards luxury, Mazda is taking a bit of a risk. And it’s a gamble that hasn’t exactly paid off yet. But the company is confident everything will work out just fine.
If you’ve experienced a contemporary Mazda (roughly model year 2016 and up) you know their interiors have drastically leapfrogged the competition. Even Acura can’t compete with what Mazda is putting in their cabins. But to make their lineup noticeably more premium, they had to increase their prices, which dented sales. The redesigned Mazda 3 won accolades from the automotive press but critical acclaim has not translated into higher volume. The company will probably move slightly over 50,000 examples of the 3 for 2019. That’s down sharply from 64,000 in 2018 and less than half the volume Mazda sold in 2012.
To counter decreased volume, Mazda is filling in their white space with more crossovers. The upcoming CX-30 is key to that plan. Mazda’s CX-30 will slot between the CX-3 and CX-5 and act as a premium subcompact of sorts. The cheapest Mazda 3 hatchback, which donated its platform to the CX-30, is $800 more expensive. Aside from this poorly named addition to the Mazda lineup, executives are also touting another new crossover. This mysterious new entry will be built at a joint plant with Toyota and arrive some time next year. In all likelihood, the crossover will compete with the Ford Edge and Nissan Murano in the mid-size segment, but no concrete details have surfaced yet.
Perhaps more important to Mazda is their new Retail Evolution showroom modernization initiative. Like most dealer upgrade programs, the new aesthetic is designed to mimic luxury showrooms. Some dealers pushed back on the expensive upgrades, which is not an uncommon phenomenon among any automakers that encouragee similar changes. But for Mazda, things are a bit different. The somewhat niche automaker is…even more niche than it used to be. Overall sales are down about ten percent. And no model is in the black. But the company thinks the upgraded showrooms will buoy sales. Mazda says dealers who already participated in the Retail Evolution program experienced a 57 percent increase in service retention and a ten percent jump in sales when compared to non-participating dealers.
Do those numbers offer a solid glimpse into Mazda’s future? Maybe. In all likelihood it was the largest and most profitable dealers that remodeled first, giving Mazda a nice set of skewed numbers to present to news outlets and the roughly 200 dealers that haven’t upgraded yet. It’s entirely possible the company’s new strategy will succeed. But competitors haven’t exactly been asleep at the wheel. Key to Mazda’s plan is how well they leverage their new alliance with Toyota. If they can keep costs down and sell their product at a higher margin than before, they might be able to eke out a win and pacify the dealers upset at the loss in volume.
A superior captive finance arm might also prove useful. Mazda recently ditched JP Morgan Chase for Toyota Financial Services. That move probably enhances the company’s ability to offer better rates for customers, which would no doubt come in handy for the higher prices they’re asking. In any event, the upmarket positioning is a risky move. Volkswagen tried a similar tactic until about ten years ago. Now their products are exactly in line with their mainstream competitors. But the German automaker didn’t produce interiors nearly as premium as contemporary Mazda vehicles. Perhaps the Japanese automaker is on to something. Maybe the old adage of “if you build it, they will come” will propel Mazda to new heights. If it doesn’t, they’re going to have to ask themselves if their upmarket manuever was worth it.
Mazda being considered a premium brand will definitely be a tough sell. Mazda has (for decades) been that ‘other” Japanese brand. I had to Uber it for about a week and rode once in a Chevy Cruze and was impressed with its plush and quiet interior. Next day I rode in a Mazda 3 and found it cheap looking, cramped and noisy. Granted it was two years ago, maybe Mazda has upped their game.
I’d love to see Mazda succeed, but some of their recent design decisions are puzzling. Build a 3 hatchback with better driver visibility and I’ll beat a path to a dealer; I’m not interested in a rolling bunker.
I’ve been very impressed with Mazda lately. To the extent that while considering an early 2020 purchase, they’re at the top of my short list. Mind you, I’m always a used car buyer, so it’ll likely be a 2015-17 model, but Mazda’s recent slotting as second in reliability only to Lexus has made me feel like I’m looking in the right direction.
If you’re looking at a midsize sedan, the 2018 Mazda 6 is considerably improved, with a luxurious new interior and turbocharged 4. I bought a brand new 2018 in September for $7,000 below sticker, essentially used car territory.
