Mazda tacking with the fleets

Mazda has long committed to a business model in Australia selling cars to private buyers rather than fleets. But the importer appears to have reached the cross-roads in its marketing strategy.

To go much beyond last year's sales figure of 100,704 cars sold in Australia, the easy choice would be to take on Toyota directly in fleet sales.

But Mazda's Yuji Nakamine is wary of jumping into the fleet sales business, boots and all. As the Senior Managing Executive Officer in charge of Mazda's operations in Europe, Asia, Oceania, the Middle East and Africa, Nakamine-san keeps an eye on Mazda's Australian operations.

"The issue is there is a big fleet market in Australia, and Toyota is very strong in that segment," Nakamine-san told journalists in Tokyo late last month. "The point is whether we want to enter into that segment or not..."

"I think there are many types of fleet business in Australia... maybe user-chooser, small business, big fleet business, rental... We are already doing some business in user-chooser... but still, there may be some opportunities, if it's a small or medium fleet enterprise – and who may want to buy Mazda without a big discount."

Selling cars by the thousands to large fleets in Australia would be a potential blow to Mazda's carefully crafted brand image, 'Zoom-Zoom'. And it's that brand image that has been the engine room powering Mazda's climb up the local sales charts.

Fleets are drawn to Mazda products in part due to their strong resale value. Ironically, the more Mazdas sell to fleets, all the more likely the resale values would suffer. Big fleets have been known to dump particular models of car on the used-car market at the end of a lease – and trash resale values in the process.

"Resale value is very important in my mind," said Nakamine-san, hinting that there was yet another reason to be choosy about the sort of fleet business Mazda Australia should conquest.

The Japanese executive has been hearing about the Australian end of the business since 2006, so he's pretty well aware of Mazda's sales strategy and results in our part of the world. Back in 2006 he figures Mazda's market share was "maybe less than seven per cent." When the company's sales in Australia reached 100,000 units – "about two or three years ago" – that amounted to 10 per cent of the million-strong market. It was then, apparently, that the company in Australia began tossing up whether to chase fleet sales and accelerate well beyond 100,000 units a year to approach Toyota, dominant for years in the number one position.

Nakamine-san was involved in that discussion between Australia and Japan. The impression he gave during the interview was of a man willing to allow the Australian management team some considerable autonomy. Local dealers have told him they're satisfied with the results Mazda Australia and its dealer network have been achieving, and one reason for that is the "stability" of the management team in Australia. But stability alone won't expand sales.

"My vision is to continue to grow the business – I don't know how much – but without jeopardising brand strengths. We want the customer to feel very happy with buying and owning Mazda products."

Nakamine feels the next-generation CX-9, to be revealed at the LA motor show later this month, represents an opportunity for Mazda in Australia, but he also sees untapped potential in the Mazda2, Mazda3, CX-5 and BT-50. Left unsaid was any word on a production counterpart for the Koeru concept (pictured), which we speculate will be named CX-6 when it reaches global markets.

Australia remains the strongest performing market in the Mazda world, according to Nakamine-san, but it's still a relatively small piece in the whole jigsaw puzzle.

Subsequent to the interview with Nakamine-san, Mazda President and CEO Masamichi Kogai revealed that the manufacturer's global production capacity was capped at 1.5 million units a year without building a new plant. The company is currently building around a million a year, despite increased sales around the world. On that basis, there's no requirement for the company to invest more in production facilities at this time.

"Our intention is not to become a big player in the industry," Kogai-san said, through an interpreter.

"Currently our production capacity is 1.5 million units. In the fiscal year ending March 2019, our sales volume target is 1.65 million units, so we are thinking of producing enough volume, without building new plants."

"To sell 1.65 million units, to supply those vehicles from the current plant side, we really need to have the new plants at full capacity. If we are able to consider that demand then – and the trend will increase or even maintain – then that is probably a time we need to study the next plant.

"Our policy is to provide the [production volume] that meet the customer's demand. We don't want to make a strategy that resets the sales volume target first and then we see how the demand goes..."

In time, it may prove that Mazda can have its cake and eat it too, increasing sales incrementally in markets like Australia – without building expensive new infrastructure and without detriment to brand image or resale values.