Good afternoon everyone!

I think this is a great opportunity to discuss some the issues facing our industry at a time of great change.

I am particularly honored by this opportunity, as it is my first chance to stand up and speak on behalf of Mazda.

So, at the end of a no doubt tiring but very informative day, I hope you are still able to focus on what I believe is a key question for the global industry: to what degree is bigger better?

As the motor industry continues to consolidate into larger global groups, the prevailing wisdom seems to be that 'bigger is better' in all things.

Yes, certainly, size confers undeniable advantages - but is size the whole story?

Well, today I would like to share with you reasons why I believe massive size is not the sole solution to all problems.

And why I believe a mid-sized player can thrive among giants if - and this is a very important 'if' - it has two things going for it:

Strategic focus... and the right alliances.

But first let's deal with the undeniable advantages of size...

Above all, size supports tremendous economies of scale and global reach.

It takes deep pockets to compete on a global basis in today's auto industry.

Just look at product development. In this era of rapid technological change and evermore-stringent government regulations, maintaining a long-term competitive edge requires automakers to fund very large-scale R&D programs over many years.

Automakers must likewise have pockets deep enough to buy global brand awareness through vast marketing and advertising budgets.

Massive size also affords massive procurement power - and component costs are critical to competitiveness today.

There can be no doubt, for all the reasons mentioned... massive size is a great advantage for automakers.

But... if size determined all outcomes then the Soviet Union - the world's largest nation in its time - would still be with us. So might the dinosaurs for that matter. And in the World Cup we saw what a tremendous challenge rising stars like Japan and Korea were able to put in the path of the great football powers!

Clearly, in geopolitics, nature and sport, size alone does not determine the outcome.

And I believe the same is true in this motor race of ours.

What else matters?

In any era of rapid change, the ability to adapt and evolve comes to the fore.

Whether in a species, a nation or a company I see three elements as crucial to survival...

Number one, to put it bluntly: hunger or fear. So long as there is food aplenty and no external threats, no creature or company is going to willingly change fundamental ways of doing things. Why bother? As they say, if it is not broken don't fix it.

But if looming hunger or fear can make itself clearly felt - among every member of an organization - while there is still time to adapt and evolve, you have the opportunity to unlock a powerful impetus to change.

Number two is 'vision' - the ability to identify a new and rational evolutionary path.

That vision requires very clear awareness of your own strengths and weaknesses, an equally clear understanding of how the environment is changing... and a very well-defined focus on the opportunities open to you.

Without that clarity of vision - without that strategic focus - all the willingness in the world to change will come to naught.

Vision is not something that necessarily gets sharper the bigger you get - in fact, the larger you are the more difficult it can be to distinguish - as we say in English - the wood for the trees.

But there is a third element, too. You must be able focus and coordinate every muscle and every mind on implementing that new vision. You have to get down and do it.

Quite simply, massive size is not essential to evolution.

What is more, size is not a prerequisite in addressing the most vital element of the business.

And that element is 'The Customer.'

Greater economies of scale may be vital to our business structure... but this is irrelevant to the customer.

Customers are becoming more demanding and sophisticated. And their requirements become evermore diverse and personalized each year.

This means, rather ironically, that just as automakers have got bigger, market segments are fragmenting, subdividing and becoming smaller.

Sweeping generalizations like '18-to-34 year-olds' or 'middle-income earners' are all but irrelevant today.

The challenge today is not to offer a wide range of choices that caters to "the masses" - it is to give each individual exactly what he or she wants.

Most car buyers could not care less which company is the biggest. In fact, some consumers actively shun brands precisely because they are too big... because they are ubiquitous and lack the cachet of distinctiveness.

Car buyers focus on other factors beyond size. Things like...

Value - Whatever they buy, from subcompact to luxury, customers look for a package that adds up to value for money.

Quality - Customers want assurance that the products they buy are well made; that they are safe; and that they are backed by matchless service.

Brand - which can be partially defined as 'trust.' The brand must, first and foremost, assure buyers that every product it carries can be trusted to deliver the values and qualities it represents.

Customers look for brands that embody qualities, visions and values that they share.

And there can be no single 'big brand' that attracts and retains all customers, because consumer tastes, aspirations, attitudes and loyalties are becoming evermore diverse... and changing at an ever-faster pace.

Add to that the fact that an increasing number of people around the world seek out - in all aspects of their lives - things that are both truly distinctive and that speak directly to their personal tastes and aspirations.

This is the market opportunity for a smaller, more agile company with a carefully targeted and clearly differentiated brand.

This is where Mazda comes in.

A central element of the effort to rebuild Mazda has been to define very clearly both who we are and who our customers are.

And we are working very hard to make that awareness central to everything we do - from product development through after-market service.

We know that Mazda cannot be all things to all people. We cannot compete in every segment in every market around the world... and we will not try.

But we can and will meet the needs and aspirations of a select, closely defined - but still very sizeable - group of worldwide customers better than anyone else.

Mazda people span all nationalities, ages and incomes - but they are united by certain distinct values.

They see cars as more than a means to get from A to B. They have never lost that thrill of motion one first discovers as a child - a feeling we define as 'Zoom-Zoom.'

