Mazda Seems Set to Enter U.S. Luxury Car Market

From Associated Press

Mazda Motor Corp., after years of deliberation, plans to jump into the crowded U.S. luxury car market, a field that the Japanese have already begun to exploit.

Mazda said Friday that U.S. and Japanese officials would brief reporters Tuesday about a "significant announcement which has been the subject of speculative stories in the business, advertising and automotive trade press."

Mazda officials declined to comment, but it seemed certain that the announcement concerned the auto maker's Pegasus luxury-car project. The project was exploring the establishment of a "second channel" of Mazda dealerships selling luxury cars.

"There's been all kinds of scuttlebutt," said John Casesa, an auto analyst with the investment firm Wertheim Schroder & Co. in New York. "I don't think it comes as too much surprise that they are going ahead with Pegasus."

Mazda would become the fourth Japanese auto maker and one of several European and U.S. companies to market luxury cars in America. Each of Japan's top three auto makers--Toyota, Nissan and Honda--make luxury vehicles for the United States, and they have been grabbing a growing share of that market from their European and Big Three competitors.

In the first five months of this year, the Japanese market share increased to 31.8% from 23.5%, while the Big Three's share slipped to 49.7% from 59%, according to figures from Jacobs Automotive Inc., a Little Falls, N.J., research firm.

With Mazda entering the fray, there's a growing likelihood of further erosion in the market shares held by the European companies and by General Motors Corp., Ford Motor Co. and Chrysler Corp., analysts say.

The increased competition could also hurt smaller-volume luxury car makers. Last week, Sterling Motor Cars bowed out of the U.S. market, saying there were too many competitors.

"It's awfully crowded," Casesa said. "The Japanese are by far lower-cost producers than the Europeans, so we will continue to see a market share shift from one to the other."

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