Mazda Europe chief races to slash brand?s CO2 but EU fines loom in 2020

Europe

Yasuhiro Aoyama, who took the helm of Mazda Europe in March, arrived at a difficult time. Starting next year, automakers will face tougher CO2 emissions regulations in Europe. It’s unlikely Mazda will comply despite huge investments to make its combustion engines cleaner and to add the full-electric MX-30 small crossover to its lineup. The EU fines will likely jeopardize the company’s profitability in Europe. Aoyama explained how Mazda will respond in an interview with Automotive News Europe Correspondent Andrea Malan.

Is Mazda profitable in Europe?
Yes, we are currently profitable in Europe. Maintaining profitability, however, mainly depends on the euro/yen exchange rate. In addition, next year we will face the potential of CO2 penalties. We are in a transition period between two generations of technology. When we have completed the transition, including the electrification of our product portfolio, our goal is to pay no fines for CO2 emissions. From that moment we want to start increasing our operating profits and return on sales in Europe. That is our strategy for the long term.

Is Mazda at risk of facing CO2 fines again in 2021 when emissions limits become even stricter?
It is difficult to give a forecast for 2021 because multiple variables need to be taken into account, not only regulation. We must also consider volumes and profit margins. In 2021 and beyond, we will see the full deployment of our latest technologies. So we will need to carefully manage profits and volumes over the next few years.

Mazda recently unveiled its first full-electric vehicle, the MX-30. What role will the crossover play in Europe?
To avoid CO2 penalties, the electric vehicle is an indispensable part of our strategy, combined with the efficiency improvements made to our combustion engines.

How many MX-30s will you sell in Europe next year?
We are still working on our 2020 budget [which will cover April 2020-March 2021], so we haven’t decided on a concrete number. We will have to sell as many battery-electric vehicles as possible so that we can reduce our potential of facing a CO2 penalty.

Who is the MX-30’s target customer?
We consider it an urban, commuting vehicle for young buyers who love driving. We want to bring the same Mazda characteristics to an electric vehicle.

The MX-30 will start at 35,000 euros. Isn’t that a bit expensive for a vehicle which Mazda has defined as a second car?
We know that the EV prices will change as more competitors bring their new models to the market. Therefore, we believe that depending on the package you offer, there will be demand for relatively small vehicles at a relatively higher price point. We are positioning our car in that sub-segment. The current price is for the launch edition. We will carefully monitor the market response and, if needed, quickly revise our strategy, which will be very agile.

Why did Mazda equip the MX-30 with a relatively small battery with a 200 km range?
We based the battery size on the needs of our target customers, who are young, urban buyers. The second factor was that when we did a life-cycle assessment, which considered not only the emissions caused while driving but the emissions from the production of the battery, we found that a 35.5 kilowatt hour battery would result in CO2 emissions similar to our diesel models. That is why we selected a right-sized battery for our first battery-electric vehicle. We understand, however, that some customers require cars that can provide a longer range. Therefore, as a second step, we will deploy a rotary-engine based range extender to the vehicle. We also need to closely monitor how fast battery capability progresses. If it improves significantly we may consider a bigger battery in the future.

The decline in diesel sales in Europe has stabilized and in some cases demand for the powertrain has risen. What is your forecast for diesels next year?
It is very hard to precisely predict how the diesel share will evolve. That’s why we employ a multi-solution strategy. Our Skyactiv-X SPCCI (spark plug controlled compression ignition) is a very good solution to counter the declining diesel trend. That being said, every time I drive a diesel on a German autobahn it reaffirms my belief that it is the most suitable powertrain for long-range travel in Europe.

The new Skyactiv-X engine launched in Europe this year. What role will it play and how many do you expect to sell in 2020?
Since Skyactiv-X launched, 60 percent of the orders for the Mazda3 are equipped with the engine and the share is 45 percent for the Mazda CX-30 crossover. We hope this momentum will help lower our CO2 emissions level in 2020. Interest in the Skyactiv-X engine is much higher than we had expected.

What will be Mazda’s best-seller in Europe next year?
Currently our best-seller is the CX-5, but based on the sales momentum we have seen since the launch of the CX-30, we believe it will become our best-selling model next year.

Will the traditional small car segment, where you offer the Mazda2, continue to be Europe’s largest and most competitive in the midterm or will it be surpassed by small crossovers?
In every segment we see a shift from hatchbacks and sedans to crossovers. The small hatchback or sedan continues to play the role of entry car in the life of most customers in Europe. This is true in Japan and other Asian markets. Therefore, from a global perspective we definitely need to remain in the small car segment.

Will the MX-30 only be sold in Europe or will Mazda also offer the car in Japan, the U.S. and China?
Given the importance of minimizing CO2 penalties, we will start selling it in Europe first. As far as other countries are concerned, we are still in a study phase.

Who will supply the battery packs to the MX-30?
Panasonic.

Mazda is also working with Toyota on electrification technologies. Will the future battery-electric vehicles from Mazda be the fruits of the work you are doing with Toyota?
As you know, the MX-30 has been entirely developed by Mazda. But we have established the so called EV-CAS (EV C.A. Spirit Corporation), a 50-50 joint venture with Toyota. This joint venture is doing research to develop the most efficient electric vehicle platform. In the future, many companies will be able to derive their electric vehicles from this platform. Mazda is contributing to the joint development with its model-based engineering and model-based design research processes. We may leverage the jointly developed platform design in the future, but at the moment nothing has been decided.

When can we expect the next electric vehicle from Mazda?
At this moment nothing has been decided. Considering the stringent CO2 regulations coming into force in 2025, we are studying many opportunities.

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