Sales Chief Confident Mazda to Emerge Stronger From Battered U.S. Market

NEW YORK – Mazda North American Operations President James J. O'Sullivan feels there's still plenty of zoom zoom left in the auto maker as he focuses on preserving the brand's assets in today's imploding market.

’10 Mazda3 seeing growth worldwide.

“Our cash flow is positive, and the back half of March was a little better,” he tells Ward's in an interview at the auto show here.

Mazda's 2.6% U.S. market share is the highest since December 1994, he says, noting the brand holds a 5.6% share in Canada and 2.8% in Mexico.

The Mazda chief also is bullish because about one-quarter of the brand’s sales currently are through leasing. “We have credit available for our customers,” he says.

And while he expects a slight upturn in sales in the year’s second half, “I hope we don't have a frost that wipes out the little sprouts.”

Mazda hasn't been as aggressive as some competitors in pushing sales. “Our incentives are a little over $2,000 per vehicle,” O'Sullivan says. “When we get into the ’10 model year, incentive spending will start coming down.”

Nevertheless, he's not happy with Mazda's current 80-day supply of vehicles. “We'll get it down to 60 days’ supply this summer. We intend to keep our inventory lean this year.”

This will be accomplished by holding fleet sales to a maximum 10%. “We'll keep it capped at that point,” O'Sullivan says. “This summer, we'll be in position to add production for increased demand (if it materializes).”

The Mazda chief is happy with the launch of the ’10 Mazda3. The small car recently went on sale in the U.S. and is seeing increased demand worldwide. “People are now turning to products that are value-oriented,” he says. “They're coming down from luxury, or near-luxury models.”

Mazda currently has 630 U.S. dealers, 51% of them exclusive, compared with 900 dealers six years ago. “We lost 30 dealers last year, and I expect to lose another 30 this year,” O’Sullivan says.

One reason is because banks are pulling out of floorplanning. “That has a negative impact on marginal dealers,” he says. “But (other) dealers are still calling me looking for our franchise.” However, Mazda only grants new franchises in markets it wants to reenter.

“We're going to get through this thing,” O'Sullivan says of the current industry crisis. “We'll be stronger than ever then.”