I believe the CX-30 name will end up being a negative, I took a close look at one and couldn’t really see a big difference between the it, the CX-3 and the CX-5 (Ok, the CX-3 is a bit smaller) but without them all side by side it’s hard to tell and frankly confusing.
I also looked at a Mazda6 earlier this year and while the new interior is very premium it may be TOO premium, the light color suede swath across the dashboard wasn’t going to wear well in regular use and the prices jump up very quickly with the base model not including several important to me features that others offered, thus bumping one up fast. No options, just about five differently equipped “levels”, however the dealers I saw weren’t large enough to carry multiples of each one to evaluate and compare.
The 3 (non crossover) went from being an attractive hatchback to being sort of ugly and tailheavy with atrocious visibility. The sedan looks better this time around but nobody’s buying those. The AWD option is a good one though and smart to compete with the Impreza.
They should absolutely bring a CX-7 back, no idea why it was removed in the first place. But the tie-up with Toyota needs to bring some electrification to the range as well, love it or hate it people are talking about it and it’s a big part (if not the only part) of the near future.
Which is no doubt the reason I got a standard 2018 Mazda 3 Sport sedan for $18K including tax and license out the door. My 2004 Focus ZTS was $17K back then. I feel the 3 sedan is quite nice although not my daily driver. I just wish there were more color choices especially for the interior.
I’m supremely torn.
I love Mazda, and own an old Miata. My nephew has a newer 3, and loves it as well.
But Mazda is fooling itself and no one else by trying to go “upscale”.
First of all, I really don’t think anything below 6 figures is really upscale any more, what with a basic car, running in the $30K range on average, and $40-50K for a CUV/SUV, and $50K for a full size pickup being normal. While that is a lot of money, to me anyway, it is not luxury prices. Historically, luxury models were 2-3X the price of a plebian model, if not higher. To really sell as a luxury car, Mazda would be competing against established luxury brands, where the clientele is used to paying higher money. Those brands work not only because they are supposedly higher quality in materials, fit, and finish, but in social value as a sign of wealth. Nobody is going to think you are rich because you drive a Mazda. Note that all the luxury brands are seeing a decline in quality, but not in sales, as they know they can foist sub-par (for them) product on status-conscious buyers who value perception over reality.
It’s like buying a modestly priced home and furnishing it with top of the line furniture and appliances. You enjoy it, and perhaps invited guests see it, but from the outside, it impresses nobody. That is what Mazda will accomplish. Great product, happy customers who actually purchase one, but most will never look at it twice.
“But the tie-up with Toyota needs to bring some electrification to the range as well”
Agreed. I believe that an electric engine (or, at the minimum, some sort of hybrid drivetrain) will be the key defining feature of luxury cars within the next few years. In fact, electrification could afford many brands (and not just Mazda) the opportunity to reposition themselves on the brand status ladder.
A couple of random thoughts: my casual observation is that nearly every brand, except Chevrolet, is trying to move “up market”. Some appear to be doing it merely by lobbing the cheap models and upping the prices on all the remaining models (Ford, for example?)
It is on thing to want to move upmarket and another to become upmarket. I have thought for 10-15 years that Mazda offered better vehicles in many segments they are competing in than Nissan or Toyota. Let’s face it, Mazda3 or it’s Japanese competition? A CX-3 or it’s competition? The Mazda6 should be competitive but Camry and Altima are default selections and no one looks at Mazda.
Finally, while the dealership showroom makes a difference, ultimately it all rests on the cars.
Mazda does have a (relatively) rich heritage.
The 1979 RX-7 was a brilliant affordable (the first 10 were, before the dealers jacked up the $6995 price, lol) sports car.
The next RX-7 was also great
Then in the 80s the 626 and MX6 were ‘sportier’
The original Miata was brilliant, the successors also good.
BUT, upmarket is a tough sell, between Toyota/Honda and Audi/BMW.
Mazda could appeal to car enthusiasts. There is a huge dearth of (relatively) sporty cars today.
The thing is, by not offering manual transmissions, Mazda loses a lot of those drivers. At least me. The moment you put an automatic in the car, there are a lot of alternatives to an ‘upmarket’ new car–from a new Camry or Accord (which to its credit, DOES offer a manual), to a 5 year old Buick Regal to a Ford Fusion.
While the manuals are disappearing, there are compelling automatic choices that cost less and have bigger dealer networks.
Mazda needs a big partner.
