Special Coverage

Greater L.A. Auto Show

LOS ANGELES – The timing is perfect for the planned 2010 summer launch of the Mazda2 B-car in the U.S., even though its debut will coincide with the arrival of its Ford Fiesta platform-mate, Mazda North American Operation’s top executive says.

“I’m glad we’re launching now vs. year-ago,” MNAO CEO and President Jim O'Sullivan tells Ward’s at the auto show here. “A year-ago, we would have launched in the abyss of the market and the economy caving in and all the distractions.”

O’Sullivan isn’t concerned the drop in gasoline prices to below $3 per gallon in the U.S. will hurt the car’s launch.

“When the economy recovers, commodities start to be in greater demand globally,” he says. “Fuel prices are going to be up over $4, closer to $5 a gallon, so we want to get in before the market gets to that level.”

The Mazda2, known as the Demio in Japan, will be powered by a 1.5L 4-cyl. engine mated to either a 4-speed automatic or a 5-speed manual. Mazda has yet to announce horsepower and torque figures.

In comparison, the Ford Fiesta will be motivated by a 1.6L DOHC inline 4-cyl. producing an estimated 110 hp and 109 lb.-ft. (148 Nm) of torque.

Although the 5-door Mazda2 and Fiesta both will appeal to customers under the age of 30, the two brands rarely are cross-shopped, O’Sullivan says.

“Our cross-shop consideration is Honda, Toyota, and Nissan,” he says. “Fiesta has its (own) focus. For us, (Mazda2) embodies everything we’ve been doing relative to the brand, which is great driving dynamics, styling, and it will be the most fuel-efficient vehicle we ever sold in North America.”

Mazda has yet to release U.S. fuel-economy figures, but the Mazda2 is rated at about 40 mpg (5.9 L/100 km) in other regions where it is sold.

O’Sullivan declines to reveal volume projections, but says the vehicle occupies a segment poised for growth in North America.

“I honestly feel the U.S. car market is going to become more like the European car market, and in order for us to make sure we compete well, certainly with other Asian brands, we think (the) Mazda2 is very integral,” he says.

The Mazda2 will be built at the auto maker’s Hiroshima, Japan, plant, and exported to the U.S. Although the yen is strengthening against the dollar and B-car margins are slight, O’Sullivan is confident the auto maker can turn a profit.

“We don’t sell cars to lose money,” he says. “We’re very vigilant on keeping an eye on costs. We can’t control exchange rates, but we can control costs.”

Even if the Mazda2 is a runaway success in North America, it’s unlikely the auto maker would add production here, O’Sullivan says, noting Mazda’s assembly plants currently are running at 80% of capacity.

U.S. dealers have been clamoring for a B-car, which O’Sullivan says will serve as an entry-point for buyers who eventually will migrate to the bigger Mazda3. Dealer demand is especially strong in Canada, where smaller cars are more popular, he adds.

Pricing will be announced closer to the Mazda2’s debut, but O’Sullivan hints the car may demand a premium.

The Mazda2 is going to “attract customers that will consider Mazda at a lower price point then maybe the Mazda3 is today,” he says. “I’m not saying it’s going to be priced below Mazda3, but they see an opportunity there in terms of the range.”

The Mazda3 sedan begins at $16,045, not including destination and delivery.

Meanwhile, O’Sullivan says Mazda is not actively seeking a partner, although the auto maker always keeps its eyes open for potential opportunities.

Ford Motor Co., which controls 13% of Mazda, is the only partner the Japanese-based auto maker needs, he says.

“They’re a fantastic partner. We have the longest running partnership than anyone in the industry; it’s been over 20 years now.”

bpope@wardsauto.com