By on December 23, 2019

2020 Mazda 3 Hatchback - Image: Mazda

One of the bigger stories this year, albeit one that occurred mostly in the background of splashier news, concerned a fun-to-drive compact car that did pretty well for itself over the past decade. For 2019, that car got a makeover and a push upmarket, aligning it more closely with other models in the lineup. That car was the Mazda 3 — and the 2019 model year brought big changes not only to its content, but also its price.

Gone was the American-market’s base 2.0-liter engine and most of the model’s manual transmission availability, and these omissions played an obvious role in inflating the model’s entry price by roughly three grand. Looking back on the sales decline that marked the new 3’s entry to the market, Mazda’s leadership is expressing regret.

Speaking to Automotive News, Mazda CEO Akira Marumoto’s Christmas wish seems to be the ability to turn back the clock.

“The price jump for the entry-level could have been too large — that is something we are reflecting on right now,” he said. “The people in that market are pretty price-conscious.”

Despite greater standard content, two bodystyles, and the (new) option of all-wheel drive, Mazda 3 sales dived in the U.S., failing to recover in the months following its introduction. While Mazda stands to earn more profit for each model sold, the reduction in volume is significant and cannot be ignored. At the halfway point in the year, 3 sales were down 20.3 percent. Through November, volume declined by 19.9 percent.

2019 Mazda Mazda3 rear quarter

As it seeks to stand apart from the likes of Honda and Toyota, Mazda’s premium strategy has hit a snag in the 3. While the model’s updated Kodo design language and fairly ritzy cabin is capable of turning heads, not enough buyers are shelling out the boosted bucks for one.

“I asked everyone to achieve three things. We’ve increased the pricing slightly while decreasing incentives. But our sales volume hasn’t reached the targeted level,” Marumoto said. “So, we achieved only two of the three.”

Mazda’s problem isn’t solely the result of its pricing strategy. As the compact car segment dwindles, the ability of any automaker to besting the previous year’s standing is growing ever more difficult to achieve.

In Canada, Mazda opted for a different strategy. The base 2.0L was retained, as was the manual transmission on several low-tier trims. Entry price remained much the same as before. Year-to-date sales through November? Down 19.7 percent.

2019 Mazda Mazda3 dashboard

It’s something of a Catch-22 for Mazda. If the company stayed the previous course and positioned the 3 as a sporty also-ran challenger to the Civic and Corolla, the far greater volume and visibility of its rivals could relegate it to the back of the pack. Do something different by moving forward with a premium strategy, and the same could occur.

And Mazda yearns to be different, as it’s part of the brand’s appeal.

“We can be unique, in terms of product, technology, pricing and customer experience. If we don’t do that and do the same thing as big players, I’m afraid it will be hard for Mazda to survive,” the CEO remarked, adding that the 2020 model year brought additional content to low-end 3s in a bid to boost appeal.

Without reducing the model’s entry price, Marumoto said, “We’re going to add easy-to-understand value.”

[Images: Mazda, Chris Tonn/TTAC]

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65 Comments on “The Cost of Going Upscale: Mazda Mulls Its Compact Car Strategy...”


  • avatar

    I have always loved the Mazda3 Hatchback, but I do not like the new Mazda3 HUNCHBACK. Unattractive design with poor visibility to boot.

  • avatar
    EGSE

    Other than maybe a few Mazda fans (none of whom I know), no one perceives Mazda as an upscale or premium brand. And if the financial markets have a “correction”, going up in price will bite them even more.

    A friend has a 2013 Mazda 3 which she likes; it’s been trouble-free and returns mid-40s MPG for her long commute. I hope they find their way but I don’t know how to fix Mazda.

    • 0 avatar
      Guy A

      All of their models are more upscale than the typical mainstream competition. It will take time to get the reputation.

      Sales went down the same amount in Canada. So charging more worked as unit profit is higher.

      They have the right idea with the new CX30. Use the 3 platform, have the most power and highest quality interior in the class – should do well.

      • 0 avatar
        FreedMike

        The CX-30 is a more credible “upscale” offering because entry-lux CUV buyers aren’t as focused on performance as the sedan buyers are.

        By the (admittedly weird) logic of the upscale-CUV market, I’d say cross-shopping a $35,000 CX-30 with something like a Lexus NX makes some sense. But comparing a $30,000 3 sedan to something like a $35,000 A-class or an A3 isn’t going to go well for Mazda.

  • avatar

    Uhh DUH, executive man.

    Without a premium reputation, you can’t just drive up prices and expect customers (most of whom are not well-funded at Mazda) to come running to your (too few and far between) showrooms.

