Article from Automotive news

Mazda and its dealers discussed a new exclusive showroom program and the prospect of a more aggressive captive finance arm at its make meeting.

The franchise program allows for cash assistance to dealers who build an exclusive facility or a stand-alone showroom that shares a back shop with another brand.

The incentive program takes effect April 1 and is in place for three years. Incentive support includes cash per car as well as a capped percentage of building costs (see related story, Page 32).

"We want to assist dealers who want to invest in Mazda," said Jim O'Sullivan, president of Mazda North American Operations.

Another reason for Mazda dealers to be upbeat: The automaker is looking at entering new segments.

Although declining to give details, O'Sullivan said: "We're not going to try to be all to everybody. We won't just slap a badge on another car and call it a Mazda. It has to fit the brand."

Dealer council Chairman Joe Shaker, a multiline dealer from Wellesley, Mass., said Mazda needs to "keep pushing into new segments," so that dealers can get more throughput. "We have to identify what's missing and fill the gaps," Shaker said.

Mazda sold 258,865 vehicles in the United States last year but told dealers it wants to hit 300,000 in 2004.

Randy Hiley, a multiline dealer in Arlington, Texas, said the best way for Mazda to hit that goal is to have the captive finance arm, Mazda American Credit Co., loosen its purse strings.

Hiley sees that happening both in terms of making riskier loans and in taking more risk with its residual values. He added, "But every dealer in every franchise wants that."

O'Sullivan said Mazda American Credit will take larger risks with first-time buyers of the Mazda3.

"We learned that with the MazdaSpeed Protege, which had an average buyer age of 26," O'Sullivan said. "They had good credit, just not a lot of it."

Dealers also believe that Mazda is underestimating the long-term value of the RX-8 sports car, for example.

"We want Mazda to take calculated risks," Shaker said. "We want to take advantage of our smallness. We can use the small supply as the basis for residuals. We can cut back on rentals, too."

On the advertising front, Shaker said Mazda will work harder with dealers to integrate their dealership ads with national and regional advertising.

In exchange, Mazda will allow dealers to get involved earlier in creating the national "zoom-zoom" ads.

 

I read somewhere that mazda is in the process of redesigning all of its showrooms to look more like a "jewel box." The new showrooms will be very product display oriented, not just a building will an open lobby with a few cars and a few desk in it. I believe part of the plan was to even have a cafe. Also, and more important IMO. Is that test drives will no longer be a "round the block" 2 min drive. (I test drove an RX-8 at one dealer that didn't even let me do that. He drove the car striaght down the road about 1 mile from the dealership, stopped in a church parking lot and told me that I could only drive it straight back up the road to the dealer. The test drive took 5 min.) Instead routes will be planned by the dealer (w. mazda's help if the dealer choses) that will show off each individual model.

 

The dealer I bought from already does this, they have a poster that says Zoom Zoom, and talk about 4 or 5 different types of driving, then there is a local map with the route highlighted. They did seem to be more picky about not putting miles on the 8, (I bought mine the week before labor day so they didn't have a demo). I went in for a oil change, it was slow so the salesman offers to let me test the Mazdaspeed Protege. Since I didn't have anything else to do I did, we probably drove around about 30 or so minutes on differnt types of roads.

 

Sounds like Mazda is on the right track. However, as good as my dealership is (and they are good, the showroom needs some serious attention... not only was it boring, but in really poor shape too. Good to hear Mazda is realizing that this is important too.

 

Also from Automotive news

NADA CONVENTION: Dealers like Mazda's store offer

Mazda's plan to offer cash incentives to dealers willing to build exclusive dealerships or stand-alone showrooms got an enthusiastic reaction at the convention.

One dealer, Bud Smail, says he was ready to pour the footings for an extension to his Mazda-Lincoln-Mercury store in Greensburg, Pa., when he heard about the new plan.

He called home and ordered the cement trucks to turn around. Everything went on hold.

"We're going to get some drawings and crunch some numbers," says Smail, whose Mazda-Lincoln-Mercury store is part of his 10-franchise holdings. "This is a very attractive program."

Last year, Mazda created a showroom design. Now Mazda believes it needs exclusive dealerships for the franchise to stand out.

Mazda will offer cash incentives from the date that dealers sign the paperwork for new construction. The deal is similar to one unveiled by Kia Motors America last year.

Starting April 1, Mazda will pay $350 per car sold to a dealer willing to build an exclusive store. If the dealer builds a stand-alone showroom and shares a service shop with another franchise - a popular option in smaller markets - Mazda will chip in $175 per car. The offer runs through March 2007, says John Mendel, executive vice president of Mazda North American Operations.

Faith in the brand

Mazda also will help if a renovation includes building a store to the specifications of its new "Retail Revolution" design. Mazda will provide as much as $300,000 of the cost of building an exclusive store and as much as $150,000 to assist on a stand-alone showroom, Mendel says.

"We have faith and confidence in the brand," he says. "We want to help dealers make the same commitment."

Twenty-three percent of Mazda showrooms are exclusive, up from 18 percent in December 2002. Another 25 percent have stand-alone showrooms with shared service shops.

Mazda wants to have 50 percent exclusive showrooms by the end of 2007, and 75 percent exclusives or stand-alone showrooms, says Jim

O'Sullivan, CEO of Mazda North American Operations. Mazda has about 700 dealers. O'Sullivan says there are no plans to add more.

"We are putting a viable business opportunity on the table," O'Sullivan says. "For some dealers in some smaller markets, doing this will never make sense. But at least the opportunity is there."

Dealers favor program

Dealer council chairman Joe Shaker, a multifranchise dealer in Wellesley, Mass., says dealers he spoke with strongly favor the program.

Estimates vary on how much it costs to redesign a dealership to conform to the Mazda design theme. Smail thinks it will cost about $125 per square foot for the 4,500 additional space he is building.

The new area will house a standalone Mazda retail showroom, service writeup area, customer waiting lounge and F&I area. But it will share service bays with a Lincoln Mercury store.

Randy Hiley, a multifranchise dealer in Arlington, Texas, thinks the job can be done for as low as $80 per square foot. He says that compares with the $110 per square foot that it costs to build a showroom to Volkswagen's specifications.

Says Shaker: "There might be some weird situations where a dealer has two brands that are great performers as a dual, but they don't do as well if you split them out. Overall, though, dealers are seeing it as a positive."