Mazda Thailand Aims at Upper End of Eco Market With New Mazda2

BANGKOK – The new Mazda2 (Demio in some markets) hits the market in Thailand, where it is being built at Auto Alliance Thailand, the Ford-Mazda joint venture assembly plant in Rayong.

The new model is crucial for Mazda, one of the smaller players on the market here, which looks to follow up the success of its CX-5 and Mazda3 models. The CX-5 has taken a 48% share of its segment since it arrived in November 2013 and the automaker has struggled to meet demand for the CUV. The revamped Mazda3 small car, launched last March, already has built up a 13% share of the cutthroat C-segment.

But those models occupy niche segments, while the Mazda2 resides in the Eco/B sector, the Thai markets’ biggest, and Mazda officials are confident the new third-generation Mazda2 can drive its market share up from its current penetration of less than 5%.

“It’s an important moment for Mazda Thailand,” Mazda Thailand President Hidesuke Takesue says during the car’s official launch at Bangkok’s upscale Centara Grand Convention Center. “(The Mazda2) raises the bar in the small-passenger-car market in Thailand. It’s comparable to European premium vehicles.”

The Mazda2 is the third model, along with the CX-5 and Mazda3, to feature the automaker’s fuel-efficient Skyactiv powertrain technology.

“Fuel economy is best in class thanks to Skyactiv,” Takesue says, adding that the car will help Mazda become an “indispensable brand” in Thailand.

The arrival of the Mazda2 represents a significant leap of faith in the market by Mazda.

While the automaker “gives utmost importance to markets within ASEAN, (we have) chosen to raise investment in Thailand in order to produce the Mazda2 for sale in domestic and export markets.”

Early markets for the Thai-built Mazda2 will include Australia and New Zealand, both of which have high standards for quality, Takesue notes.

Thailand joins Japan and Mexico as one of the three global production hubs for the new model.

Mazda’s growing confidence in Thailand is evident in the 12 billion baht ($369 million) investment in the AutoAlliance JV, which has raised production capacity to 120,000 complete vehicles a year, plus another 38,000 CKD kits.

Mazda also poured TB11 billion ($338 million) into a transmission plant here, which is the first to build Skyactiv gearboxes outside of Japan. Production began earlier this month, with output going to AutoAlliance and other plants around the world.

Takesue says another TB3 billion ($92 million) is being spent to build a Skyactiv engine plant in Thailand to feed its new Eco cars.

Mazda says it sold 34,326 vehicles in Thailand last year, down 36% from 2013, mirroring the overall market’s decline.

Takesue forecasts the automaker will bounce back this year to 50,000 units, providing a volume gain that likely would outperform the overall market. He’s relying on the new Mazda2 to deliver, saying ambitiously “the sales target has been set (at) over 30,000 units.”

Pre-bookings for the new model, which opened last month, stand at 3,000 units.

Significantly, the new Mazda2 is the first model out of the Thai government’s Eco Car 2 program that kicked off last year. It’s also the first Eco diesel model, and that is expected to be a plus factor for the Mazda2 in a market where diesel fuel retails at a significant discount to gasoline.

The Mazda2 is equipped with a frugal 1.5L diesel, power is rated at 104 hp and 184 lb.-ft. (250 Nm) of torque, while producing less than 100 g/km of carbon-dioxide emissions and meeting Euro 5 standard. That ticks off all the qualifying boxes in the Thai government’s Eco Car 2 program requirements.

Mazda is unashamedly aiming the car at the upper end of the segment, with engineering emphasis placed on added comfort during long-distance driving. Features include a wider gap between the pedals; upgrades to the front and rear suspension to improve ride; and increased chassis rigidity.

Pricing is where the big question mark hangs. The new Mazda2 starts at TB675,000 ($20,742) and runs up to TB790,000 ($24,276) with the model’s standard automatic transmission. That puts it firmly at the top of the premium-small-car market and in excess of some bigger cars.

In an under-pressure and price-conscious market, it’s a bold strategy and reflects the confidence Mazda has in its new model, as well as its improving brand image here.