And I can tell you that our Zoom-Zoom message is proving highly effective at cutting through advertising clutter around the world. This goes to show how an inspired and carefully focused message can help a mid-sized player overcome the budgetary might of larger competitors.

Our goal is to reach prospective customers who seek cars that are 'Stylish, Insightful and Spirited.'

This is more than mere sloganeering. What I have just quoted you is the top level of our brand strategy and the motive force behind our product development process. It is, in effect, a powerful focusing mechanism.

Focus is in fact a key word in this discussion about size.

At Mazda, our goal is to focus every single facet of the company on fulfilling a highly focused brand promise to our very clearly defined customer base.

Our goal is to serve these like-minded customers better than anyone else by focusing every waking thought of 38,000 people around the world on their specific needs and aspirations.

Would we have greater advantage at this if we were ten times larger?

I don't think so.

Factor in also that our course cannot be a straight line. Our customers' needs and aspirations - again, by definition - are shifting constantly.

And it is not enough to simply follow our customers' course. We must anticipate their direction - and arrive one step ahead with new product offerings that surprise and inspire them.

As a mid-sized automaker... Mazda does indeed enjoy some inherent advantages over larger competitors.

In a company like Mazda, sharing information and coming together in cross-functional teams is something that is easy to encourage - if only because people are more likely to know one another personally.

The result is tremendous agility - and we are well on the way to achieving it.

The other very vital asset we have is a very detailed roadmap to lead us where we need to go. We call that roadmap the Millennium Plan. It is our medium term business strategy to drive the company back to sustained profitability.

We are already well on track to executing it - and I have come aboard fully committed to executing our plan.

Through the Millennium Plan, Mazda recorded a powerful return to profit last fiscal year - the greatest improvement in our 82-year history.

Mazda managed that in a year we had no new products. Our people did it largely by deepening their awareness of the business issues and by taking tough decisions to address them.

And we are on track to do even better this year.

Having delivered financial recovery, we are now in the growth phase of the Plan. This fiscal year we are launching a wave of new models that fully embody our new brand values... thanks to that focusing mechanism I mentioned before.

In May we launched the Mazda Atenza - the Mazda6, as we call it overseas. Initial sales are already way ahead of expectations.

In August we will introduce an all-new successor to our highly successful DeMio small car.

And early next year we will roll out the eagerly anticipated RX-8 ... a genuine sports car in handling, performance and styling, but thanks to a new and significantly improved rotary engine, a sports car that will comfortably seat four adults plus luggage.

Another key thrust of the Millennium Plan is a concerted effort to evolve Mazda's corporate culture through personnel programs like our Mazda Business Leadership Development initiative.

The goal is to preserve our historic strengths - dedication to quality, extraordinary technical capability and a knack for developing unique products like our Miata/Roadster - world's best-selling two-seater sports car.

At the same time, we are growing new strengths: the ability to alter course quickly and precisely as circumstances change; and an unwavering focus on the needs of our customer base.

Mazda is a company that is generating tremendous momentum....

We have a highly focused development program that is launching products which I am confident will lead their respective classes.

And we are using our smaller size to good advantage.

As I've told you... we are now confident of our ability to match or beat larger players with focus, responsiveness to market trends and remarkable agility.

Mazda's historic strengths in flexible manufacturing bolster that agility. So does the growing ability of parts makers to develop and supply complete system modules.

But Mazda also has another size advantage on its side - an alliance that affords us the global strength of Ford.

Partnership with Ford allows Mazda to benefit from synergies that range from joint product programs through procurement to distribution.

But we take great care to ensure that we will never impinge on our distinct brand identity.

We are not and will not be 'badge engineers' who replace blue ovals with Mazda's winged brand symbol. We know that will not work - and our partners at Ford know it too.

Customers want products that deliver distinctive value. So to ensure we design, build and sell products and services that are uniquely "Mazda," we retain a full array of core skills in-house.

And it is Mazda that decides which Ford group projects we participate in. My management team and I decide... no one else.

Make no mistake. I will be a forceful exponent of Mazda interests wherever that is required.

Quite often, how we represent Mazda interests within the Ford group is by showcasing our truly brilliant technological skill base.

A perfect example is Mazda's role in developing the new I-4 engine - a remarkable power plant that will be used across the Ford group...

That role has won our company tremendous respect and a mandate as the Center of Excellence in four-cylinder engines for the Ford group.

It has taken time for the automotive world to fully understand Mazda's status within the Ford group. But there are signs it is happening.

An auto analyst at the University of Cardiff lauded Ford's Premier Automotive Group for maintaining the distinctive national character of Volvo, Jaguar and other recently acquired brands.

I believe much of Ford's achievement in this area comes from many years of working with Mazda. It is encouraging to see that some people are beginning to understand:


Mazda is not a Ford subsidiary.

Just as Volvo is quintessentially Swedish and Jaguar British, Mazda represents a unique and powerful expression of Japan's unique automotive culture.

And we bring a unique Japanese perspective to the Ford group.

Partnership with Ford does not diminish Mazda - on the contrary, it ensures Mazda's survival as a mid-sized player with a unique market proposition and its own vibrant and distinct corporate culture.

