Beleaguered Mazda dealers should soon start enjoying a long-awaited lift in trading profitability, says Jeremy Thomson, managing director of the Japanese firm’s UK subsidiary. Here he explains how it will happen to AM.
Q: How do you respond to the low NDFA ratings in dealer satisfaction that highlight issues around sales and market share?
A: This is not a full and complete evaluation of network views because, regrettably, the NFDA picks up only a small number of dealers. But I take any survey seriously. This one gives me something to focus on, but after 10 years of watching the NFDA, I have to say it follows an almost identical pattern relating to profitability.
When we can create strong network profitability, we get good NFDA results, but this year has been tough for the network and undeniably tough for us as a manufacturer.
It’s plain that the culmination of exchange rate issues, a depressed retail market, much tougher conditions in the fleet industry and an all-time low in consumer confidence means our dealers’ returns are not strong enough.
Q: Is now as bad as it will get?
A: We have moved out of some of the higher cost fleet activity and kept the emphasis on the core retail that supports our dealers that’s more profitable per unit for all of us.
In a sense, we’re at the nadir of our performance on so many levels. There is a clear light at the end of the tunnel, but it has been a long tunnel – three years of tough business conditions toward the end of the product cycle is not what you’d wish for.
Q: Can you do more to help the dealers?
A: Over the last three years, we’ve taken a number of decisions to support their businesses. We’re not protected from the whirlwind of the UK economy – in fact we’re in the eye of the storm – so I think it would be unusual to find a retailer reporting tremendous returns over that period.
We have always taken a pragmatic approach to dealer standards in tough times and my plan is to concentrate on the basics and not ask dealers to make excessive investment in facilities – unlike some manufacturers, who are going through major brand repositioning requiring heavy dealer investment.
We don’t think that’s appropriate at this stage.
Q: But things will improve?
A: Yes, absolutely – I know the picture will be much better in the next year or two. Obviously, it’s difficult to foresee the future, but history shows that exchange rates tend to bounce back in time.
Early results to our change in primary brand campaigns have been very positive. These are repositioning Mazda as an overtly Japanese company built on a passion for cars that drive well and are ingeniously built – values generally associated with German brands.
In the UK, most Japanese brands try to associate themselves with Britain because of their UK bases, but we have an opportunity to stand out from the crowd and emphasise Japanese origins. I think this has as many positives as being German.
Q: Do you think your dealers are demoralised?
A: Any businessman who has been through the last three years and probably the worst recession since the start of the century will be feeling the strain. However, all good business people need to have a vision for the future.
I have a passionate view that around the corner – in the next six to 12 months – we will start a process that will deliver a fundamental transformation for our brand and our position.
Business is not about always worrying about yesterday, but looking to tomorrow and doing it with a sense of realistic pragmatism.
If I had nothing to offer, the dealers would be demoralised, but we not only have something very positive to offer, but it is tangible, it is here and it is now.
We’re about to launch the start of our sixth-generation technologies and we took dealers to Frankfurt to see the new CX-5 in its final production state.
They were very positive about the car and what it means for the range – we’re unique in not only developing eco technology, but in making it available on every car.
Q: What are you ambitions?
A: By 2015, we will be well on the journey to rolling out our new products.
We had three years in the past when we’ve sold more than 50,000 units and my expectation is that we can achieve a 3% market share to equate to between 60,000 and 70,000 units, but with the right kind of business.
In the last decade, we have always focused on core retail and end-user and user-chooser contract hire fleet.
We have never exceeded 3,000 annual sales to daily rental, and that’s a cap based on what we think is appropriate for the brand and the ability to remarket the product back into the network without issues surrounding external disposal.
That has protected residual values and jealously protecting these is an investment in the future.