    It is a good car, but it is also too expensive for the badge on the front.

    • 0 avatar
      28-Cars-Later

      But that’s not what the ad agency said!

    • 0 avatar
      FreedMike

      And to establish a “premium reputation,” you have to make a car that drives like something premium. Most importantly, it needs to be reasonably quick. The 3 isn’t.

      It can’t compete against the A-class because it’s not a Benz (and, yes, I’m calling the A-class a Benz for argument’s sake). It’ll get murdered performance-wise by an A3 or BMW 2-series. It can’t compare to the ILX because…well, no one needs to compete against the ILX, so we’ll move on.

      And it’s not a CUV.

      I have no idea what these guys were thinking.

      • 0 avatar

        That’s true, it’s underpowered. I said this to Mazda, that their cars were considered underpowered, and asked how they planned to fix the issue. They said their cars were powerful enough now.

        I also inquired as to the direct competition for the 3, and they could not answer the question. They’ve built a Suzuki Kizashi here.

        And it’s one which is considerably more expensive than a Golf GTI.

        • 0 avatar
          FreedMike

          “Powerful enough now.”

          I’d guess that’s marketing BS – they aren’t stupid enough to not know something that performs like a Corolla isn’t going to sell to someone who’s looking at an A-class Benz or A3.

          That, or they’re REALLY clueless.

    • 0 avatar
      jkross22

      Premium reputation….

      There are a number of car companies that attempt to price their wares well above their market position… Cadillac and Ford are near the top of that list. Mazda has company, but they’re far from the only violator on this.

      Then there are the car companies slapping badges on cars and thinking they can cash in on the badge while delivering poor products. BMW, how you doin’?

      It seems the only car company left producing value vehicles is Hyundai/Kia. Maybe some Honda/Toyota vehicles as well, but it’s not across the brand anymore.

    • 0 avatar
      ToolGuy

      The answer to the riddle, presented for Marumoto-san’s consideration:

      https://en.wikipedia.org/wiki/Price_elasticity_of_demand

      (% change in demand due to a given % change in price. Note in the table at the end that automobiles have higher [more negative] elasticity than most things. [Note that university education is listed as -0-!])

      “Without reducing the model’s entry price, Marumoto said, ‘We’re going to add easy-to-understand value.’ ”

      This is un-decontenting. (Hello Ford.)

  • avatar
    cprescott

    I generally have high regards for Mazda when they built simple and intelligently designed products. However, these modern bath tubs on wheels that are horrific to view outside from inside are pretentious snobmobiles.

    I can understand Mazduh wanting to be BMW, but to do so you must be legit – and they aren’t. The prior generation of Mazda three hatch was almost spot on in terms of design and interior room. While materials did need to be upgraded, there was a simplicity about that car that befit something premium.

    The mistake that Mazduh is making is having a base level anything. Start with what you were building as your best as your entry product and then take the vehicle from there. At least the price would match the content and the image. And get rid of the bloated design that is more befit an American vehicle and do something sensual. All of your products need to eschew the bloated blob look and need to have some tension to the design – something edgier. The overall look of your cars is too feminine.

  • avatar
    TKewley

    Entry level buyers will be put off by the price. BMW/Audi intenders will be put off by the beam axle in the rear. Everyone will be put off by the unfortunate styling and outward visibility of the hatchback.

    Hard to see what Mazda was thinking – they appear to have built a car for a market that does not exist.

  • avatar
    make_light

    The new 3 hatch is my favorite new car design in ages, I’m shocked at the amount of hate it gets. I guess the terrible visibility complaint is legitimate. But it’s so sensual, one of the few new cars that looks like it was designed by humans, not robots. Almost makes me regret purchasing a CPO A4 last year. I’m clearly in the minority though, because I’ve barely seen one or two on the road since its introduction.

    • 0 avatar
      mjg82

      Completely agree, I think it’s stunning and find myself pricing them out often. It’s smaller than I usually go for but I do often find myself thinking about polymetal grey hatch. Red interior please.

    • 0 avatar
      FreedMike

      I liked the 3 hatch’s styling too, but you can’t see out the back of it. I could put up with that if it had some balls, but it doesn’t.

      Do I hate it? No. But there’s no way I’d own something I can’t see out of.

      Seriously, what’s the point of buying this over a GTI if you can live without AWD?

  • avatar
    FreedMike

    Here’s what Mazda doesn’t get about upscale compacts: they need to be fast, or they need to be CUVs. The 3 is neither. The car looks like premium goods inside and out, but it has no balls.

