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NEWS
Toyota beyond Mazda's grasp
Narrower product range and fleet sales in Australia ensures Mazda won't overhaul number one brandToyota has a lock on the position of most popular brand in Australia, and won't be stepping down from the dais in the foreseeable future.
That's the conclusion to be drawn from speaking with Martin Benders, Managing Director for Mazda Australia. Newly-appointed to the position, Benders spoke with motoring.com.au last week concerning the dominant position Toyota holds in Australia. It's his view that while Mazda Australia has the runs on the board in this country, it doesn't have a sufficiently broad product portfolio to come close to matching Toyota for sales.
"They can fill all the little gaps, right?" Benders explained. "So they’re little gaps that we’re not going to go after. You can immediately take out all of those specific [segments] … like, we don’t have an off-road four-wheel drive range, which they are big on."
On top of that, Mazda relies almost exclusively on private sales, which is good for brand management, not so good for sales volumes.
"We don’t go after fleet business in any big way," Benders continued. "[Toyota does] a lot of fleet business. Camry’s a prime example of that. So there’s another slice that we take away."
To illustrate the extent of the problem for any car company aiming to take significant market share away from Toyota, the number one brand's year-to-date sales (64,947) are nearly double Mazda's (34,584). The gap between the two companies is enormous.
Mazda is strong in light and small cars, with Mazda2 and Mazda3 outselling Yaris and Corolla in sales for the year so far, but the difference between Corolla and Mazda3 is barely 200 units. Of all the other VFACTS segments in which Toyota competes, only the medium SUV segment provides another clear win to Mazda – with its CX-5 around 1700 sales ahead of RAV4 in year-to-date numbers.
If the problem for Mazda Australia is one of finding a sufficiently diverse product portfolio to go hunting Toyota, isn't this a problem for Mazda's head office in Japan? Benders avoided the admission that R&D at the present time is costly for Mazda, faced with a cash-flow problem. Instead he preferred to place the question in the context of Mazda's aspirations.
"Our stated aim is to be 1.7 million units by 2015, 2016," he said, prior to explaining that currently, the company is achieving production and sales of around 1.35 million, roughly where BMW is.
According to the Mazda exec, Toyota benefits from a brand image that appeals to a much wider demographic, whereas Mazda's branding is more narrowly focused towards drivers and motoring enthusiasts.
"Being number two or three in the market, you’ve got to have a broad appeal to start with," Benders said, returning to the Australian context. "But we’d still like to skew our appeal to people that sort of like cars rather than people who buy appliances... as a general sort of rule. Whereas Toyota I think... [is] the safe bet, you know; people who don’t think about cars too much will go and buy Toyota as safe every day. Not to say they don’t have specialist vehicles that appeal to those other people, but we’d like our full range to appeal more to those people."
The importer's distant second to Toyota doesn't mean that anyone is slacking off, however, or that Mazda hasn't come ahead in leaps and bounds over the last decade. On the contrary, Mazda's position in Australia has been an exceptional result. The local market is achieving sales figures relatively well ahead of the company's record in Europe and North America.
In a market of just 22 million people last year Mazda sold close to 104,000 vehicles, according to VFACTS. By comparison, Mazda sells around 130,000 cars in Europe and around 200,000 in America, Benders says. The Australian arm received a mention in the most recent global report ("they singled out Mazda Australia as one of the big contributors," Benders notes).
That contribution came not only from sales growth, as Benders remarks, but also from the strength of the Australian dollar. Unlike Mazda divisions overseas, the Australian operation runs lean without the need to discount the living daylights out of new cars to sell them. It all seems to have come as a surprise even to the Mazda Australia boss. When he left Australia to take up positions overseas, around the middle of the last decade, the importer was forecasting sales of around 70,000 a year.
"I must admit I thought we were pretty well maxed out at that point," he said. Benders credits his predecessor, Doug Dickson (who was also National Sales Manager before that), and Dickson's predecessor in the role of MD, Malcolm Gough, for Mazda's climb up the ladder.
One of the chief things Benders attributes to Mazda's rise in Australia is a decision to stop playing retailers against each other.
"We learnt those lessons through the nineties, when we had a fairly flat volume when the market was growing. And I think we worked out what worked and what didn’t work, and we said to our dealers … things like: 'If you sell this volume, we’ll give you a bonus … ' and they’re all destructive type processes."
The lesson learned for Mazda lay in encouraging dealers to compete against rival brands, not fellow dealers. That lesson was put to the test in the aftermath of the GFC... and it has boosted the dealers' confidence in the brand even more.
"If we go back to the Lehman Brothers collapse, the GFC, we said to our dealers, 'Look, we think there’s still opportunity in the market. We don’t think the GFC is going to be as impactful in the Australian market.' And we had strategic input that told us that," Benders explained.
"So we said to our dealers, 'We think we can grow a level when everybody else is going to shrink in.' They said, 'Okay, we’ll go with you on this.' And it worked."
Contrary to the reactions of other companies in the market, Mazda actually increased its orders for new cars from Japan during that period.
Mazda Australia nowadays provides a model for other Mazda divisions around the world to follow. The same day motoring.com.au visited for the interview with Benders, he had met with German Mazda dealers out here on a fact-finding mission. Unfortunately for the German dealers, anything they took away from their visit may provide little benefit back home. It's Benders' opinion that wholesalers in Europe have a lot more power over the retailers than is the case in Australia.
"I think it happens because the population in Europe, while it’s huge, is spread quite evenly over the continent.
"So all the dealers tend to be quite small operations. The manufacturers do have disproportionate control. What’s built up is a level of tolerance between each other, rather than working as a partnership."
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Written byKen Gratton
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