Image credits: Mazda de México
News Article

Local Production Key to Mazda’s Growth in Mexico

By Miriam Bello | Wed, 09/21/2022 - 02:50

Located at the center of the country, in the Bajio region, is Mazda's largest plant outside of Japan: the Salamanca complex, in Guanajuato, where the automaker builds vehicles that are exported to 38 countries in the Americas, Asia and Europe, as well as some models for the domestic market.

With little under eight years of operation, the Salamanca plant has established itself as a key facility for the corporation. In 2020 it reached cumulative production of 1 million units in just six years.

Mazda vehicles made in Mexico have reached regions as diverse as Japan, Spain, Switzerland, Greece, Peru, the US, Colombia and Ecuador, among many others. The Salamanca complex employs just over 5,000 people and, since its construction, has had a positive impact on the region.

“Since 2011, due to the good sales results we were having in Mexico, the company decided, for the first time, to build a production plant outside of Japan. The company chose Salamanca and the development that the municipality has had is indisputable. We see now restaurants, hotels, shops, supermarkets, employment, growth and well-being, which has everything to do with the establishment of different brands in the region, including Mazda," Miguel Barbeyto, President, Mazda de México, said in an interview.

“For the construction of this plant, the corporation invested over US$700 million in a place that was practically unknown to the company. We did something right to earn the trust of the global corporation and we responded to that trust by reaching the 1-million-unit production mark just six years after opening,” said Barbeyto.

Mazda’s plant in Salamanca is about to take on an even more relevant role. Starting this year, production of the Mazda CX-3 compact SUV will be transferred from Japan to the Mexican lowlands. This model is of great relevance as it represents around 10 percent of the brand's total sales in Mexico.

Mild-Hybrid versions of models that were already manufactured in Salamanca, such as the Mazda3 sedan, Mazda CX-30 and Mazda2 Hatchback and Mazda2 sedan, have also been added to the production lines.

Recently, Mazda de México also announced a new price strategy with the Mazda2. Contrary to what is happening with the rest of the industry, which last year saw a price hike of up to 15 percent, the Mazda2 now offers a more affordable product compared to 2021 with a starting price at less than MX$280,000 (US$13,955).

"This price expansion is the reflection of a strategy that we took on some time ago. Mazda Corporation has an expansion plan in Mexico, supported by double-digit growth in production at the Salamanca plant, and Mazda2 is the product that will trigger this growth,” Barbeyto explained.

This price rearrangement does not involve sacrificing vehicle features. On the contrary, Mazda will now incorporate a new top-of-the-line version for its different models called Carbon Edition, which adds new safety assistance.

"To achieve this, economies of scale play a very important role: the higher the production volume, the lower the costs, which allows us to reposition prices without sacrificing quality, equipment or safety levels," explained Barbeyto.

This price strategy will not cover all models but it responds to the brand's need to compete in market niches where it does not participate but sees an opportunity.

Mazda's challenge is twofold: it seeks to increase volume, while maintaining its aftersales service level as the number of customers increases.

Currently, Mazda is among the top brands in the Long-Term Customer Service Satisfaction Index (CSI LT), as well as the Vehicle Quality and Reliability Study (VDS), both carried out by the consulting firm J.D. Power.

"Regardless of the segment in which we are competing, we want the experience of owning a car to be fascinating for our customers. That is why we are constantly seeking to deliver better products that adapt to clients’ routines with maintenance services for every need," concluded Barbeyto.

Photo by:   Mazda de México
Miriam Bello Miriam Bello Senior Journalist and Industry Analyst