There is one further aspect of this size question I'd like to explore.

I noted earlier that greater size does not necessarily offer advantages in focusing on customers.

Well, who is it the prospective customer actually talks to when he or she goes to buy a car? And who actually services the cars they buy?

No matter how big the manufacturer, in most countries it is small businesses - the dealerships - that actually meet the customer face-to-face.

In an increasingly competitive marketplace, those small businesses labor under tremendous challenges. Margins get ever tighter. Technology becomes ever more complex. And new regulations increase costs.

To make the challenge even tougher, greater sophistication is badly needed on the very front line - among the sales staff whose responsibility it is to close each sale.

How can we increase consumer trust, confidence and satisfaction in dealing with the salespeople who are their only human link with the manufacturer?

That is one of the greatest unresolved questions in the industry. And, again, I can't see that being a bigger automaker is necessarily the answer.

In fact, I believe a smaller, more focused organization should actually be better positioned to do the job.

I won't claim that we have all the answers. I don't think anyone does at this point. But I do believe we are asking the right questions - and that is where you have to start.

Even before that, however, Mazda has had much work to do getting its distribution house in order in our three major markets.

In our view, the prerequisite to retail reform is closer relationships between manufacturer and dealer - and that has been the focus of our efforts in Europe.

Our national distributors across Europe used to be partnerships between Japanese trading companies and local interests - which left Mazda at arm's length from the dealers and made it difficult to have a consistent brand message to the customer or effective organizational processes.

But over the past few years Mazda has gradually taken direct control of more than 80 percent of our European distribution by volume. This has laid the groundwork for us to power up pan-European marketing activities and to provide more hands-on support to dealers.

We are in fact in the midst of a very significant turnaround in Europe - and I expect this will be fully reflected in our year-end results.

Our new Mazda6 has been received very favorably in Europe. And we expect our new DeMio small car to do similarly well as it reaches Europe this fall.

We expect these new models will enjoy a strong showing in Europe because:

So... in a short space of time we have resolved four very major problems in Europe.

The net result is that this year you are going to see Europe make a significant contribution to a growth year and a profitable year for Mazda.

Japan is an altogether different proposition. Our dealer network here labors under a significant debt load - and that remains a key issue for us.

But given that we control most of our distribution network in this country we are well placed to lead the way in making changes.

Already, over the past three years, we have made great strides:

The results are evident. Last year our Japanese dealers once again showed an operating profit. And we are seeing vast improvement in customer satisfaction indices.

We have achieved that in a period where we had no new products to drive results. So just watch what happens with a stunning range of new products in the showroom.

In North America we face yet another set of dealer-related challenges.

First and foremost is the fact that many of our North American dealers are 'dual franchisees' - which is to say they sell products from multiple automakers.

And, naturally enough, these dealers prefer to steer customers to products they know they can sell and that yield the highest margins.

So our challenge is to ensure customers walk in to the showroom with Mazda in mind as their first choice. And we must ensure that dealers support the customer's inclination, and support it because it makes business sense to do so.

In terms of the dealers, that means - above all - we must make sure they can make money selling Mazda.

And that is happening. Again, in a year when we had no new product to offer, we managed to nearly double North American dealer return on sales to one-and-a-third percent. Nor is that the end of the story. With a range of exciting new models we will do even better.

But here is where the challenge comes together across our three key markets - Europe, Japan and North America: the Mazda brand.

Over the next few years we will use our size, agility and focus to build excitement behind the Mazda brand... excitement among a very clearly defined group of prospective customers.

And we will ensure those prospective customers feel that Zoom-Zoom excitement the moment they walk into a Mazda showroom. They will feel the Mazda difference - and that difference will stand out very clearly even in dual-brand dealerships.

We will achieve that goal - and many others as well - because everyone at Mazda understands that we need to evolve... and they have a very clear evolutionary path laid out in our Millennium Plan.

Of course, there are circumstances beyond our control. But we are confident that we now have the agility to adapt to whatever comes our way.

The most worrisome of those circumstances is surely the continuing economic fragility around the world. For example, things still look pretty grim in Japan.

But at Mazda we have seen how much Japanese people can achieve when they get a strong, shared vision of where they want to go. We've now got that at Mazda, and we are confident our neighbors will recover their confidence just as we have ours.

And when Japanese consumers see the levels of excellence and innovation their countrymen are achieving at Mazda, I believe they will confidently buy our products.

No doubt, Japan still has a tough road ahead. We know that at Mazda because we have driven it ourselves. We are making good progress, and we are confident the rest of Japan can too.


Does Mazda need to be world's largest motor manufacturer in order to thrive?

No. Nor does Ford need to be small in order to be agile.

That said, clearly... Ford's global might will remain a key asset both for itself and for Mazda.

But the point I hope you take away from this is that size is not the sole question that will determine the outcome.

The question that does matter is: 'Over the long term, can Mazda profitably produce cars that consistently meet the needs and desires of customers worldwide who share our vision of what a car should be?'

My answer to that question is unequivocal: 'Yes, absolutely.'

Thank you so much.