The latest generation Mazda3 has been widely recognized as a major step forward from the previous model. However, the 3’s sales in the U.S. have been below par, falling every month since August. In the first two months of this year, sales dropped by 27 percent, a troubling slide for a car that has long been Mazda’s best-selling nameplate and a major contributor to its profitability.
So why is that happening to a car that has only launched last year? Well, Mazda’s strategy to limit incentives to maximize transaction prices and profits has been undermined by a running battle for small-car supremacy between the Toyota Corolla and Honda Civic, according to an Autonews report. The Mazda3 has become collateral damage in this battle, supports data analytics firm Millward Brown Digital.
The redesigned Mazda3 arrived in dealerships around the same time as the redesigned Corolla. Dennis Bulgarelli, director of the automotive practice at Millward Brown Digitail, says that while Mazda3 drew higher online shopping traffic from consumers nearing a purchase decision, many of them opted to buy the Corolla instead.
Bulgarelli told the publication that incentive spending by competitors, particularly on the Honda Civic, increased while Mazda didn’t do the same with the Mazda3. Incentives were cut to $1,233 per unit in January from more than $2,700 during the outgoing model’s sell-down last summer. The Mazda3 incentive was the lowest among the car’s main competitors.
“In that segment, unless you’ve got some compelling reason to be considered over a Honda and Toyota, you’re probably going to lose that battle,” Bulgarelli told Automotive News.
Mazda spokesman Jeremy Barnes said slumping sales of the Mazda3 have been partly weather-related, but mostly due to the competition from Honda and Toyota. However, he stressed that Mazda won’t play the incentives game anytime soon, instead preferring to control incentives in order to preserve residual values and brand strength.
By Dan Mihalascu
PHOTO GALLERY