Subaru successfully parlayed all-wheel drive and Foresters into what it is today. I don’t see Mazda repeating Subaru’s success.
I agree on the manual tranny part. I creep new cars when they come out and try to mod it out to my liking on the websites. I would honestly buy a new 6 if I could get the top of the line with a manual trans. Hell i still have my 2015 Cx5 and still thinking of ways to do a manual tranny swap, or at least fit a MazdaSpeed 3 turbo engine in it
Mazda appear to be very popular here I’m seeing lots of them in my travels of course vast numbers of those are likely rentals but they must be a popular choice for a reason
I test-drove a new Mazda 3 a few months ago. While it was impossible not to be impressed with the very high-quality materials and switchgear, my foremost impression was of how high the beltline was, how small the windows were, and how I felt like a little kid sitting in his parents’ car pretending to be old enough to drive. And this was a sedan; I’ll be nice and avoid further discussion of the hideous-looking hatchback with its cargo-van rearward visibility. Oh, and it cost a few thousand dollars more than the alternatives from Toyota, Honda, VW, or especially Hyundai and Kia.
It’s certainly possible to move your image upscale (BMW was a purveyor of economy cars in the early 1960s), but it takes time. And in addition to nicer dealerships, Mazda needs more of them. I have a family member who liked the Mazda 3 but ruled it out because the nearest dealer was two towns away. Even in my more urban area, it’s a 25 minute drive to the nearest Mazda store, and it’s an appendage to a utilitarian 1970s Ford dealership with all the ambiance of a government office building.
I noticed that about the sedan the first time I drove the wife’s car. Then I realized I could raise the seat and so raised it to it’s maximum height and that made a telling effect on me. At 6’1″ I felt like I was looking over the top of a fence. Nor longer with the seat raised.
As an avid reader of Car & Driver and Consumer Reports, I was aware of how highly regarded the Mazda 6 was. I thought they were beautiful, inside and out. Was puzzled the 6 didn’t sell better, until I realized I had to look two or three times to determine if I was looking at a 6 or a Mazda3. I think they look too similar, a good thing for the 3, not so good for the 6. I bet many Altima/Camry/Accord buyers blew off the 6 as a sporty little coupe. A shame, because if they sat inside and test drove a 6, they would find a fine family sedan that just happens to look like a little sport coupe.
The lead photo shows how small (narrow) the Mazda3’s rear window really is.
The problem with Mazda moving “upscale” is that the brand wants to occupy a 21st century version of the space that had been the province of the large Buicks, Chryslers and Oldsmobiles during their heyday. Namely, the “near luxury” segment.
Those marques were either discontinued (Oldsmobile) or rendered irrelevant (Buick and Chrysler) as mass-market marques began selling vehicles at luxury prices (price a top-of-the-line Ford F-150 or Chevrolet Suburban).
Meanwhile, the luxury marques have been steadily expanding their reach downward.
Without a firm foothold in either the mass market or the luxury arena, I don’t see how this will work for Mazda in the long run.
Without a firm foothold in either the mass market or the luxury arena, I don’t see how this will work for Mazda in the long run.
I think these delineations are increasingly being blurred. What exactly does “luxury” mean anymore? A Mercedes GLA? Is a Tesla a “luxury” car/brand? That word seems outdated to me.
People recognize/identify brands in various ways, and not very consistent ones. Chevrolet sells the Trax as well as the Corvette and Suburban; the latter two being essentially brands of their own. Ford’s Titanium trim vehicles are essentially Lincoln-grade, except for the name.
What was once so much more clearly defined has become jumbled. Brands are increasingly seen for what they really are. As in, different things for different folks. An Escalade may convey prestige to some buyers and in some geographic ares, and also convey something decidedly less…positive to others and geographic areas.
Mazda has actually been talking about this push upwards on and off for years. I remember there being a bunch of press about it a few years back. Everyone wants to move upmarket! Who doesn’t? The problem is if everyone else is doing it, it’s just treading water.
Perhaps the more up-to-date descriptive word would be “aspirational” brand?
Some buyers around here still do aspire to own a Mercedes, and the less expensive Mercedes models ride out of the showroom on the coattails of the S- and E-Class models.
I’m seeing lots more Teslas around here, and they are not parked in lower income – or even middle-income – neighborhoods. These people are not buying on price, and they are driving a Tesla. So Tesla is forging a positive image that makes well-to-do people want to buy one.
