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Mazda offers dealers compelling case to take on franchise

Mazda UK is on the hunt for dealers to bring its number of outlets to the 160 optimum.

It currently has 150 dealers with four new appointments in Bridgend, Beckenham, Loughborough and Reading. However, it is still looking for dealers in Docklands (East London), Croydon (south London), Oldham, Bedford, Rochdale and Banbury.

The Japanese manufacturer, which enjoys 2.4% of the new car market achieving just 50,335 sales over the last 12 months, said dealer interest has been significant.

Twenty-three dealers have taken on the franchise in the past 12 months, 10 of which were in areas that had no existing Mazda representation.

While the majority are multi-franchise dealers, the Mazda franchise is now attracting the attention of the larger dealer groups. Vertu and Cambria are both now selling Mazda cars.

“It is very refreshing to have this new blood,” Mazda MD Jeremy Thomson told AM. “We have a very broad church with dealer groups down to single franchises.

“We are attractive to dealers because we have taken a lot of cost out of the dealer business. They are now typically achieving a 1.7% return on sales.”

This is borne out in the recent RMI franchise dealer attitude survey, which found Mazda dealers rated the value of their franchise at 6.8 out of 10 – above the 6.7 average.

Mazda does not require a major investment to run or establish a franchise. For example, last year’s tie up between Mazda and banking giant Santander resulted in lower dealer stocking rates.

It also allowed dealers to offer compelling PCH and contract hire rates onto potential customers.

In addition, Mazda introduced changes to the way stock is managed and funded. It now holds more stock on behalf of the dealer network and the longer a car sits in stock the larger Mazda UK’s contribution to stocking costs.

“If there is a stock problem, it is not the dealers fault it is ours aswell,” said Thomson. “Now dealers have flexibility on stock.”

Unlike many franchise dealers, Mazda dealers do not have a dealer council. Instead, every six months the Mazda management team gets on the road and visits the network at regional meetings.

“Attendance is almost 100%,” said Thomson. “These are them-and-us like some dealer councils, it is not adversarial.”

Scrappage has also been good, although not exceptional for Mazda. It achieved a 2.5% share of scrappage sales – the same as its total market share. Without a city car, it should have been more difficult but, as Thomson says, “scrappage brought dormant customers out into the open”. And many of these were existing Mazda drivers – one-third traded in a Mazda.

They were also open to larger cars than expected. Mazda predicted that 95% of scrappage sales would be its Mazda2, in reality it was just 62%, with 20% buying Mazda3.

With scrappage now closed, Mazda has launched its version of an extended scrappage.

 

Mazda is also creating a new corporate sales team charged with boosting sales to sub-100 car fleets.

“We are frustrated we can’t get more of a share of fleet,” explains Mazda MD Jeremy Thomson. “We have not been aggressive enough in some areas.”

That, he says, is about to change.

“We are going to work with our dealers and get in front of sub-100 fleets to generate interest in Mazda. Up until now we have been focussed on 100+ fleets,” he said. “We are adding a new strand, although we will remain in contract hire and lease – there is no move away from these areas.”

The Japanese manufacturer currently has a 1.3% share of the fleet market and aims to grow that “sustainably” to over 2% by the end of the year using the new corporate team which will be split regionally to work with dealers in each area.

“We will work with dealers and support them,” explains Thomson. “It will be a holistic approach to SME sub-100 fleets.”

The new team, which will be established in May, will focus on small fleets, which are fast becoming the target for almost every manufacturer as they search for new buyers to pick up the slack when the scrappage scheme ends in two weeks.

“SME fleets are the panacea,” he says. “We want a 5,000 unit increase in fleet sales across all channels but the volume of that will be to SME.”

 

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