    If they’d dropped the 2.5 turbo in this, and sold it for about $32,000, they’d have found some entry-lux buyers.

    As it is, it’s just a nice compact that happens to cost more than other nice compacts. No mystery as to why it doesn’t sell.

  • avatar
    FormerFF

    Not every carmaker can move upmarket, Mazda. You’re late to the party and it’s going to be a long slog.

  • avatar
    RedRocket

    The utterly hideous styling of the 3 hatch would explain some degree of sales decline, but not 20%. However it is interesting that a price increase of +/-20% and a sales decline of +/-20% occurred in sequence. It suggests perfect elasticity in the market.

    Regardless, Mazda clearly made a serious error, but it is hardly management’s first. They took years to address the reputation of the car as harsh, buzzy, and prone to rust. They never really did address the lack of power or at least upgrade choices that have plagued their products for years. Even last years rollout of a turbo engine for the CX5 brought with it a stiff price premium.

    Their management seemingly fails to realize that you cannot have a premium image if most of what the buying public sees on the road are low-end entry level models. Nobody is going to pay Acura or Lexus prices for something that looks like the neighbor’s plastic-hubcap 3 or CX5 base model. This strikes me as a company that needs to be acquired by an automaker that has more of a clue how things actually work in the marketplace.

    • 0 avatar
      Guy A

      People complain about them being underpowered but the CX30 is way more powerful than anything in the segment, the 3 is more powerful than any competitor other than sports models (GTi, Si etc). The turbo is in the 6 and CX5 so they compete fully in their segments.

      • 0 avatar
        RedRocket

        The new turbo models aside for the moment, the Mazda 6 and CX5 have always felt slooooow to everyone except the fanboys. The 3 didn’t, but it was in part because it used the same effect as a ’60s British sportscar – the noise and vibration made you think you must be going fast.

  • avatar
    HiHat

    Someone needs to do a heel-face turn, and benchmark the BMW 2002 for visibility. Especially now that Subarus are losing their lead in this area. I’ve always loved the way 3, and the Protege before it, drove, but the steadily shrinking windows knocked them off my radar.

    There is a whole market niche waiting to be gobbled up by a carmaker bold enough to lay down the law to their designers, and restore the ability to see out of our cars. Though it’s a last gasp before autonomous vehicles make this moot.

    • 0 avatar
      cognoscenti

      HiHat wrote: “There is a whole market niche waiting to be gobbled up by a carmaker bold enough to lay down the law to their designers, and restore the ability to see out of our cars.”

      I feel you, and SO wish that this was possible. However, it is not the designers that drove the change. It is side impact and rollover protection standards that drove the hardpoints in the chassis and the thickness of the pillars, taking away flexibility of the designers for the greenhouse. This impacts all carmakers. The result is that your car is safer in a crash, even if it is harder to see your way to avoid one in the first place!

      • 0 avatar
        ToolGuy

        cognoscenti,

        1) This makes sense to me for the A-pillars and maybe the B-pillars. But past that (C and D pillars) it seems like there are things going on which are not purely dictated by side impact or rollover?

        2) Is the rising beltline related to side impact/rollover?

        3) Is the degree of tumblehome tied to side impact/rollover? (To me, it seems like you would want *more* space in which to fire off curtain airbags?)

        I’m not arguing with you, I’m sincerely asking. Thanks.

        • 0 avatar
          mjg82

          I think past the B pillar it’s all about keeping the lines clean. Lest all cars with a D pillar start rocking Honda Odyssey side glass. Though on the rear end, glass extending further down (like a Volvo C30 but purely for visibility) is a styling exercise I’d be interested in seeing.

        • 0 avatar
          spookiness

          @ToolGuy I read an article years ago that quoted a Chrysler designer, (I think in reference to the first Pacifica CUV) that high beltlines were a product of test marketing and had nothing to do with crash worthiness. Perceptions of privacy within the vehicle, and perception that more metal equals safety. Women in particular.

          • 0 avatar
            ToolGuy

            spookiness,

            This makes sense to me.

            If I look at a 1986 Nissan Stanza Wagon, I can almost relate – glassline too low (?), feeling of being ‘exposed,’ that insecure feeling you get when the handrail at the cliff is mounted too low.

            (But sitting in a current Camaro reminds me of Martin Blank stashing Debi in the bathtub because Grocer is on the way.)