Mazda has no equivalent of the S-Class to sell its cheaper models to aspirational buyers, and it doesn’t have Tesla’s image. I’m just not seeing how it can really move the needle regarding its brand image. Perhaps Mazda’s management knows something that I don’t.
“…I remember there being a bunch of press about it a few years back”
I remember Amati (and the Millenia) too! 🙂
Yes, Dino, I also remember the Amati and Millenia. And, let’s go even further back in time. I still remember the Mazda GLC…”back in the day.” Had I not been so young and, consequently not earning quite enough money for a new car and the attendant new car insurance, I might have purchased one of those Great Little Cars.
I don’t care for the latest Mazda 3 in hatchback form – the 4-door is better but I haven’t actually seen one yet.
We looked at a CX3 last spring when my wife was changing her car, but the Mazda was just too small in the back. The CX5 wasn’t available as a petrol automatic.
Surely the up-coming crossover is the electric MX-30, with optional rotary range-extender ?
I will second Howard Kerr’s point. Seems everyone is chasing higher transaction prices and higher gross margins. In their Q3 report, FCA openly said they were pursuing higher prices and margins, even at the expense of volume.
First, the big three killed their lower priced passenger cars, then the more expensive passenger cars. I expect the next step will be to drop the smallest CUVs. The IIHS is helping in that regard by replacing their impact test analog that used to be based on a 3300lb CUV, with a 4200lb SUV analog, which will make the smaller CUVs appear ‘less safe”.
I think Mazda should have made the CX-30 the new CX-3 and either made the old one the CX-2 or dropped it entirely in the US. The CX-3 is Mazda2 sized and while attractive the back seat is seriously cramped. The CX-30 looks the right size for its segment.
I like Mazda and want them to succeed The interesting thing is I see a lot of Mazdas in my area so their niche popularity appears to be partly geographic. Mazda should be selling better since they offer both superior dynamics to Toyota/Nissan and far more elegant style than the the current Toyonda angry eyebrows. The problem with moving up market is that “near luxury” is a crowded space and getting people to buy other than the prestige names is a challenge.
I am very much in agreement with you, Joe, in that I want to see Mazda succeed. Back in the day, was a fan of the underdog AMC until they were absorbed by Chrysler. For many years, before the import brands caught on, was then a huge fan of Chrysler, the smallest of the Big Three. Now, with Isuzu, Suzuki and several others having disappeared from these shores, and with Mitsubishi only selling a few models, I truly hope the leadership at Mazda has the vision on what’s needed to survive in the current automotive market. The market as noted, has been constricting. For those of us that consider ourselves to be auto enthusiasts, more choices is far preferable to less choices.
Have long considered myself to be a car guy, as in sedans, both 2-door and 4-door, and hatchbacks. And, even still kinda like station wagons, despite never having owned one. GM, Ford and Chrysler killing off production of most of their sedans has been rather disturbing to me. You know, considering that is all some of us of a certain age have ever really known and been familiar with.
Having said what I just said, have just this year considered the possibility of getting an SUV in the future as I have had had the occasion to ride in two different Jeep Grand Cherokees in the past year. They have seemed to be rather popular for quite some time and generally have a pretty good reputation. Have even made the effort to discover the pricing of late model used Grand Cherokees online. Let’s just say that they’re not cheap when new, and sure seem to retain a strong resale value when used.
So, while I acknowledge that I definitely liked my experience as a passenger in a Grand Cherokee, I also don’t necessarily need one. From this article and another online at TTAC, I’ve come to think that I might seriously consider a Mazda CX-30 for my next vehicle. It definitely looks worth checking out. My take on Mazda’s idea of premium is that it is nicer on the interior than the average SUV/crossover. To me that’s “just right.” Because that’s where you experience a vehicle as an owner or passenger. Some of us have no interest in following the crowd to get a Subaru, Honda, Toyota or whatever else is said to be popular. I think the Mazda CX-30 has a real chance to succeed, and I hope it does. Though I most likely won’t be in the market for a new vehicle for a few more years.
The more modern vehicles become jam packed with more electronic doo-dads, reduced visibility and enhanced driver distractions, the more I’ll be inclined to keep my older car that I can atleast see out of without having to rely on cameras and beepers to alert me of impending danger when I back up or making a lane change.