Masamichi Kogai
President and CEO
Mazda Motor Corporation

Ladies and gentlemen, thank you for joining our briefing on Mazda's Long-Term Vision for Technology Development. I'd like to start by outlining Mazda's vision of the future and explaining our plans for product and technology development, which will play an essential role in the realization of that vision.

Early in 2012, as we launched the first new-generation model featuring SKYACTIV technology and KODO—Soul of Motion design, the CX-5, we also got to work on our structural reforms. We implemented the four key initiatives you see here and made steady improvements to our business. In the intervening years we have promoted a management style aimed at enhancing our enterprise value, with a focus on improving brand value.

Our aim is to make Mazda a brand with which customers feel a strong emotional bond. Around the world, Mazda has always been known for making sporty cars like the MX-5 and rotary-powered cars like the Cosmo Sport and Savannah, and we've been supported by a passionate fan-base.

In 2002, we introduced our "Zoom-Zoom" brand message and declared Mazda a brand that would offer driving pleasure, thereby creating connections with a wider range of people who resonated with our message. And since the launch of the CX-5 in 2012, I think many Mazda and CX-5 fans have come to recognize the value of that driving pleasure, and we are starting to create a strong bond.

By offering products, technology, design and services that exceed their expectations, we want customers to feel the joy of driving and the brilliance of life from the first time they drive a Mazda. We want their life to be enriched through car ownership. This will encourage them to choose Mazda again when it comes time to trade in, and to recommend Mazda to others, gradually expanding our fan-base. That is the kind of brand I want Mazda to be.

One of the main drivers of our brand's growth so far has been Sustainable Zoom-Zoom, which we announced in 2007. We staked our survival as an automaker on this long-term vision for technology development that commits us to provide all customers with cars that offer a breakthrough combination of driving pleasure and environmental and safety performance engineered from the customer's point of view.

To achieve this, we completely overhauled every vehicle system – engine, transmission, body and chassis – as we honed our global product lineup. The result was SKYACTIV technology. We gave our all to develop technologies that would appeal to and satisfy customers in the driving situations they faced daily: Fuel economy and eco-performance, for example, that deliver in the real world; safety performance and peace of mind; i-ACTIV-AWD and unique vehicle dynamics technologies like G-Vectoring Control. We also revamped our designs under the KODO design concept, which reflects a Japanese aesthetic and has unified our lineup with a look of unadorned beauty.

Such a comprehensive product overhaul is extremely rare in the auto industry, but we achieved it with limited resources, thanks to our Common Architecture concept, whereby parts share the same basic structure across model lines, and our volume- and model-mix flexible production system. As a result, we have been able to offer customers vehicles, technologies and designs that exceed their expectations at reasonable prices.

The new-generation products that resulted from this coherent set of engineering and production philosophies became a driving force in our structural reforms and I think we can say that stage one was a success. Sales volume has increased from 1 million 235 thousand in fiscal year ended March 2013 to the point where we are targeting 1.6 million units this year, an increase of about 30 percent. Most of this extra volume, by the way, is being produced at our overseas plants, helping to strengthen Mazda against currency swings.

Furthermore, a range of highly competitive models has enabled our "right-price" sales policy, increasing transaction prices and helping to make dealerships more profitable. This in turn has allowed us to start investing in dealerships and human resources, strengthening our sales network not only in Japan but Europe, Australia, ASEAN and China as well. Currently, we are focused on reforming our network in the important U.S. market.

We are improving residual values for Mazda models and repurchase rates are much higher for owners of new-generation vehicles, so I think it's clear that we have improved Mazda's brand value.

Now we are in Stage 2 of our structural reforms, working hard to achieve further growth (our financial targets for fiscal year ending March 2019) through enhanced brand value and qualitative growth in products, sales, production and finances.

Now I'd like to talk about advances in Mazda's products and technologies in the mid to long term, an important factor in our continued growth.

Personally, I have always thought that a company must become an essential part of people's lives to earn their trust and form a bond. And that bond is strengthened when customers empathize with the company's greater cause and philosophy, as expressed through its products, technologies and services.

Accordingly, I will now announce Mazda's new initiative, Sustainable Zoom-Zoom 2030, which lays out how, in line with our corporate vision that you can see here starts with the words "we love cars," Mazda will use driving pleasure – the fundamental appeal of the automobile – to help solve issues facing people, the earth and society.

At Mazda, we see it as our mission to bring about a beautiful earth and to enrich people's lives as well as society. We will continue to seek ways to inspire people through the value found in cars. All Mazda employees will maintain a keen awareness of the issues facing people, the earth and society, and we will take a unique approach to their resolution.

Firstly, for the sake of our planet, we think it's imperative to cut emissions of the greenhouse gases that contribute to global warming and achieve a substantive reduction in CO2 emissions. In addition, we need to examine the worsening problem of air pollution in major cities around the world.

To achieve a significant cut in greenhouse gases, we need to reduce CO2 emissions over the entire life cycle of the vehicle. Mazda will move beyond current "tank-to-wheel" evaluations, which look only at CO2 emissions while driving, and take steps to reduce CO2 on a "well-to-wheel" basis, which considers fuel extraction, manufacturing and shipping as well. 

Specifically, our goal is to reduce Mazda's corporate average "well-to-wheel" CO2 emissions to 50 percent of 2010 levels by 2030, and achieve a 90-percent reduction by 2050.

We believe this will require a "multi-solution" approach that enables us to offer appropriate powertrains in consideration of each region's energy situation and electricity generation methods.

