Poor Sales Doomed Mazda6 in Flat Rock JV

Special Coverage

Frankfurt Auto Show

FRANKFURT – Future product plans for the Flat Rock, MI, vehicle-assembly plant remain uncertain as Mazda negotiates the withdrawal of the Mazda6 sedan from the AutoAlliance International facility jointly owned with Ford.

Mazda Chairman, President and CEO Takashi Yamanouchi tells WardsAuto on the sidelines at the auto show here that production and sales volumes of the midsize car have fallen far short of the 100,000-unit target set for North America when the second-generation Mazda6 launched in Flat Rock in autumn 2008.

“Right now we are producing only about 40,000 units annually,” Yamanouchi says. “At that level we are not profitable.”

Mazda sold 20,751 Mazda6s in the U.S. through August, a 14% decline from like-2010, according to WardsAuto data.

The last strong year for the Mazda6 was 2005, with 71,447 deliveries.

Yamanouchi says the current vehicle arrived with great momentum three years ago. “But immediately after the launch, Lehman Brothers collapsed (prompting a global financial meltdown), which resulted in that segment of the market shrinking dramatically.”

“And that resulted in fiercer competition in the segment. As a result, we are only able to sell less than half of what we had originally planned.”

The auto maker, based in Hiroshima, concluded a dedicated plant in North America for the Mazda6 is unnecessary and that vehicles can be supplied from Hofu, Japan, more cost-effectively.

Yamanouchi: Midsize sedan production in North America unnecessary.

Mazda has not specified when Mazda6 production will end in Flat Rock, but the next-generation sedan likely will arrive for the ’14 model year.

“What we do with the Flat Rock plant is still in discussion with Ford,” Yamanouchi says. “It’s a joint venture right now, and we will be talking with them. For the time being, that relationship will be maintained.”

Ford produces the Mustang there.

Asked whether another Mazda could be assembled at the facility, Yamanouchi says, “We’ve only announced we are going to withdraw the next Mazda6 from that plant.”

In this era of globalization, auto makers continue to emphasize the need to produce vehicles in each market where they will be sold. Yamanouchi says he understands “quite clearly” that Mazda is bucking the trend. Unlike its Japanese rivals, the auto maker soon may source all of its vehicles for the U.S. from overseas.

“With the scale we are achieving with the present model (Mazda6), it is quite clear that integrating into one location will be more efficient and effective,” he says.

All-new CX-5 arrives in early 2012.

As the Mazda6 wraps up in Flat Rock, the auto maker will open a new factory in Mexico in late 2013 to build the Mazda2 subcompact for the South American market. However, the U.S. version of the car will continue to come from Japan.

“That’s the thought at present,” Yamanouchi says, adding that if the yen continues to strengthen relative to the dollar, the auto maker may reconsider.

At the auto show here, Mazda unveils the CX-5 compact cross/utility vehicle, which goes on sale in most markets, including the U.S., after the first of the year. The vehicle arrives with two new engines, a 2.0L direct-injection gasoline 4-cyl. and a 2.2L turbodiesel, both springing from Mazda’s Skyactiv product strategy.

Yamanouchi says the global market for compact CUVs is about 4 million units, and the CX-5 likely will achieve its highest volume in the U.S. But the diesel engine also should make the vehicle popular in Europe.

The engine will come to the U.S. in the future, potentially in the next Mazda6, company sources say.

Yamanouchi also says the auto maker will continue to develop the rotary engine, which has powered generations of Mazda sports cars, including the current RX-8.

“There are various possibilities, not only using the rotary to power the vehicle directly, but using it as a range extender for some type of hybrid vehicle. We already have on the road a rotary engine fueled by hydrogen. So I think the engine holds a lot of potential for the future.”

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