Mazda asserts design independence from Ford to keep brand alive

August 14, 2002

Hiroshima, Japan --Bloomberg news is reporting that Ford Motor Co.'s London design center, opened in June to cut costs by cooperating across brands, will miss at least one member of its empire. Mazda Motor Corp. insists on keeping its vehicle styling separate.

The solo approach of Mazda, a third-owned by Ford, is typified by the Demio compact that went on sale last week. Mazda avoided discussing its plans for about two years and then resisted Ford efforts to make the Demio look more like its own Fiesta.

Design is "the most important part" to keep different, said Fumiaki Inami, Mazda's chief of product strategy, in an interview. "Why should we work together?"

Mazda, the first Japanese automaker to ally with a global automaker in 1979, has been increasing the number of parts it shares with its parent to shave costs while scaling back collaboration on design to keep its cars distinct. Investors say Ford and Mazda's challenge is shared by other automakers including General Motors Corp. and DaimlerChrysler AG that have taken control of smaller Japanese companies.

Mazda needs to sort out "what role it will play in the overall Ford group," said Kerry Goh, who manages about $400 million in Japanese equities at AIB Govett (Asia) Ltd. in Singapore, including Mazda and Nissan Motor Co. shares. "The only area for them really is in the niche performance vehicle," he said, referring to high-peformance cars not aimed at the mass market.

Outperforming Ford

Investors are glad Mazda's fortunes aren't too closely tied to Ford's lately. Shares of the Dearborn, Michigan-based automaker had fallen by a quarter this year as of Monday's close, compared with a gain of 37 percent for Mazda.

Ford intended the London design center to foster cooperation across brands from Jaguar, Aston Martin and other Ford marques. That would reduce costs and bring vehicles to showrooms more swiftly. The hub, established for an undisclosed sum, is open for Ford units to use whenever they wish. Designers there are working on two concept cars to be unveiled next year, Ford said.

Mazda, which has designers in Hiroshima, Frankfurt, Yokohama and Los Angeles, says the carmaker's involvement in the center isn't needed for now. Japan's No. 5 automaker already plans to share about 70 percent of its platforms by volume with Ford by March 2005.

Tribute or Escape?

Mazda's absence from the London design center was partly triggered by customer feedback to its first effort to develop a common chassis with Ford. Many buyers had trouble telling the resulting Tribute and Escape sport-utility vehicles apart.

"It was the first time we'd done something together and we probably stayed a little more closely glued together through the whole process than what we now think we have to," Chief Financial Officer Bob Shanks said in an interview.

The Japanese automaker sold 9,730 of the Tribute at home in the year ended March 31, barely half its annual target of 18,000. The company fared better in the U.S., beating its annual sales target of 40,000 units to reach 45,270 vehicles.

Styling aside, sales of Tributes lagged in Japan because there's less of a market for the light truck, said Tatsuo Yoshida, an analyst at Deutsche Securities Ltd.

Customers like Kosuke Haruki, who bought a new Mazda Atenza sedan last month, support Mazda's desire to differentiate its designs from Ford's.

"I don't have a very good image of Ford as their cars seem bland, catering to the masses," said Haruki, a 30-year-old businessman in Tokyo. "I used to drive an RX-7, and that taught me Mazda has great craftsmanship."

Lesson Applied

One lesson gleaned from the Tribute/Escape collaboration was the importance of keeping external designs different, knowledge that's been applied to the new Demio compact, which shares a platform with Ford's new Fiesta.

Mazda swapped ideas on the sport utilities before developing the models. When it came to the Demio, Mazda kept its plans separate and resisted Ford's push to standardize some features to save money, said Yasushi Nakamuta, chief designer at Mazda.

"The Fiesta's audio panel is a little off-center and we wanted the Demio's to be in the center," Nakamuta said, referring to dashboard layout. "We battled and we won."

Mazda can't stray too far from designs shared with its parent without giving up the cost savings that come with sharing some components.

Financial Limits

"It's good business to share powertrain and platform with a big-volume Ford program," Inami said, noting that Ford's unit sales are five times Mazda's.

Mazda also needs to target a research and development budget that this business year is almost a third of that available to rival Nissan, Japan's third-biggest automaker, and itself an affiliate stepping up parts-sharing with its parent, France's Renault SA.

Mazda executives say it's vital to retain a separate look to its products, a view supported by Daniel Arturo Heller, a researcher at Tokyo University studying the Ford-Mazda alliance.

"If it doesn't do that, then the relationship ceases to be one of an alliance and Mazda will lose its identity and there will be less appreciation for its technological strengths," Heller said.