(Bloomberg) -- Mazda Motor Corp. named Akira Marumoto its next chief executive officer to lead a revival in earnings growth in the face of a slowing U.S. market.
Marumoto, an executive vice president who heads operations in the U.S., will replace Masamichi Kogai after the change is ratified at an annual shareholder meeting on June 26, Mazda said Friday. Kogai will become chairman following a five-year tenure in which he orchestrated deeper ties with Toyota Motor Corp. Both of Kogai’s most recent predecessors as CEO also served five-year terms.
The leadership changeover comes amid a paradigm shift in the auto industry toward self-driving, connected and electric cars, and the rise of China’s importance as the U.S. auto market shrinks. Mazda is among Japan’s most export-dependent automakers, with less than a fifth of revenue generated at home.
Marumoto will oversee a target to raise annual sales to 2 million vehicles by 2024, from about 1.6 million now. China became Mazda’s biggest market last year after sales in the U.S. shrank close to 10 percent from a peak in 2015. Operating profit has dropped by more than a third from a record in the fiscal year ended March 2016. Marumoto said he will focus on reviving the U.S.
“I’ve been overseeing the North American market for three years and the region has been causing concerns in terms of both profitability and branding,’’ Marumoto said at a briefing in Tokyo to announce the change. “The U.S. is the highest priority.’’
Shares of Mazda advanced 1 percent to 1,463.5 yen at the close in Tokyo, giving the company a market value of about 925 billion yen ($8.5 billion).
The stock has declined about a fifth during Kogai’s tenure as the company struggled against intensifying competition and the accelerating pace of technological change. At 143 billion yen, Mazda’s research budget for the current fiscal year is about an eighth of Toyota’s 1.08 trillion yen outlay.
To level the playing field, Kogai engineered a tightening of ties with Toyota that included technology sharing and a capital alliance, which he announced with his counterpart Akio Toyoda in August. The companies are also building a joint assembly plant in the U.S., where Mazda currently has no factories.
Another essential fruit of the pact for Mazda -- which doesn’t offer electric vehicles currently -- has been the establishment of a venture with Toyota and group supplier Denso Corp. to jointly develop EV platforms and parts.
The relationship grew from an invitation Kogai extended to Toyoda several years earlier to visit Mazda’s test track in Hiroshima to try out any car the Toyota scion wished. Marumoto was involved from the beginning, Kogai said at the briefing.
“We want to develop the relationship with Toyota further,’’ Kogai said. “I feel I can entrust that to Marumoto.’’
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