Mazda
Corporate History & Strategy

In the early 1960s, Mazda recognized the future potential of the rotary engine, which was still under development by West Germany's NSU. Unlike conventional reciprocating engines that generate power through the back-and-forth motion of pistons, the rotary engine directly generates power through the rotational motion of a rotor, combining characteristics of fewer parts, high output, and low vibration. In 1961, Mazda concluded a technology licensing agreement with NSU, paying 280 million yen in licensing fees (patent royalties) to acquire the patent license.

However, at the time the technology licensing decision was made, the rotary engine had not yet been commercialized as an engine for four-wheeled passenger cars, and numerous challenges remained to be solved, including durability, seal technology, and fuel efficiency. Mazda was in the midst of transitioning from a three-wheeled vehicle manufacturer to a four-wheeled vehicle manufacturer, and a proprietary technological foundation was essential for differentiating itself from major manufacturers like Toyota and Nissan. Fully aware of the high risk of investing ahead of time in an unfinished technology, the company committed to the technology licensing as the core of its future competitiveness.

In April 1963, Mazda established the 'Rotary Engine Research Department' within the company, assembling approximately 47 engineers. Under the inaugural department head Yamamoto Kenichi, R&D was pushed forward to mount the rotary engine in four-wheeled passenger cars. An authority on internal combustion engines harshly criticized that 'the rotary will never work,' and within the company, criticism arose that 'money is being wasted on something with low chances of success'—the development proceeded against strong headwinds.

After approximately three years of trial and error, the team succeeded in commercializing the rotary engine. In May 1967, Mazda commenced sales of the 'Cosmo Sport,' the world's first mass-produced rotary engine vehicle. The car, which achieved high output while minimizing noise, attracted domestic and international attention as groundbreaking technology, and Yamamoto, who led the development, was hailed as 'the father of rotary engine commercialization.'

Mazda positioned the rotary engine as its competitive pillar and set forth a policy to expand four-wheeled vehicle exports, primarily to North America, in addition to growing the domestic market. However, in 1970, the Clean Air Act (Muskie Act) was amended in the United States, mandating strict emissions standards for new vehicles from 1975 onward. The rotary engine, which was inferior to conventional reciprocating engines in exhaust gas purification, faced a situation where it could not function as the trump card for export expansion that Mazda had envisioned.

Furthermore, when oil prices surged following the 1973 oil shock, demand for rotary engine vehicles with inferior fuel efficiency rapidly declined both domestically and internationally. Mazda was left with massive inventory and fell into an operating loss of 17 hundred million yen in October 1975. Despite succeeding in commercializing a groundbreaking technology, the rapid changes in the external environment—tightening environmental regulations and the energy crisis—fundamentally overturned the anticipated revenue model.

In 2013, Mazda withdrew from North American local production through the joint venture with Ford (AAI in Michigan), and in 2015, Ford's complete sale of Mazda shares ended approximately 36 years of capital alliance. Vehicles for North America were switched to exports from the Mexico factory and the domestic Hofu Factory, but the North American market was Mazda's largest overseas market, and the resumption of local production under a new framework remained a management priority for reducing foreign exchange risk and responding flexibly to local demand.

In August 2017, Mazda concluded a business and capital alliance with Toyota Motor, with mutual investment of 50 hundred million yen each. One of the pillars of the alliance was joint local production in the United States, with plans for Mazda to produce the North America-exclusive new SUV 'CX-50' and Toyota to produce the compact Corolla. Unlike the Ford era, where Mazda's management was dominated by the largest shareholder, an equal partnership model based on 50-50 joint investment was pursued.

In March 2018, the joint venture Mazda Toyota Manufacturing, U.S.A., Inc. (abbreviated: TMT) was established with equal 50-50 investment from Toyota and Mazda. A new factory was built in Huntsville, Alabama, with total investment reaching 1.6 billion dollars. Of this, Mazda's share was an estimated 800 million dollars. The factory employed approximately 4,000 workers and established an annual production capacity of 300,000 units (150,000 for Mazda, 150,000 for Toyota).

The new factory commenced operations in January 2022, and in April of the same year, sales of the North America-exclusive SUV 'CX-50' began. Approximately nine years after dissolving the Ford partnership, Mazda achieved re-entry into North American local production under a new framework of an equal joint venture with Toyota.

As its North American sales strategy, Mazda chose a premium route focused on brand value advocacy. While minimizing dealer incentives to avoid price cutting, the company invested in dealer staff education and store renovations to enhance the quality of the customer experience and improve brand image.

This strategy proved successful, with cumulative North American sales of 304,000 units in the first half of FY2024, achieving the highest sales record since the commencement of local factory operations. In contrast to the era when North American operations were passively expanded under Ford's umbrella, Mazda is building an autonomous growth strategy that prominently features its own brand value under the equal joint venture with Toyota.