Mazda may need to match U.S. incentives to sustain sales

BY LINDSAY WHIPP BLOOMBERG NEWS

TOKYO

November 4, 2002;Lindsay Whipp writing for Bloomberg reports that Mazda Motor Corp., a third-owned by Ford Motor Co., said it may have to match incentives offered by U.S. rivals to sell old models and sustain sales in the world's largest auto market.

Mazda, Japan's fifth-largest carmaker, yesterday cut its group operating profit forecast by 1 billion yen ($8.1 million) to 50 billion yen for the year ending on March 31, 2003, blaming increased incentive spending. Its incentives rose about a third to more than $2,000 a vehicle in the six months to June.

Should General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler unit "continue those levels of incentives we'll have to match them on similar products, otherwise it will impact sales," said Gideon Wolthers, a Mazda managing executive officer, in an interview.

U.S. automakers have been using zero-interest loans since the September terrorist attacks last year to revive sales and have extended them to spur sales as consumer confidence wanes. General Motors said Wednesday it will extend its offer of no-interest loans on 2002 and most 2003 models until Jan. 2.

Mazda, which has about 1.6 percent of the U.S. market, has suffered as a lack of new models in the market caused sales through retailers to drop 8.5 percent to 129,000 units in the first half.

The automaker said its North American operating loss was probably 7.2 billion yen in the first half of the business year, as it had higher fixed marketing and incentive costs. The maker of RX-7 sportscars is using zero-interest loans to lure in customers, Wolthers said.

The company will release its Mazda6 sedan in the U.S. at the end of the year and Wolthers said incentives should then start to decrease.

"The real answer for us lies as we go forward as the introduction of the Mazda6 comes into play," Wolthers said. "We envisage the level of incentives spent will be substantially less on those models than the existing models."

Mazda now sells models including the Tribute sport-utility vehicle and Protege sedan in North America.

Mazda's larger rival Honda Motor Co. cut its full-year profit forecast last month as it spent more on incentives in the U.S. and developing new technology.