September 15, 2017 2:33 am JST

Mazda takes road less traveled in sticking with diesel

Strategy focuses on honing engines while tapping Toyota for electric technology

MASAHISA YUZAWA, Nikkei staff writer

Mazda President Masamichi Kogai introduces the diesel-powered CX-8.

TOKYO -- Mazda Motor on Thursday unveiled the CX-8 sport utility vehicle, cutting against global trends with a new model running on a diesel engine and nothing else.

The auto industry as a whole is shifting away from diesel-fueled vehicles, as their popularity wanes in the wake of the Volkswagen emissions scandal two years ago. Automakers are moving toward electric vehicles instead.

But Mazda will offer neither an electric nor gasoline version with this flagship model, highlighting the Japanese automaker's matter-of-fact approach of sticking with its strengths. The crossover SUV is slated to debut in Japan in December before going on sale worldwide.

'New challenge'

"We face a new challenge of touting the joy of driving while advancing technologies that reduce [vehicles'] environmental impact," President Masamichi Kogai stressed at the unveiling event in Tokyo.

The CX-8, a large SUV with three rows of seating, provides Mazda customers in need of spacious seating cabins with an alternative to the minivan that will be discontinued this fiscal year.

However, vehicles that run on engines are facing growing headwinds. The U.K. and France have announced plans to ban sales of such vehicles around 2040. China is considering a prohibition on production of gasoline-fueled vehicles. Hence, global automakers at the just-opened International Motor Show in Frankfurt are competing largely on electricity-based drive systems.

Reporters at the Mazda CX-8 event asked whether the company can comply with global environmental regulations by continuing to use diesel technology. Mazda responded that, at present, a powerful diesel engine offering a long range is essential in a large SUV.

Demand still growing

Two major factors seem to be at play. One is persistent demand for engine-powered autos. British research company IHS Markit projected in the spring that global sales of vehicles that run on engines, including hybrids, will increase roughly 15% by 2025. Diesel sales are seen falling by 17%, but solid demand of around 15 million units is still expected.

Another reason is Mazda's own passion for engine technologies. Mazda has cultivated a reputation for its diesel engines around the world by meeting emissions limits on nitrogen oxides even without installing special filtering equipment, for instance. "We have led growth of the diesel market in Japan," Kogai said proudly.

But he also said that Mazda will develop plug-in hybrids and electric vehicles to comply with increasingly strict regulations. The company decided in August to team with Toyota Motor on electric vehicles. Mazda seems intent to rely on Toyota to develop electric driving systems while it focuses on vehicle development as a whole.

With annual sales of 1.55 million units, Mazda is considered a midtier automaker. While technology challenges keep piling up, on connected cars and autonomous driving, the company does not have the resources to cover all angles. "Honing engine technologies is a tactic to capitalize on its strength," said an analyst at a Japanese securities brokerage.

But environmental regulations and the strategies of big automakers have changed drastically over the past several months. So it is not yet known whether Mazda's strategy of concentrating on engine-based technologies while working with Toyota on electric vehicles will prove successful.

Mazda Motor Corp.

Japan

Market(Ticker): TKS(7261)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 9,017.56M
Shares: 599.87M

Toyota Motor Corp.

Japan

Market(Ticker): TKS(7203)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 196,290M
Shares: 3,263M

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