But we will achieve the bulk of that reduction using the internal combustion engine, which is forecast to remain a component of the majority of drivetrains globally for many years to come. We believe that taking CO2 reduction as far as it can go with the combustion engine is what is expected of Mazda.

Therefore, to protect our earth, we will work to minimize greenhouse gas emissions under real-world conditions. We'll investigate every possibility in our quest to perfect the internal combustion engine and become the world's leading company in this field. We will also combine our base engines with electrification technologies.

In addition, we will introduce electric vehicles and other electric drive technologies in regions with air-pollution controls or other policies, or that generate power from clean energy sources.

As for our efforts to perfect the internal combustion engine, we can now see a clear path to the mass production of our next-generation engine. This is a new kind of engine that combines the advantages of diesel and gasoline engines using a completely new method of combustion. We see it as a crossover between a diesel and a gasoline engine, and have named it SKYACTIV-X accordingly.

Of course, our current SKYACTIV gasoline and diesel engines remain extremely competitive, and we will continue updating and using them. We will also adopt some mild hybrid technologies, which are ideal for enhancing the efficiency of internal combustion engines; continue reducing weight, including adoption of some new materials, and continue to make improvements to our SKYACTIV-Body and Chassis.

Now let's turn to issues we face as a society. Certain factors are seen as playing an increasing role in traffic accidents, especially in developed nations. Examples include accidents caused by young, inexperienced drivers; distracted driving due to smartphone use; driving errors by elderly drivers, who are increasing in number every year; and driving under the effects of overwork or illness.

In addition, new issues are arising as the structure of society changes. Public transportation systems in depopulated areas are weakening or disappearing altogether and elderly and disabled people suffer from a lack of transportation options. We see such issues affecting not just Japan, but all developed countries set to experience population decline in the coming years.

To address these issues, Mazda will work toward realizing cars and a society that offer safety and peace of mind, and create a system that enriches lives by offering unrestricted mobility to people everywhere.

Our aim is a motorized society free of traffic accidents, and we will help achieve this by continuing to advance our safety fundamentals – driving position, pedal layout, visibility and our Active Driving Display – and making them standard on all models. We will also continuously update and make standard our advanced safety features. Additionally, we aim to make the Mazda Co-Pilot Concept, which uses autonomous driving technologies to allow drivers to enjoy any drive with peace of mind, standard by 2025.

To help with the inconvenience caused by weaker public transport in depopulated areas and other issues facing society, we are going to create a new business model that will enable car-owners to help support other people's mobility needs using an advanced version of Mazda Connect. In other words, we'll help bring about a society in which people support each other.

Lastly, building on these contributions in the areas society and the earth, let's look at how Mazda will contribute directly to people's lives.

Today we enjoy a more affluent lifestyle thanks to mechanization and automation, but stress levels have also increased because we tend to get less exercise and have less opportunity for direct social contact.

As a remedy for such problems, we aim to offer an emotionally enriching experience within a stressful world to as many people as possible. In addition to the fundamental pleasure of driving, customers will be experience the uplifting personal satisfaction that comes from making a contribution to society and the planet.

To this end, we will pursue and enhanced Jinba-ittai driving feel that will unlock people's potential and invigorate them mentally and physically, and further hone our vehicle designs, which we think enrich the emotional lives of all who see them.

As I said earlier, we see it as our mission to bring about a beautiful earth and to enrich people's lives as well as society, and through each of these initiatives we will continue striving to inspire people through the value of the automobile.

Moving forward, we will gradually introduce into our cars the technologies that will make Sustainable Zoom-Zoom 2030 a reality. Prior to that, however, we'd like to offer you all detailed briefings on each technologies and a chance to drive a prototype and experience it for yourself.

Specifically, we will hold briefing sessions on our next-generation gasoline engine, SKYACTIV-X, our next-generation platform and our new design concept soon. And we will reveal all of these to our fans at the Tokyo Motor Show later in the year. Second, we will hold a briefing on our EV and a new connectivity system in 2018. Third, our next-generation diesel engine and a plug-in hybrid electric vehicle will be briefed in 2019. And finally in 2020, we plan to hold a briefing on our Mazda Co-Pilot Concept autonomous driving technologies and a comprehensive wrap-up of the whole four years.

With these technologies Mazda will meet increasingly stringent environment and safety requirements, including new regulations coming into effect in Japan, Europe and the U.S. in 2020 and 2025, and, as a company of modest size, work to offer multiple solutions to meet the diverse requirements of customers around the world.

To support this, we will expedite efforts to enhance brand value and realize qualitative growth in the areas of products, manufacturing, sales and finances as laid out in Structural Reform Stage 2.

Mazda has always had a passionate global fan base, and our new-generation models have attracted an even wider range of customers. In order to turn these newcomers to the brand into loyal Mazda customers, we will offer our best and most up-to-date products, technologies, designs and services with our next generation of technologies and products as well.

We will work to build a strong bond with our customers, in other words, to make Mazda Premium a reality, so they will choose to stay with the Mazda brand for life. When I say premium, perhaps you think of expensive European luxury brands, but that is not where we are aiming. For us, Mazda Premium means making the best cars in the world, brightening people's lives through the power of driving pleasure, and creating an emotional connection with our customers. Thank you, and be sure to keep your eye on Mazda.

Now, I will hand over to Kiyoshi Fujiwara; who oversees R&D, MDI and cost innovation at Mazda. He will outline our SKYACTIV-X engine, a key component of our next-generation product and technology offensive.

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