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Mazda Shines After Alliance With Ford

Posted on: Thursday, 23 October 2003, 06:00 CDT

When U.S. automaker Ford Motor Co. took the wheel at Mazda Motor Corp. seven years ago, the Japanese automaker was in sad shape - stuck with debt, tumbling sales, a bloated work force and a management desperately looking for guidance.

But today Mazda is a star of the Ford group, which also includes Volvo, Jaguar and Land Rover.

And Mazda is likely to shine bright on Saturday at the public opening of the Tokyo Motor Show, where the company is displaying a new design for one of its prized cars - the MX-5 Miata, recognized by Guinness World Records as the best-selling open-top two-seater sports car of all time.

The roadster, set to roll into showrooms in 2005, drives home the success of an international alliance in a nation where foreign ownership of major carmakers was still nearly unthinkable in 1996, when Ford raised its stake to 33.4 percent from 25 percent.

Displaying everything from ecological fuel cells to chic interiors, Nissan Motor Co. and other Japanese automakers that have forged partnerships with foreign companies are showing off the fruits of their collaboration at this year's exhibition.

The event, held in Tokyo's Chiba suburb, has more than 260 exhibitors. Reporters got a sneak peek on Wednesday.

Nick Scheele, Ford's chief operating officer, said Mazda's progress is clear at this year's show compared to the last one in 2001. Mazda has emerged with an onslaught of models whose development is synchronized with Ford's, he said.

"We also integrated Mazda far, far more closely into Ford, and Ford into Mazda," said Scheele, who was in town for the show. "And I think we're seeing the benefits of that."

Cost savings from such coordination are crucial amid intensifying global competition, analysts say. Toyota Motor Corp. and Honda Motor Co. are Japan's only major car makers to remain totally Japanese owned.

Mazda, Japan's fifth largest automaker, is likely headed toward its best operating profit in a decade this fiscal year. It doubled its fiscal 2002 profits from a year earlier to 24 billion yen ($218 million).

But Ford - the world's second largest automaker - has been struggling. It lost $6.4 billion in 2001 and 2002, and is going through massive cost-cutting.

The new Miata harks back to the identity of the original by emphasizing a simple, curvy body - not the macho, muscular lines of some sports cars. To create its short, oval shape, Mazda moved the engine behind the front axle and the air conditioning unit to the rear.

Mazda is also showing a new kind of rotary engine that runs on hydrogen. The company's hot-selling RX-8 sports car is the world's only commercially produced car with a rotary engine, although that one runs on gasoline. Many feel a rotary engine delivers a quieter, more nimble drive than other types of engine, though it's had some problems with emissions.

"Mazda is doing quite well," said Koji Endo, auto analyst at Credit Suisse First Boston in Tokyo. "Their new models are getting good reviews."

Mazda's big challenge is beefing up sales in North America, a key market for all Japanese automakers.

Other partnerships are also in the limelight at the Tokyo show.

Mitsubishi Motors Corp. - which brought in a former Mercedes designer to jazz up its models under a three-year alliance with Germany's DaimlerChrysler AG - is showing its tiny, jelly bean-shaped "minicar," a popular ride in Japan.

While the alliance has helped, Mitsubishi is still struggling to boost sales in Japan and North America. Analysts say the alliance needs more time to see the full effects of the tie-up.

The success of another alliance - Japan's Nissan Motor Co., which is 44.3 percent owned by Renault SA of France - was underlined at the show when Nissan CEO Carlos Ghosn appeared with a kimono-clad woman in a still-in-development roadster inspired by Nissan's 1935 original.

Under the 1999 partnership, Nissan has made a dramatic turnaround from near bankruptcy. Nissan's booming profits are helping Renault weather sluggish sales, boosting the French automaker's profits this year.

Ghosn, sent in by Renault to fix Nissan, said he was happy to see Renault's risk-taking was producing solid returns.

"Nissan is becoming a huge contributor to creation of value inside the alliance," he said.

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