By Chang-Ran Kim
TOKYO (Reuters) - Japan's Mazda Motor Corp (T:7261) will sell only diesel-powered cars in the domestic launch of its key model for 2015, gambling it can convince the country's army of hybrid petrol-electric drivers that the days of sooty, noisy diesels are long gone.
Masamichi Kogai, Chief Executive of Japan's fifth-biggest auto maker, placed his diesel bet in Tokyo on Friday as he unveiled the CX-3, a compact sport-utility vehicle (SUV).
"In Japan, more and more people are choosing to drive diesels," Kogai said. The CEO also said the greater power offered by diesel engines is a selling point for bigger cars, including compact SUVs.
Mazda has high hopes for its new entry in a small but growing segment of the global auto market. Kogai said the compact SUV segment is expected to double in size by 2020, attracting stiff competition from the likes of Nissan Motor Co's (T:7201) Juke and Hyundai Motor Co's (KS:005380) ix 35.
Though Mazda has aggressively promoted diesel engines in Japan, its second-biggest market after the United States, diesels still make up less than 3 percent of passenger car sales with just 79,000 sold in Japan in 2014. Mazda has advanced technology that cuts emissions and sound, but diesel engines - once dubbed a health hazard by a former Tokyo governor - have suffered a lingering image problem in Japan.
With the weak yen making its exports more profitable, Mazda has performed well lately. It expects to sell 1.4 million cars in the financial year ending March - 225,000 of them in Japan - compared with 1.33 million a year earlier.
Yet with a comparatively small line-up, the company needs every launch, including the CX-3, to be successful.
Mazda plans to build about 150,000 CX-3s a year in its home base in Hiroshima, to be sold in 120 countries starting with Japan on Friday at a base price of 2.376 million yen ($19,931).
The car hits showrooms in Australia next month, followed by Europe, North America and other markets. The CX-3 also comes with a 2.0-litre petrol engine in some markets.
To shed another negative image of the diesel engines as loud, Mazda said it has developed a brand new technology that reduces the "knocking" sound unique to diesels by installing a hollow, cylindrical pin in the piston. The technology debuts as an option on higher-end versions of the CX-3.