Just one mainstream brand posted a sales increase in 2020: Mazda.
Despite the COVID-19 pandemic, the small Japanese automaker saw its U.S. sales rise 0.2 percent to 279,076 vehicles last year.
The addition of the CX-30 subcompact crossover in late 2019 helped drive sales in 2020. Philip Van Riper, chairman of the Mazda National Dealer Advisory Council, says the CX-30 has helped Mazda reach premium buyers and is exposing a new segment of customers to the brand.
Elsewhere in the lineup, the Mazda3 compact, available as either a sedan or hatchback, now comes in a revised base model with a smaller engine and reduced price, while a turbocharged engine option is now at the top of the range. Jeff Guyton, president of Mazda North America Operations, has said offering a broad range of powertrains is part of a strategy to grow sales.
Mazda dealers should also get another crossover offering once production at the Alabama joint manufacturing plant with Toyota begins this year.
Van Riper, 45, vice president at Mazda of New Rochelle and Garden City Mazda in New York, spoke with Staff Reporter Jack Walsworth. Here are edited excerpts.
Q: How was 2020 for Mazda dealers?
A: Besides the obvious challenges that we all dealt with, I think we came out of the year stronger than we were going into it. Even with all the challenges that were presented, I think the dealer body and [the Mazda National Dealer Advisory Council] working with the factory team really came together to find success with the environment we’re in. There were some great accomplishments. We finished the year with our highest sustained market share that we’ve had. We were one of the only brands that finished the year with year-over-year sales growth, which was a great accomplishment, given that many stores were shut down for parts of the year.
We also did some new programs, the community outreach. Mazda developed a program called Essential Car Care. That’s morphed into the Mazda Heroes program. During the depths of the pandemic, it was a way that we found we can give back to the front-line workers, the health care workers, that were battling the pandemic. We just tried to contribute to communities in the ways that we could. I think it had a great, positive impact on the Mazda community, as well as the communities that we’re working in.
One other great accomplishment of the year was the launch of Mazda Financial Services with Toyota. Amazingly, that was launched on April 1. Despite the environment that they launched in, it ended up becoming a great relationship through the first year. That has been a really powerful contributor to the success that we’ve had. In perspective of what 2020 was, we had some great achievements.
To what do you credit Mazda’s sales increase last year?
How we responded to the pandemic, in the early spring, was very aggressive and created the groundwork for the success that we had.
First off in the spring, the [dealer council] and the factory teams were holding weekly meetings. The foundation of everything we did was just the communication that we had, back and forth. The team [at Mazda North America’s headquarters] wanted to know everything that was going on on the ground, the data points of customers coming in, what was selling and what we needed. There’s a few major things they did. Programs and incentives that Mazda deployed were some of the strongest they’ve ever done. We had 0 percent financing across almost the entire model lineup. That was a first for us. We had very aggressive programs to support the certified pre-owned business, which also paid great dividends.
The factory tried to help the dealer body from a cash flow perspective. They simplified and accelerated the co-op reimbursement program, as well as some other similar actions.
Third is that community outreach. I think that really had a positive impact in that it brought a lot of folks into Mazda stores who’d never been in here before with the Essential Car Care program. Just by being able to do that and letting the teams in the dealership feel good about what we’re doing, it kept everyone energized and focused on what we had to do.
Do you expect sales to rise again in 2021?
It’s very difficult to say. A lot of the same constraints that we had in 2020 still exist. The pandemic is still a big issue. There’s a lot of recessionary aspects to the economy. A lot of folks still unemployed. With that being said, I think that we’ve got the best and most complete model lineup that I’ve ever seen with Mazda. I think that the relationship with Toyota is going to continue to be a strength for us. We’re able to get more deals done now than we’ve historically been able to do.
Coming back to the product perspective, the CX-30, which we rolled out last year, was very strong in 2020. I think we’ll continue to grow its share in volume this year. That car is phenomenal. It helps us get up to the premium buyer and is bringing a new segment of the buying public into the stores, exposing them to Mazda. We’ve got good expectations for that car. The CX-5, our bread and butter, will continue to do well, and I expect it to be able to continue to take share there. I hope that we will see continued growth but very difficult to say. I think we’re really well positioned, given all of the challenges there are.
Are Mazda’s production and inventory levels coming back in line with demand?
They are. Right now, we’re in a good position. The second half of the year, it was challenging, like all brands, with the plants being shut down and trying to figure out where to deploy the inventory across the country. But for the last couple of months, and looking forward into the pipeline, we’re in a strong position, and I really don’t believe that inventory is going to be one of our constraints.
How are Mazda dealerships’ profitability levels? Has that changed in the past couple months?
