Mazda counts on new engine, EVs to reach EU CO2 goal

Mazda CEO Akira Marumoto is leading an electrification push that should help the Japanese automaker slash its CO2 footprint and avoid paying big fines in Europe. A recently announced emissions-pooling deal with Toyota will also help. In addition, Mazda is working with Toyota on electrification technologies, but Marumoto says "unique" engines will remain part of his brand's identity. He discussed the challenges Mazda faces with Automotive News Europe Correspondent Andrea Malan.

One of Mazda's main challenges in Europe is to meet tougher CO2 emissions targets. JATO Dynamics estimates that Mazda's 2018 CO2 level was 135.2 grams per kilometer, and the fleet total needs to be 95g/km by 2021. Why is Mazda so far from the target?

There are two reasons why our emissions are above 130g/km. First, our best-selling model is the CX-5 midsize SUV. Second, the diesel mix of our smaller models, the Mazda2 and Mazda3, has been diminishing. That is why we are quite far from what we planned five years ago.

Will Mazda manage to hit the target in 2020 and 2021? How will it do that?

First, the Skyactiv-X engine we are launching this year emits less than 100g/km of CO2. [The Skyactiv-X uses a technology called spark-controlled compression ignition, which Mazda says combines the best traits of diesel and gasoline engines.] Second, the first Mazda battery-electric vehicle will hit the market next year. Finally, we will introduce plug-in hybrid models from 2021 or 2022. So we will eventually achieve the target, although we will have some difficulties in 2020.

If you see next year that Mazda will not be able to hit the CO2 target, will you pay the fines or will you curtail sales of the higher-emission vehicles?

We will have to balance the impact of possible CO2 penalties with our sales targets. But we also have to consider the sustainability of our dealer network.

When will we drive a car with the Skyactiv-X engine?

That will happen within this calendar year.

The decline in diesel sales had a negative effect on the CO2 balance. What is your opinion about the future of diesel in Europe? Will the diesel penetration level stabilize?

Diesel share in small and compact vehicles will suffer more declines, while I believe for SUVs such as the CX-5 it will stabilize. Look at the big three German automakers. They are introducing electric vehicles but at the same time working on the development of new diesel engines. We believe for SUVs and large sedans, the most efficient powertrain will be a diesel coupled with an electric motor.

Will the joint work Mazda is doing with Toyota help you reach the even stricter 2025 and 2030 CO2 targets? When will the first results of this cooperation come to the market?

We do not develop any engines with Toyota. Mazda is a small company, so we have to focus on our uniqueness, and I believe our engines are very unique. If we share our engines with other companies, that would dilute our uniqueness. Therefore, we have no plans to do so. We are jointly developing a new EV architecture with Toyota, but we will first introduce our own EV on a Mazda architecture in 2020.

What effect will Skyactiv-X engines have on Mazda's sales in the midterm?

Customers will decide. We have the manufacturing flexibility to produce all the different types of engines on the same line. The Skyactiv-X engine has a number of advantages, but we don't want to sell it cheap. Moving to a 10-year horizon, many of our engines will be replaced by Skyactiv-X and by further new-generation powertrains.

So are you already working on the following generation of engines?

That is not a completely new architecture; it will be an evolution of Skyactiv-X.

At the same time, you are not dropping diesel development altogether?

As Skyactiv-X is a sort of hybrid between a gasoline and a diesel engine, we can use this technology to develop a new generation of diesels.

Will Mazda couple its diesel engines to a mild hybrid?
In our technology vision to the 2030 horizon, all vehicles will have some form of electrification. That applies to diesel engines as well.

What role will rotary engines have in the future?

We have continued working on the development of the rotary engine even after we discontinued the RX-8. Its first application will be as a range extender for EVs. Inside Mazda, we all have the dream of seeing one day a vehicle powered by a rotary engine. But given the number of things we have to do, we had to put this on the back burner, and we have no time frame.

Mazda crossovers were 46 percent of sales in Europe in the 2018 fiscal year. Is that percentage more than 50 percent now? Will it grow further?

Our global crossover mix is currently about 60 percent, and if Europe wants more, we are ready to produce them. More specifically, we should have the production flexibility to cope with various demand mixes. With our new-generation products [the Mazda 3 and CX-30], we made sure that all of our plants are able to produce both traditional cars and crossovers/SUVs and that they can handle fluctuations in demand mix between cars and SUVs of plus or minus 40 percent from plan.

Will Mazda continue producing the Mazda6 despite the shrinking large-sedan segment?
That segment is shrinking in Europe, but we don't make cars only for Europe. There is still a certain level of demand for that kind of car both in China and in the U.S.

Mazda has one of the most geographically balanced sales bases among automakers. Do you fear the effect of the current trade tensions?
Tariffs are, of course, an important factor for our business, so I hope the trade war between China and the U.S. will be solved as soon as possible.

What is your forecast for 2019 for China?

I think 2019 sales will be lower than 2018. However, although demand has slowed since 2018, we are not changing our strategy. We are actually one of the brands that spends less on incentives in China. We will stick to this policy and will try to minimize dealer inventory.

Is Mazda in a position to divert cars from China to other markets if the slowdown continues?

Currently our China production is sold only in China.