Why the new Mazda3 is so expensive

When it goes on sale in Australia in April, the all-new 2019 Mazda3 will go up in price by a whopping $4500 at base level, to $24,990 plus on-road costs for the entry-level Mazda3 G20 Pure manual.

That represents a price increase of 22 per cent and takes the Mazda3 – once Australia’s top-selling model bar none – off the shopping list for buyers of traditional small cars starting around the $20,000 mark, such as the Toyota Corolla and Hyundai i30.

But Mazda Australia managing director, Vinesh Bhindi, says the price increase of almost one quarter is part of a new strategy that will focus on SUVs.

"From our point of view the new Mazda3 will set a new standard in the small-car segment. Tradition has it that some customers see it as an entry point but there are other options for entry point."

There are other less expensive models in Mazda showrooms that will pick up the slack, said Bhindi.

"For those customers, if the new Mazda3 isn't a proposition purely based on affordability, we'll have the CX-3 and Mazda2 as potential offerings – if not maybe a used Mazda vehicle."

An all-new Mazda SUV expected to be called the CX-4 will be shown at the 2019 Geneva motor show in March. It would ostensibly slot in between the CX-3 ($21,790) and CX-5 ($29,770) and could fill part of the void left by the entry-level $20,490 Mazda3 Neo.

"Our strategy is a little bit different. We will add more SUVs to our range," confirmed Bhindi.

With a price tag just shy of $25K, the entry-level Mazda3 is now lineball with the Volkswagen Golf, which is seen as a premium offering.

The 2019 Mazda3 is significantly more expensive than the new Corolla (from $22,870) and Hyundai i30 (from $19,990) but Bhindi says the price shift for the Mazda3 comes after significant research and number crunching.

"The strategy in bringing this product to Australia was looking at the core private buyer and what do they buy, what do they look for?

"Our research showed they want all the gadgets, all the tech, more refinement, they appreciate quality and driving dynamics. If it's a good value proposition they'll put it on their shopping list," insisted the Mazda boss.

"We've seen the percentage of entry-level [Mazda3] models is quite small, around 10 per cent in the sales mix."

As we reported in the Mazda3 pricing and spec story, the new Mazda3 is fitted as standard with more gadgets than Batman's utility belt, led by an 8.8-inch widescreen infotainment display with sat-nav.

Also standard on all variants are LED headlights, alloy wheels, radar cruise control with traffic sign (speed limit) recognition, head-up display, active lane keep assist and push-button engine start.

Despite Mazda's insistence that the new Mazda3 pricing strategy is what customers want, Bhindi conceded that sales of the popular vehicle could drop by around one third, from 31,000 in 2018 to 20,000 in 2019.

"In the full calendar year our conservative call is about 20,000 [Mazda3 sales]. But some of those customers we think will look at other options in our portfolio and also naturally they migrate towards SUVs.

"The volume will re-distribute, is what I'm saying," explained Bhindi.

The Mazda3 was Australia's top-selling car in 2012 and last year was the fourth best seller behind the Toyota HiLux, Ford Ranger and Toyota Corolla.

With sales of the Mazda3 predicted to drop as entry-level pricing is jacked up, Bhindi said the CX-5 mid-size SUV could "potentially" become the Japanese brand’s top-selling model for the first time.

"There's a number of factors as to why we're taking a conservative approach to passenger car sales. The tide towards SUVs -- whether CX-3 or CX-5 or another SUV -- is happening. Consumers are saying an SUV is making more sense now. That's one element.

"Another element is that the overall market is adjusting this year. Whether it's the credit crunch, people's perception of an economic downturn, whether it's an election.

"But in the end Mazda Australia's strategy is to have many nameplates and models and to give options and depth of choice for the consumer.

"And if it means we're going to take some of our traditional Mazda3 customers in a new direction, so long as it's a Mazda we're happy."