An unrelenting focus on establishing long-standing dealer relationships will allow Mazda to continue its growth in market share to three per cent in five years time, says UK MD Jeremy Thomson.
Eight years of continuous market share growth, unique for any manufacturer in the UK, has given Mazda a 2.4% slice.
Thomson said the growth had been “slow and steady”, particularly during the recession. Officially, Mazda has nine open points (see list below).
Thomson says there are five without a specific partner in-line to fill them: Northolt, Croydon, Hemel Hempstead, Bedford and Banbury.
The latest opening is the Hodgson site in Gateshead, the centrepiece of which is a 32-car tower showroom, the first of its kind in Europe, opening this month.
The sales success is down to careful assessment of dealer representation plan. “Looking at open points and measuring the ‘lost opportunity units’, or lost sales, in some years they added up to 4-5,000 units.
So, filling open points has been a strategic imperative.”
Allied to this need, Thomson said, is an emerging trend amongst the larger dealer plcs and “emerging groups on the acquisition trail” considering Mazda as an attractive brand in the portfolios each is building.
“The scale of representation offered by certain groups fits our model of critical mass representation – one or two Mazda dealerships within a group is not enough to ensure we have the right share of the market. The ideal is four or five.”
This means Mazda has sufficient representation within the management structure of the group, critically an individual with P&L responsibility for Mazda at a senior enough level to make a difference, particularly in the face of another, more dominant brand in the group.
“A multi-brand group has to provide us with sufficient share of mind and attention so that when we do something strategically different from other brands it’s noticed and taken advantage of.”
Other important factors include group funding and the degree of prominence given to brands in dealerships.
Three groups Thomson named as fulfilling this need are Cambria Automobiles, Vertu Motors and Johnsons Cars.
In July, Vertu bought three Mazda sites from Brooklyn Motors: the group’s operations director David Crane citing the manufacturer’s refreshing focus on customers as one of the reasons behind furthering the relationship.
Cambria’s relationship with Mazda began in 2009 with the purchase of Northampton Mazda.
This grew with the acquisition of the Drake and Fletcher businesses in Tunbridge Wells and Maidstone.
Johnsons took over an existing franchise and showed it was willing to “drive the Mazda brand forward”, with one of their senior board members, David Rowe, on the Mazda dealer forum.
In sales terms the focus is on “quality retail”.
“Over the last few years we’ve tentatively interrogated our sales channels leading to an emphasis on sales to private individuals and in fleet end-user contract hire.
"Doing that consistently has seen our retail share grow.”
A key part of this has been the finance penetration growth from 45% in 2008 YTD to 67% this year with Santander-backed products, central to which is personal contract purchase plans.
“I want to get customers into a structured repurchase plan of less than three years,” Thomson said.
Two years is the ideal now because in 2012, he promises there will be a significant amount of new product emerging.
“I want a pool of customers I can tap into to give me foundations of fairly fundamental step shift in our fortunes because we can be a 3% share brand in five years from now.”
PCP now accounts for 45% of business and two-year deals have gone from 1% of business to 23% in since last August.
Central to the product development plan is the SKY power train concept, a range of fuel efficient petrol and diesel engines with the ambition to increase Mazda fuel economy by 30 per cent between 2008 and 2015.
Return on sale in the network is at an average 1.5%, up from 0.8%, with the top quartile achieving 3.7%.
The industry average, according to latest figures from ASE, is 1.4%.
Thomson wouldn’t say how many dealers were on the ‘critical list’ in the bottom quartile.
“Under performing dealers tend to be down to historical factors such as a partnership with another brand that caused chronic cash burn years previously that has affected the group,” he said.
“The circumstances may be beyond our control, but we can step in early and help by moderating pressures.
"Or in the worst cases we will influence more structural changes, looking at operational issues and succession planning because we need reassurance about the longevity of the relationship.”
For the remainder of the year, Thomson said, there was a degree of concern in the sector.
Consumers’ confidence in buying a house or car has taken a knock.
People are deferring the discretionary spending.”
He said in these circumstances the basics have to be done well.
“Dealers are telling me they are having great success in converting everyone who comes in the showroom, but we need to get more people into the showroom.
"Mazda is spending 40% of its fixed marketing budget online, targeting people who are in the market to buy a car.”
A continued focus is being placed on training.
Attention had shifted away from this in the last 18 months as the manufacturer focussed on more pressing matters around the recession.
The budget is back, however, with levels of investment from Mazda runs into the “100s of thousand of pounds”, an increase on the “negligible” spend in recent years.
A new programme on understanding customer experiences through mystery shopping via video, email and telephone is underway.
Dealers get a DVD of the mystery shop recordings.
Unusually the dealer scores themselves.
Mazda is giving its dealers coaching skills on how to self-assess and improve their performance, the ultimate question being: would this experience persuade a customer to visit the showroom?
A similar non-dictatorial approach led Mazda to end its CSI programme two years ago as it turned out more to be an exercise in printing paper than in improving performance.
Now, Mazda is piloting a customer satisfaction measurement based loosely on NADA-24, an American developed system which allows dealers to listen to customer feedback within 24 hours of a showroom visit.
This in turn leads to training on the ‘brand, products, customers and systems’.
A needs analysis is now being done on all customer-facing dealer staff with each getting a tailor-made programme mixing mandatory training (paid for by Mazda) and advisory, paid for by the dealer.
The goal is to give the dealer staff the understanding and passion for the brand that matches customer expectations, Thomson said.
Naturally effective selection and recruitment is an area of interest for Thomson.
Of particular interest at the moment is one dealer who video mystery shops every job applicant in their current workplace.
A job offer is conditional on the mystery shop performance.
Three quarters of all applications are rejected. Over-the-top?
Thomson says not: “If you’re building a business, wouldn’t you want to know an individual is capable from day one?”
While he admits the approach is extreme, Thomson says visits to customer events at the dealership reveal staff passionate about the brand and customer service.
Mazda Motors UK – key facts
• Combined sales performance up by 19% (overall market up 15%)
• In retail Mazda sales performance up by 23%
• Combined sales year-to-date market is 2.22%, 3% up on 2009 share of 2.16%
• Retail market share has increased to 2.9% from 2.7%
• 2010 March and May total market shares were best ever; March, May and June were best ever retail market shares
• YTD 2010 Mazda MX-5 sales up 49% and Mazda CX-7 up 107%
• Mazda2 sales up 29% year-on-year
• Finance penetration has increased from 45% (2008 CYTD) to 67% (2010 CYTD); PCP mix of finance from 31% to 45% and the 24 month from 1% to 23%
• Mazda tops automotive sector in 2010 ICS (UK Institute of Customer Service Satisfaction Survey) ahead of BMW, Toyota and Honda. 26,000 respondents assessing companies in the retail, financial, tourism, telecoms, transport and automotive sectors
• Dealer profit up 20% CYTD to June; up 150% in new cars.
Dealer representation - open points:
• West London (Northolt)
• East London (Docklands)
• South London (Croydon)
• Hemel Hempstead