Sep 19, 2017
TOKYO — Mazda Motor Corp. has embarked on a three-year dealership upgrade targeting more than 100 outlets across the U.S. as part of its push to achieve 2 percent market share.
The campaign, which began last year, has overhauled about 26 stores so far and aims to improve about 130 in total within two to three years, spokeswoman Yukari Hara said.
Among the changes:
• Moving some locations and changing dealers.
• Introducing new outlet designs.
• Strengthening dealer training.
The network upgrade is initially focusing on markets where Mazda already has a strong foothold, such as California. Mazda has about 600 outlets across the U.S., Hara said.
Mazda said it isn't dropping dealers. But through the network overhaul, the company says new dealers have been brought on to replace some who have left the brand.
"We have been working more closely with our dealers to evolve their businesses and through that process, some new dealers have chosen to begin working with us, while others have made the decision to leave the Mazda brand," the company said in a statement emailed to Automotive News.
The Japanese carmaker declined to say how many dealers have left and how many have joined.
Mazda is buttressing its retail network as it aims to bolster brand image and market share without resorting to aggressive incentives. CEO Masamichi Kogai wants to lift U.S. market share to a sustainable 2 percent from its current level around 1.7 percent.
But as Mazda restricts incentives, sales have stalled. Mazda's U.S. sales slumped 6.7 percent to 297,773 vehicles in 2016, even as the overall industry inched ahead 0.4 percent to recover volume. This year, sales were down 2.4 percent through August in a market off 2.7 percent.
"We are taking on the challenge of prioritizing brand over sales," Hara said. The strategy calls for lifting dealer margins by improving ? brand image and customer satisfaction.
"We have gained the support of our dealers," Hara said. "The dealer owners have started to believe it is time for them to invest in Mazda, as we can consistently deliver excellent products."
Part of the campaign, dubbed Retail Evolution, involves rolling out new store designs. Mazda declined to say how much dealers must invest, saying cost varies from outlet to outlet.
Stepped-up training on Mazda's message and brand expectations is also on tap.
"In order for our dealer partners to become true brand advocates," Mazda said, "we understand that it's necessary to train the dealership staff not only on the items specific to their job functions, but to the ideals and mission of the brand itself."
Mazda also plans to overhaul its sales incentive system, according to a report in Japan's Nikkei business daily.
Under the new setup, half of a dealer's incentive payments will be based on an assessment of the dealer's efforts on eight points. They include the store's interior and exterior appearance, equipment, the store's website design and customer satisfaction results.
Car-heavy Mazda has also been caught flat-footed by a market hungry for light trucks.
Slumping U.S. volume and increasing incentives to move slow-selling sedans helped fan a 24 percent drop in global operating profit in the company's fiscal first quarter ended June 30.
Operating profit in North America, Mazda's biggest market, slid 37 percent as the company raced to make more crossovers available.
Mazda aims to fix that by buttressing sedan sales with more competitive incentives and other market campaigns. It will also jack up the supply of crossovers.
Later this year, Mazda will increase production of the new-generation CX-5 crossover at its Hofu assembly plant in western Japan to boost shipments to the United States, executives said.
"Competition is very tough in the U.S.," Managing Executive Officer Tetsuya Fujimoto said while announcing financial results on Aug. 2. "But we are progressing well with our planned shift to crossover models. We will ramp up production considerably in the second half."
Source: Automotive News