        • 0 avatar
          scott25

          Beltlines have risen because of pedestrian safety. They’ve had to rise to keep the proportions uniform with the higher and more blunt front ends. It’s also mostly responsible for the giant grille trend

          • 0 avatar
            krhodes1

            You don’t HAVE to have a high blunt front end – that’s just the cheap way to do it. To pass ped safety regs in Europe, the Miata/Fiata have hoods that pop up in the back to provide the required crush space. Any automaker could do that on any car, at the cost of a few bucks a car. That is the sort of thing that SHOULD be done in a premium car. Or better yet, train [email protected] not to walk out in front of moving cars… Pretty sure I was taught to “look both ways” before I went to Kindergarten.

            Ultimately, I think the lack of visibility is all about those test market results and secondarily penny-pinching – with safety a very distant third.

      • 0 avatar
        HotPotato

        Are safety standards TRULY responsible for stupid styling decisions leading to impaired visibility? Volvo was decades ahead of safety standards for most of its history, and made phenomenal upright sedans with huge square windows (S90 etc). Yes, the center pillars were thick — they even painted them body color to accentuate that, rather than hiding it with matte black paint between the windows — but the windshield frame was not.

  • avatar
    SCE to AUX

    Mazda has one of the flattest sales profiles of any mfr. I wonder if their problem isn’t the vehicles or pricing, but simply advertising. It’s not like people are leaving the brand; they’re just not joining it.

    http://carsalesbase.com/us-car-sales-data/mazda/

  • avatar
    sportyaccordy

    Mazda has had a lot of missteps. Skyactiv-X/D both flopped. This 3 is a big misstep. CX-3 vs CX-30 is strange. Where is the CX-7?

    There are too many brands on the market with not enough differentiation or value. Mazda could have positioned itself and leveraged its relationships better (i.e. shoulda went hybrid instead of Skyactiv-X/D- Toyota would have loved to help). I don’t know if they are going to make it, at least in the US

    • 0 avatar
      bullnuke

      “I don’t know if they are going to make it, at least in the US” This is and has been my thought on Mazda. They would probably be better served by emphasizing on the markets outside the USDM as did Suzuki where both actually sell well. The flailing around to re-invent themselves as a premium brand is beginning to look like desperation to remain somehow relevant in the US as the sales volumes for much of their vehicle lineup (with the exception of the CX-5) continues to stagnate or decline.

    • 0 avatar
      Guy A

      The new X engine be is a flop?
      As for the CX30 it is building on the success of cars like the Crosstrek and uses the 3 underpinnings – you should applaud the business sense of that.
      The CX3 is smaller and is a bigger success than having a 2 hatchback would be in the US market. Also in markets like the UK the CX5 is viewed as large do a smaller CUV is needed. I expect with the CX30 now bring available that the CX3 will shrink down in sales but it has been out for four years so has done good business for Mazda. The CX7 is out in 3021. Other brands take their time, like the seven seater Jeep or Subaru.

  • avatar
    PJmacgee

    “a fuel tank shape issue on certain RAV4 Hybrid vehicles” …*certain* RAV4 Hybrids, but not others? So they already knew about it and started redesigning the tanks before now, but didn’t offer to retrofit anything until enough people complained. Sigh…

  • avatar
    theraiderhater

    There is no mystery here. If we told the truth, nobody wants to BUY a Mazda3 because the design is SO. DAMN. UGLY. The hatchback is Renault Fuego ugly. It’s an abomination in person. Mazda, STOP BEING ENCOURAGED by the few magazines and the .001% of people here who say “its my favorite design of 2019!”. These people are NEVER going to actually BUY your car. Mazda owners are the only people who are going to continue buying your cars. So stop with the hideous KODO crap, make THE rear suspension independent again and give it MORE POWER. Sales dropping 20% in Canada as well – where you can still buy the 2.0 base model with a stick – is ALL THE PROOF YOU NEED that pricing is NOT the problem here. SLOW POOR HANDLING UGLY ASS CAR!!

    • 0 avatar
      scott25

      Very few people have that strong of feelings about it, or else it would sell. Plenty of underpowered hideous vehicles with ill-handling suspension have sold like hotcakes.

      • 0 avatar
        Daniel J

        Exactly. Civic in all forms is just overstyled. Kia and Hyundai have the value proposition and people buy corrolla for Toyota. I’ve been to my Mazda dealer and they are there for the cx5 usually. Mine sells 3s right next to Jettas and the 3 is miles ahead.

        One thing I will say that hurts them is the infotainment. Some are out off by no touch screen.

  • avatar
    monkeydelmagico

    Subaru extended win streak can be partially attributed to solid branding. Mazda has a better product, generally speaking, but much less brand focus now that zoom zoom is dead. An upscale move without the corresponding marketing campaign is a tough sell. They seem to be going after the female demographic with some of the ads but it hasn’t resonated yet. Keep trying. Might be a good time to leverage solid reliability ratings too.

