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While that might affect their market share in HN neighborhoods I assure you Mazda is making money hand over fist selling their boring non-hybrid SUVs to normal

While that might affect their market share in HN neighborhoods I assure you Mazda is making money hand over fist selling their boring non-hybrid SUVs to normal people. People love them and they sell.

lotsofpulp 1y ago
They have a low single digit percentage profit margin. That is not making money hand over fist, that is barely surviving. https://www.mazda.com/content/dam/mazda/corporate/mazda-com/en/pdf/investors/library/result/2024/presentation20240510_e.pdf https://www.mazda.com/content/dam/mazda/corporate/mazda-com/...
- 0_____0 1y ago
  That doesn't seem unusual for automotive. What number were you expecting to see?
  - lotsofpulp 1y ago
    It's not about unusual, just that a low profit margin in a volatile industry is (with a downward trend in sales for almost 10 years), by definition, not making money hand over fist. That is why their market cap graph looks like this: https://companiesmarketcap.com/mazda/marketcap/ https://companiesmarketcap.com/mazda/marketcap/
- crmd 1y ago
  Mazda’s operating margin is higher than Walmart’s (along with many others). I think hyper scalable sectors like high tech and finance distort our OM expectations.
  - lotsofpulp 1y ago
    Operating margin is irrelevant, only profit margin matters for this context. Walmart hangs out in the 2.5% to 3.5% range, not materially different than Mazda. Either way, any business with a low single digit profit margin is not making money hand over fist. It might be different if Mazda had such a huge and loyal market share that their low profit margins are offset by low volatility of expected future sales (such as with Walmart/Costco), but that isn't the case at all with Mazda. Their expectation is that their sales will be stagnant at best, but probably decline for the foreseeable future.
ak217 1y ago
I know Mazda makes good boring SUVs, I own one. I like Mazda's design philosophy, that's why I want them to succeed. In terms of vehicles sold, Mazda's sales peaked in 2017, the year before I bought my most recent one. As best I can tell, operating profit peaked in 2016. Mazda maintained their relevance and independence by operating their own center of design, engineering, and manufacturing excellence in Hiroshima, and exporting the results to the rest of the world, since at least the 1960s. As I mentioned, that thread is now broken as far as EVs go, with the Changan JV making EVs for Mazda. China is now producing excellent EVs that surpass the capabilities of ICE cars at a fraction of the cost/price, thanks to continuous improvements in LFP battery technology. China also dominates solar, which (together with the batteries) solves the grid stress issue for large EV deployments in most regions of the world. Together these exports are likely to disrupt Japanese, US, and European ICE exports and energy markets throughout the world, no matter what tariffs the US chooses to enact. Mazda and the rest of Japanese companies slept on it, led by Toyota's trust in the hydrogen-powered future that didn't materialize, even while Panasonic had the best batteries in the world. The time to invest in these platforms and technologies was 15 years ago - now they will have a far harder time financing this and finding technology development partners. Sure, they can survive - not thrive - on existing ICE exports for a while, but they will face a shrinking market and stronger headwinds - and are likely to lose their independence, which is what allowed them to design great cars. Don't believe me? Look into what's going on with Nissan (which squandered an even bigger lead - the world's first mass-produced EV).

While that might affect their market share in HN neighborhoods I assure you Mazda is making money hand over fist selling their boring non-hybrid SUVs to normal people. People love them and they sell.

lotsofpulp 1y ago

They have a low single digit percentage profit margin. That is not making money hand over fist, that is barely surviving. https://www.mazda.com/content/dam/mazda/corporate/mazda-com/en/pdf/investors/library/result/2024/presentation20240510_e.pdf https://www.mazda.com/content/dam/mazda/corporate/mazda-com/...

0_____0 1y ago
That doesn't seem unusual for automotive. What number were you expecting to see?
- lotsofpulp 1y ago
  It's not about unusual, just that a low profit margin in a volatile industry is (with a downward trend in sales for almost 10 years), by definition, not making money hand over fist. That is why their market cap graph looks like this: https://companiesmarketcap.com/mazda/marketcap/ https://companiesmarketcap.com/mazda/marketcap/
crmd 1y ago
Mazda’s operating margin is higher than Walmart’s (along with many others). I think hyper scalable sectors like high tech and finance distort our OM expectations.
- lotsofpulp 1y ago
  Operating margin is irrelevant, only profit margin matters for this context. Walmart hangs out in the 2.5% to 3.5% range, not materially different than Mazda. Either way, any business with a low single digit profit margin is not making money hand over fist. It might be different if Mazda had such a huge and loyal market share that their low profit margins are offset by low volatility of expected future sales (such as with Walmart/Costco), but that isn't the case at all with Mazda. Their expectation is that their sales will be stagnant at best, but probably decline for the foreseeable future.

ak217 1y ago

I know Mazda makes good boring SUVs, I own one. I like Mazda's design philosophy, that's why I want them to succeed. In terms of vehicles sold, Mazda's sales peaked in 2017, the year before I bought my most recent one. As best I can tell, operating profit peaked in 2016. Mazda maintained their relevance and independence by operating their own center of design, engineering, and manufacturing excellence in Hiroshima, and exporting the results to the rest of the world, since at least the 1960s. As I mentioned, that thread is now broken as far as EVs go, with the Changan JV making EVs for Mazda. China is now producing excellent EVs that surpass the capabilities of ICE cars at a fraction of the cost/price, thanks to continuous improvements in LFP battery technology. China also dominates solar, which (together with the batteries) solves the grid stress issue for large EV deployments in most regions of the world. Together these exports are likely to disrupt Japanese, US, and European ICE exports and energy markets throughout the world, no matter what tariffs the US chooses to enact. Mazda and the rest of Japanese companies slept on it, led by Toyota's trust in the hydrogen-powered future that didn't materialize, even while Panasonic had the best batteries in the world. The time to invest in these platforms and technologies was 15 years ago - now they will have a far harder time financing this and finding technology development partners. Sure, they can survive - not thrive - on existing ICE exports for a while, but they will face a shrinking market and stronger headwinds - and are likely to lose their independence, which is what allowed them to design great cars. Don't believe me? Look into what's going on with Nissan (which squandered an even bigger lead - the world's first mass-produced EV).