Now is the time to be a Mazda dealer, according to UK managing director Jeremy Thomson.
Dealers who have faced years of a lack of new product in an extremely difficult market might respond that it couldn’t have been any worse.
But, as Thomson admits, the manufacturer took a risk in ensuring it had market-leading products – and he is determined to stay in post to enjoy the mutual benefits.
Jeremy Bennett: You ended 2012 with a market share of 1.28% on 26,183 units, was this expected?
Jeremy Thomson: Yes. It’s where we planned it to be and knew we were coming into an aggressive launch phase.
Although we’d launched the CX-5, the first of the fifth generation cars, it was very limited on production availability because it has been such a strong global success.
JB: Looking to 2013, what is a second new generation car going to mean?
JT: It means this is the best time to be a Mazda dealer.
We’re on the cusp of a real turn in the fortunes for the Mazda franchise. It’s been difficult not having new products through a contracted and very tough economic climate, but we are coming out ahead and coming out the other side of that difficult period quite quickly now.
So, last year roughly 25% of our sales were of the new CX-5.
This year it will be 50% new model sales and as we go into 2014 it will pretty much be our entire product range accounting for sales.
The impact on dealers will be substantially improved unit profits.
JB: Which is high on dealers’ priorities as there has been very little positive to say on retained margins.
JT: I never flatter myself that there is anything other than one absolute clear driver for automotive success and that’s new products.
I’d love to think that everything else we do, all the people we throw at it and tactical margin programmes, make a difference, but actually the product that consumers want to buy and are prepared to pay a premium for is, to have the car they want, when they want it and that provides dealer margins. In addition, we have put in place our new strategy to try and help dealers retain margin effectively.
JB: What’s that going to do?
JT: As part of our variable margin, we have a marketing performance award, which means there’s a minimum criteria dealers need to achieve to earn that variable margin and that might be, for example, media they place and the type of promotional events they do.
The amount of variable margin attached to these new models is significantly ahead of the equivalent margin on the outgoing models.
So the way in which we use margins supports dealers doing their very best job in terms of promoting our product.
JB: So they are in empowered to do these things?
It’s not all about the money in the sense of purely about selling cars on the forecourt or showrooms?
That’s not enough?
JT: One way is to give the network a fixed margin, which is just a lump of money to be used as a discount.
Unfortunately, we know a lot of that can be given away in those situations.
You only need one dealer within the network to be doing it and others have to follow.
I think that’s why looking at this in terms of variable margin, and particularly with the focus on rewarding great behaviour in terms of, for example, how they market the car. It’s a win-win approach for the manufacturer and the dealers.
JB: Is it quite subjective though?
There’s a huge degree of scope in terms of how it’s done and a marketing plan will be agreed with a dealer’s business manager. It will be pre-agreed at the beginning of the campaign.
But we don’t take things lightly.
We have a small team that will run an event for a dealer in their showroom, for example, at the weekend and it will bring in professional test drivers to do a much softer sell, leaving sales staff free to actually work the showroom.
These have a tremendous success rate.
I think just over half our network is using that sort of technique for the Mazda6 launch.