LOS ANGELES — Mazda is getting back on track in its journey from a small, mainstream brand to a more premium player after something of a rocky year.
U.S. sales have suffered beyond the industry as a whole, the launch of the redesigned Mazda3 sedan drew stronger media accolades than consumer demand, and there was some dealer pushback on store upgrades designed to replace the breezy zoom-zoom aesthetic with something more like an upscale department store.
But there’s good reason for optimism, said Jeff Guyton, who took over as president of Mazda North America in April after holding the same position at Mazda Europe for a decade.
The new CX-30 subcompact crossover is likely to find a sweet spot in the U.S. market based on price, features and body style, Guyton said on the sidelines of the Los Angeles Auto Show. A new U.S.-built crossover is coming in 2021. And the brand has reached a milestone in the transformation of its retail experience, a key piece of Mazda’s strategy to improve its performance.
The Retail Evolution store upgrade program is the brand’s effort to convert mainstream showrooms in the brand’s blue-and-white motif to the new black-and-silver model, designed to be more welcoming and project an almost luxury-dealer level of service. Mazda last month commemorated its 100th dealership that completed the program since it was announced in 2014: Jeff Haas Mazda in Houston.
While some Mazda retailers have pushed back on investing millions of dollars on brick-and-mortar when buyers are increasingly doing more vehicle shopping online, Guyton said the upgrade directly translates into better sales and service revenue, increased loyalty and greater visibility for the relatively small brand.
“Lots of manufacturers do projects like this and it’s about the style, it’s about the design. And it is that for us, too, but what is much more important is the level of hospitality that is happening in that store,” he said. “In order to take the brand forward, we needed to make a big change in both how the retail experience looked as well as how it behaved.”
According to Mazda, dealerships operating for more than a year with the makeover have seen service retention increase by an average of 57 percent and sales grow more than 10 percent year over year compared with stores without the upgrade.
Mazda expects 300 dealerships will complete the Retail Evolution program by 2021 out of about 550 total. The refreshed stores will handle about 85 percent of the overall business, Mazda said in a press release.
“Historically, we had poor retention both in service and in sales,” Guyton said. “Really, this Retail Evolution program is intended to make that a thing of the past. We see significant uplifts in loyalty already for the stores that are in operation, but once we have more of it — combined with the training and the technology pieces — I think there’s a nice progression for the brand. And then, you add the product.”
On the product side, Guyton is confident that the CX-30 is entering the right segment at the right time.
“Although I won’t talk about an actual volume figure, I do think there’s a substantial step up that can happen with the CX-30,” he said. “And the reason I say that is, unlike the Mazda3 coming into a sedan segment that is struggling, the CX-30 comes into a segment that’s growing.”
With that growth, however, comes new competition.
At the L.A. show, Kia unwrapped the new Seltos crossover as a biggish subcompact with all-wheel drive at a starting price below $22,000, not including shipping. Chevrolet brought its chunky new Trailblazer with a starting price below $20,000, before shipping.
Guyton thinks the CX-30 will stand apart, especially on the upscale trims where Mazda has proved that it can do full-leather, premium interiors with minimalist beauty.
“We think with this product we have tremendous advantages in [noise, vibration and harshness], we’ve got a very nice package, and we have great performance.”
The strategy for the CX-30 is also different from that for the Mazda3, where the brand’s intention to appeal to more upscale buyers limited sales at the lower end of the market. “Candidly, the base car is priced above where the volume zone is,” Guyton said. The upside was that the car did well in the upper trims, where margins are higher. “We were pleased with that. We were not pleased with the bottom. But we are, with time, adjusting.”
Mazda3 sales were down 21 percent through October compared with last year, when the brand was selling the previous model at a lower price.
Overall, Mazda sales were off 10 percent during the first 10 months of the year, to 227,687, with every model in the red. The best performer was the CX-5 compact crossover, with just a 1 percent decrease.
When it goes on sale early next year, the CX-30 will start at $22,945, including shipping. It has the advantages of the company’s elegant “Kodo” design and a 186-hp motor, giving it a more premium feel than most competitors. The top Premium trim with awd stickers at $30,645, including shipping.
“It’s going to be a very good price,” said Guyton. “We had the endorsement from our dealer council, and all the data that we see says that the lineup is just exactly where it needs to be.”
Guyton didn’t offer any more information on the crossover that will be built in Alabama in a joint-venture plant with Toyota that is expected to be operational by 2021. The factory will build separate vehicles on separate assembly lines. Guyton did say that by lining up the company’s current crossovers — CX-3, CX-30, CX-5, CX-9 — the gap for a new model is evident. “And maybe I’ll leave you with this: Maybe it’s not only size that differentiates.”
Toyota is also supporting Mazda next year by handling the role of finance captive through Toyota Financial Services. Mazda is ending its decadelong relationship with JPMorgan Chase for Toyota Financial because of its expertise in auto financing. That, too, Guyton said, is another piece of the overall premium puzzle.
“You know, I don’t know how else to say it — it should be coming together.”