Its US sales are down this year so far, and frankly the entire American auto sales picture has flattened out. But under new CEO Masahiro Moro, Mazda North American Operations clearly means to be regarded as a brand on the rise.
Also serving as CMO for Mazda worldwide, Moro crucially sees brand management as the key to long-term success for Mazda in the US and globally.
“We have changed to emphasize brand and product value to customers and to emphasize brand-value management,” Moro told a group of journalists in Detroit recently.
Mazda’s global share of automotive sales is less than 2 percent, but over the past few years the Japanese brand has been seeking to punch above its fighting weight by overhauling its entire product lineup, gaining technologically with its new SkyActiv development platform, expanding its offerings in fast-growing SUV and crossover segments and, most recently, casting itself as a near-premium marque.
So far this year, progress isn’t evident because Mazda’s US sales were down about 8 percent for the first half of 2016 compared with a year earlier. But much of the reason for the decline was the fact that Mazda was introducing a significantly enhanced new version of its CX-9 flagship SUV and its dealers had been without the previous version to sell for most of the year, explained Robert Davis Sr., vice president of US operations.
Now the new CX-9 has populated showrooms and is gaining a good reception, especially for its Signature trim level of premium materials, amenities and technology, which Mazda is using to try to begin leveraging its brand out of the mere mainstream of the US auto market and into near-luxury territory adjacent to, say, Acura.
Moro said Mazda began emphasizing long-term brand equity a few years ago, after the Great Recession brought yet another turn in the industry’s historical boom-and-bust cycle and after the company’s brain trust closely examined its approach. Its philosophy at that point was heavily based on increasing volume and achieving sales growth at nearly any cost.
“We sold at a discount so the customer didn’t see value other than the price deal,” Moro said. “We also focused on selling smaller cars” with relatively small profit margins. Customer retention rates were low to match, he said—less than 3o percent in the US.
“We weren’t going to survive that way,” he recalled. “So we changed our philosophy 180 degrees. We started from scratch” by developing the Skyactiv platform, which brought weight-saving technologies and improved driving dynamics to all the new models that would be built on it. Mazda also created a new exterior-design language it calls Kodo, which suggests forward momentum and dynamism even when the vehicle is standing still.
“It was ridiculous in a way, but we had to throw out convention,” Moro said. “And now our philosophy is designed around how to keep customers coming back to Mazda. Everything is customer-focused. We used to be essentially a wholesale producer. Now we are focused on how to take care of the customer throughout the ownership cycle. It’s a big shift in mindset.”
As a result, he said, despite the 2016 dip so far, Mazda has posted 15 percent sales growth in the US over the past five years, and growth in retail sales is higher as the company seeks to curtail fleet sales that end up retarding the value of used products and eroding overall brand equity. Better prices for used Mazdas mean that customers can afford higher-priced new Mazdas. “It’s a new cycle for our business,” Moro said.
“We made the huge mistake in the past of thinking a manufacturer can create a brand image with the customer,” he said. “But the customer’s own perception is everything, and that takes a longer time … You have to continue to evolve your technology, product and design for five years in a consistent way, otherwise the customer doesn’t believe you.
“So our task now is to convince consumers and dealers through brand value management. And our brand is to be the smart alternative to premium brands.”