It has. It’s been a positive. Return on sales are near all-time highs across the dealer body. There’s a lot more focus on not only growing volume, but growing margins, and working smartly and intelligently to capitalize on taking more of the growth in the segments we compete in. There’s a pretty positive view from the dealer body right now about how we performed.
How did Mazda help dealerships navigate the changes brought about by the pandemic? Is there anything more that dealers want to see Mazda do?
Digital retailing and how to evolve into a digital retailing environment. This is something that Mazda was pursuing since 2019, but the pandemic definitely accelerated the focus on it. We have rolled out tools that help the dealer body provide full, seamless digital retailing experiences to our customers.
Right now, a good chunk of the dealer body has adopted it, and we’re pushing to get the full dealer body on board. At the end of the day, whether it’s Mazda or any other brand, we need to be able to serve our customers, however they want to interact with us. That’s something that we’ve embraced.
Looking at certified pre-owned, is Mazda doing enough to promote those sales?
They’ve taken very positive actions in the last year to strengthen the focus here as they never have before. They’re doing more advertising for certified pre-owned, which is a real benefit to us. We always welcome more advertising, but I’m very pleased with the actions they’ve taken in the last year.
Is there anything missing in the Mazda product lineup?
I wouldn’t say there’s anything missing right now. In the areas that we’re trying to compete in, we’ve got the product that lets us do it well. There’s continued discussions about how we grow the product portfolio and that’s something that’s going to evolve over time. But I think the dealer body feels good about what we’ve got. Where there has been feedback, Mazda is always receptive to hearing and making the changes we need to continue to grow in the next three, five, 10 years.
Many rivals are introducing hybrid and plug-in hybrid crossovers. Are dealers asking Mazda to consider hybrids, especially crossovers?
Mazda has actually confirmed that they’re introducing a hybrid. It’s going to be a combination of a couple options of fully electric, as well as a plug-in hybrid. I don’t have the time frame for when that’s coming. But it’s something that Mazda is always talking about.
With the [dealer council], we’re always having that conversation. There seems to be less requesting that from the customer base than there is maybe from outside influences. With the core Mazda customer base, it’s a very driver-centric customer. They like the engines that we have. Mazda has phenomenally performing engines and it caters very well to the customer base that we have, as well as what we’re going after.
That vehicle you mentioned, is that the MX-30?
Correct.
There were some reports that it is coming to the U.S. as both a plug-in hybrid and a full-electric vehicle. Do dealers want or need such a small hybrid or EV?
I think it’s a good place to start. I don’t believe there’s a lot of pushback, that we’re approaching the market from the wrong perspective.
Mazda plans to bring its iconic rotary engine back as a range extender for the plug-in hybrid MX-30. Is this a good way for that feature to return to the brand?
I think it is because it’s going to serve two purposes. One, it’s just a very efficient engineering way to approach the technology. But there is also a good segment of the Mazda population that does have that fondness for the rotary engine. I think it’ll serve a couple purposes in making the vehicle successful.
Some Mazda dealers have complained in the past about a lack of consistent advertising. When there are ads, sales increase, but when ad spending falls off, so do sales. From a dealer’s perspective, have you seen the advertising effort improve? If not, what would you like to see?
That concern was realistic. It’s something, historically, that we’ve been challenged with. I think that over the last year, and perhaps even the latter half of 2020, there were some significant changes and just acknowledgment of what we needed to do from an advertising perspective.
Over the last year, Mazda has become much more thorough in the linkages between the various advertising campaigns: What is pushing out to the traditional media channels? What’s going out through digital, and Tier One to Tier Three being tied together. I think the dealer body is feeling pretty good about the direction that we’re going in the advertising space. We need to just continue to stay aggressive with it with an always-on mentality. If we can do that, along with having the programs and incentives that we need to be in front of our customers, we’re going to have several good years ahead.
Has Mazda’s strategy of having some smaller engine choices and more affordable entry prices, plus bigger engines and more premium trims, been working? Does it create confusion for customers as to whether Mazda is more of a mainstream or premium brand?
I think it has been working. We rolled out a couple of turbo variants in the Mazda3 and the CX-30. Each of those enable us to stretch up to the premium buyer. We’re enabling those buyers to come into the stores and get exactly what they were looking for yet save money over what they traditionally might have been looking at. Yet we’re not losing our core customer base. People still recognize the Mazda product. It’s a great driving product. It’s a reliable, powerful engine. It’s efficient. I think it does provide what our customer base is looking for.
Are Mazda dealers still on board with facility upgrade programs?
The program is still going well. There is a good embrace across the dealer body. I believe it’s approximately 175 dealerships that are already operating under the new facility look. By the end of 2022, the committed plan right now is to have about 300 dealerships. So more than half of our dealer body will be in the new facility.