  • avatar
    digitaldoc

    Mazda really missed the boat with their new 3. I had driven the previous 3, and felt it had decent performance at the price offered, and found the 2.0NA to be plenty adequate, with tight handling.

    I have sat in the new 3, and found it claustrophobic, with compromised visibility out the back, both in the hatch and the sedan.

    As Mazda jumped the price, and now claims to be premium, the powertrain needs to be reworked significantly. The 2.5NA is like vanilla ice cream to me, merely adequate, with too high of a torque peak, and buzzy as the revs build- hardly premium by any standard. The lack of an optional engine proves frustrating for those willing to pay more, and the 6 spd auto, while better than a CVT, does not match other premium offerings. Oh, and I know this engine well as I drive it daily in my Mazda CX-5 2.5NA, and it is by far the weakest point of the car (the turbo came out the year after my purchase).

    While the interior is nice, a premium car needs more than that these days. Mazda needs to get their Skyactiv-X over here and stop sending them all to Europe, and tune it for more performance- at least 200 hp, and they also need an 8 spd tranny. The 3 was conceived with the Skyactiv-X with its intended powerplant, and the 2.5NA is a bit of a placeholder. North America is delayed in getting the engine as they are diverted to meet the stricter emission requirements overseas.

    “Near premium” does not work without an improvement to the powertrain, and this is the fundamental problem with the 3. Adding safety equipment, and reshuffling options is not going to increase 3 sales.

    • 0 avatar
      RedRocket

      Mazda is a relatively small company in the automotive world, so their ability to engineer things like a replacement 8-10 speed automatic transmission is limited. I suppose they could buy one from a 3rd party but then you get into situations like FCA had with using the 8 and 9 speed autoboxes in Jeeps, and Acura had the same problem with the early TLX models. It would be a big risk for them. But again, does any “premium” brand still employ a 6-speed automatic?

      They consistently seem to lag behind the competition not just in mechanical things like transmissions but also in infotainment. I have to think that is due to their size, and perhaps also due to their corporate mindset. They seem very resistant to embracing outside concepts.

  • avatar
    Mike-NB2

    I have the opportunity to drive a lot of different cars each year as rentals. I had a Mazda 3 as a rental a few times this past year and absolutely loved it each time. But, I’ve owned several Mazdas (including a 2006 3 GT) and I prefer small cars so I’m pre-disposed to like them anyway. The 3 is an amazing car. I didn’t like everything about it but I was VERY impressed.

    I bought a GLI in April but if Mazda had a performance version of the 3 (with a manual transmission) I probably would have gone with the Mazda even though I’ve owned more VWs than anything else.

    This car deserves to do better in the market.

  • avatar
    Pitoner

    I want to love the styling of the hatch so bad. I really try to but to me the bulbous rear end detracts from a stunning design. If they were gonna charge more maybe stretching it a little more and making the rear seat legroom better and having a bigger hatch with better visibility. But then they’d be taking away from CX-5 sales. Almost there Mazda. Still rooting for u all tho

  • avatar
    Pitoner

    I want to love the styling of the hatch so bad. I really try to but to me the bulbous rear end detracts from a stunning design. If they were gonna charge more maybe stretching it a little more and making the rear seat legroom better and having a bigger hatch with better visibility. But then they’d be taking away from CX-5 sales. Almost there Mazda. Still rooting for u all tho

  • avatar
    simplemention

    should’ve never given up the 2.0 litre, folks really don’t care about power unless you corner them and ask. and should have never offered awd, nobody cares who isn’t springing for a crossover. at a minimum, should have limited it to one model in the lineup for the american market.

  • avatar
    Danny Ray

    Always thought I would trade 2017 3GT at end of lease. New model reviews exposed
    poor changes. No more independent rear end. cramped interior, reduced rear vision and mediocre tires as before. And price increase? Was given huge incentive to trade. Will buy mine out. Better than what is currently offered.

  • avatar
    lurch394

    I love my 2015 Mazda3 Grand Touring with manual, but I can’t see why the new model is so much more expensive. If Mazda wants to go upscale, keep the lower trim levels and put a turbocharged 3 at the top of the line. GM didn’t dump Chevy and just expect everyone to buy Cadillacs.

  • avatar

    I wonder which brand is considered more premium Lincoln or Mazda? In Russia and China it would be Lincoln. How about USA and Canada?

  • avatar
    Art Vandelay

    $#!+box

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