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Mazda is 'timing the market right' with new hybrid vehicles

Mazda (MZDAY) had one of its best years in almost 30 years as demand for hybrid vehicles begin to overshadow EVs. Some companies who have invested heavily in EVs have not seen the ROI as the demand for EV has slowed.

Mazda North American Operations CEO Tom Donnelly joins the Yahoo Finance Live alongside Senior Reporter Pras Subramanian to discuss Mazda's performance and where its hybrid vehicles fit into the autos landscape.

Donnelly comments on Mazda's strategy with the current consumer demand: "The term that I've used is, and others internally have used, is an intentional follower. We want to time the market right and ensure that we introduce products, technology, power trains that the market demands. We are clearly seeing a slowdown in BEV [battery electric vehicle] adoption, we are seeing an acceleration in hybrid demand, and that's why we think the introduction of the two plug-ins that we have this year... We think we are timing the market right. As we play forward to the 2030 horizon, we think we are going to be well-positioned."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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Editor's note: This article was written by Nicholas Jacobino

Video transcript

SEANA SMITH: As auto giants warn of a new reality for EVs, companies that haven't gone all in on electric vehicles are starting to reap some of those benefits. Mazda having its best year in nearly 30 years that's thanks to demand for its hybrid vehicles. Here to tell us more, I want to bring in Tom Donnelly, he's Mazda North American operations CEO, along with Yahoo Finance's Pras Subramanian.

Great to have both of you. All right, let's talk about some of the dynamics that are going on right now within your industry, Tom, because it's an extremely tough time for auto giants right now trying to navigate this shift or slower than expected shift to electric vehicles. How are you thinking about this and approaching the transition at Mazda?

TOM DONNELLY: No question, it is a dynamic marketplace right now. But we've had a strategy all along that we call multi-solution. So a multi-solution approach, meaning all along our plans were around hybrids, and plug-in hybrids, and ultimately electrification.

So last year, we introduced a plug-in hybrid, CX-90 in the mid CUV segment. In a few months, we're going to introduce a plug-in hybrid CX-70 as well. And later this year, we'll introduce a CX-50.

And we have a three phased approach that will take us out through 2030. And by 2030, we will have a full lineup of electrified vehicles. So we think the pacing and our overall strategy is right for the market today.

PRAS SUBRAMANIAN: Hey, Tom. It's Pras here.

TOM DONNELLY: Hey. Good morning.

PRAS SUBRAMANIAN: Do you think that-- or I look at it as sort of Mazda was criticized in the past for not going fully in on EVs. And many said, it was more of-- it was a money issue, it's a tremendous money issue to invest in and Mazda was having success with their cars and pushed more into the hybrids. Is it more of a business case situation or more of a we kind of fell into this because we weren't really investing so heavily into the EV transformation?

TOM DONNELLY: Yeah, Pras, great question. We think our strategy is the right strategy as I said a minute ago. The term that I've used and others internally have used is an intentional follower.

So we want to time the market right and ensure that we introduce products, technologies, powertrains that the market demands. And we're clearly seeing a slowdown in BEV adoption. We're seeing an acceleration in hybrid demand. And that's why we think the introduction of the two plugins that we have this year, as well as the hybrid in CX-50 later, this year we think we're timing the market right.

And then as we play forward to the 2030 horizon, we think we're going to be well positioned. Again, we'll have a full lineup of EV vehicles by then. But we think our strategy is right for today's marketplace and really for the next couple of years.

BRAD SMITH: Coming off of, Tom, 2023 where you did see record sales, I wonder what feedback you're hearing from the dealer networks specifically on pricing right now that the consumers are actually gravitating towards?

TOM DONNELLY: Yeah, great question. We're just coming off the National Auto Dealers convention, NADA. So we just spent the last few days with our dealer partners and they're very enthusiastic about their business and their outlook for this year.

There's clearly been a shift in the marketplace in terms of, beyond the electrification, a much greater sensitivity to affordability. But we think we've gotten ahead of that in terms of some actions we've taken. They feel very upbeat about the product portfolio, the actions we've taken to really enhance the customer experience via our Retail Evolution showrooms. So we think the building blocks that we've laid over the last few years position us well for the next few years for sure.

And we're really pleased with, as you acknowledged, coming off of really strong calendar year of 2023. We had our best December ever in terms of retail sales, our best January ever in terms of retail sales. And we've got a few products that we're going to introduce this year, so we feel really upbeat about our plans and our outlook for this year.

PRAS SUBRAMANIAN: Hey, Tom, so you know the CX-70 just announced and revealed late last month, it's a popular vehicle amongst the Mazda faithful, right? But also it's a very competitive landscape with that mid-size crossover area-- that market. We just saw Ford talk about how they're going to exit that market in terms of EVs in the future.

They're saying it's too difficult. How do you feel about that? Do you think that Mazda has the right kind of game plan in place to address the extremely competitive marketplace, that is that mid-size crossover market?

TOM DONNELLY: Yeah, great question, Pras. Yes, we feel like we're well positioned. And in the respect that when you think about what buyers in that segment desire, we think the characteristics of the product and the Mazda brand really set us up for success there, more specifically the importance of styling and driving dynamics.

I mean, the customer profile in that segment is largely empty nesters, fairly affluent. They have options and they have choices. And we think that, again, the design, that has always been a Mazda strength, the driving dynamics. And what's unique about this vehicle for us is really significant capacity and utility in this vehicle. So we think that hits the sweet spot with what customers in this segment are desiring.

BRAD SMITH: Tom Donnelly who is the Mazda North American operations CEO and Yahoo reporter Pras Subramanian, thanks so much for joining us.