Lack of EVs hurts Mazda in China

Japanese OEM Mazda’s struggles in the world’s biggest auto market continued in the three months to June as a dearth of EV models undermined its ability to rebound from a collapse in Chinese sales in recent years.

Japan’s sixth-largest car manufacturer sold 20,000 vehicles in China in its first fiscal quarter of 2024, a decline of 17pc on the same period a year earlier, it reported on Tuesday. Mazda sold 84,000 vehicles in China in its financial year ended March 2023, a 50pc drop from 2022 and down from a peak of 321,000 in 2017.

Mazda manufactures cars in China through Changan Mazda Automobile, a joint venture it formed with local partners Chongqing Changan Automobile and FAW in 2021. Mazda previously had separate JVs with each of the Chinese companies.

Mazda said in April of this year it plans to launch two new BEVs in China by 2025 and move product development from Japan to its Chinese joint venture as it aims to arrest its sales decline.

Mazda’s best-selling models in China, such as the Mazda3, feature internal combustion engines. In 2021, it released an EV version of the CX-30 compact SUV, which was described variously as “very odd” and “a step back” by reviewers.

The MX-30 EV, another compact SUV, was designed as an EV first, but with a relatively short range of 200km, has not made an impact in China or elsewhere.

In the US, Mazda announced the MX-30's discontinuation in late July, unsurprisingly after the model sold just 94 units in the first seven months of the year. Mazda's US electrification efforts will now be focused on large platform PHEVs, such as the CX-90 and upcoming CX-70 PHEVs, as well as the CX-50 hybrid.

Peer travails

Japanese automakers in general have been struggling in China where domestic BEV brands have been rapidly growing market share. BEV market share will grow from about 25pc of all passenger vehicles sold in China this year to 58pc in 2030, forecasts from consultancy S&P Global Mobility show.

The market share of all Japanese brands in China fell to 17.8pc in June from 21.5pc a year earlier, according to data from the China Passenger Car Association. Mitsubishi, Japan’s seventh-largest automaker, suspended production in China indefinitely in mid-July amid plunging sales.

In May, Toyota, the world’s biggest automaker by volume, announced a plan to turnaround declining performance in China after experiencing a 30pc drop in sales from 2021 to 2022, in a market that was down only 6pc.

Last week, Toyota said competition in China had become “increasingly severe due to the rise of local brands” and measures it had taken to respond to price cuts there would hurt its profitability.

While China and southeast Asia continued to pose a challenge to Mazda, it performed strongly elsewhere, particularly in Japan where sales volume increased by 70pc to 42,000 and North America, where it sold 128,000 vehicles, 61pc more than a year earlier. European sales climbed 46pc from the previous year to 44,000.