Don’t sleep on this brand

Hey, everyone.

Today, thanks to a leaked internal memo from one of you, I’ve got an exclusive inside look at a “sleeper” auto brand. Let’s get after it.

—CDG

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Don’t Sleep on Mazda?

I’ve always loved an underdog. There’s just something about those sleeper brands that continuously (and subtly) grind to find new ways to reach and serve customers in a competitive market.

I’m becoming more and more convinced that Mazda deserves to join the ranks of those determined, innovative, and strategic automakers with a good chance of going the distance. Here are three reasons why →

Reason 1: Sales volume. Mazda sales increased 23.2% from 2022 to 2023, capping off last year with the brand’s best December performance on record. That put Mazda at its highest annual market share of 5.1% among direct competitors in 2023, according to my friends at Haig.

Take a look at the below graph and tell me Mazda doesn’t have some best-in-class momentum right now—it’s one of the few brands with average sales moving in the right direction, and it’s far outpacing the rest of the pack in terms of new car sales growth.

Reason 2: Product mix. Late last week, I received a leaked internal memo from Mazda’s SVP of Retail Operations explaining where Mazda stands in this industry-wide wave of normalization.

One of the standout data points from that memo? Mazda’s inventory trim mix. The brand “aggressively downshifted” its production mix in the fall to get in lockstep with the current market focus on affordability. The results: Mazda’s on-ground mix is now more than 70% fast-turn trims.

Plus, Mazda scores great on reliability—it was No. 7 on J.D. Power’s most recent ranking.

This is all working together. Mazda’s non-fleet retail business grew in Q1 of this year, buoyed by CX-30 and CX-50 sales both up 40% and Mazda3 sales up 25% annually.

The brand’s 1) focus on affordability plus 2) strong performance in mid-market SUVs and compact models have combined to help cement Mazda in a solid inventory situation right around the golden number of 60 days supply. Demand is high enough to move models, but supply is strong enough to ensure there are actually models to sell. 

All said and done, Mazda has been able to claw some market share from Toyota due to better inventory availability and a strong dealer reputation (free from add-ons or discount hesitancy).

Reason 3: Dealership relations. Mazda’s leadership has long been focused on creating closer relationships with the brand’s dealers (following the Toyota blueprint in a lot of ways). And it seems like it’s working:

• Dealer throughput jumped a notable 82% from 2012–2023.

• Right now, Mazda dealer profitability growth is head and shoulders above the rest.

• Mazda is ranked No. 8 in brand and No. 6 in residual values by Consumer Reports.

Now, it’s one thing to capture momentum. But it’s another to hold onto it, especially for a brand working on moving upmarket in a high interest rate environment that’s put a renewed focus on vehicle affordability. But Mazda seems to have a plan in place to keep the wheels greased…

Back to that internal memo I mentioned from Mazda’s SVP of Retail Ops. My biggest takeaway? Mazda has the fundamental strategy in place to engineer dealer focus, move more units, and continue its ambitious climb.

Some POV: Earlier this year, Mazda set a sales goal of 450K vehicles in the US in 2024. It’s also targeting 500K sales in 2025. FYI, Mazda sold a brand record 363,354 vehicles in 2023. It’ll take a lot of grit to meet those goals, and Mazda leadership told dealers they’re “not satisfied” with Q1 total volume growth.

So what is Mazda doing to ensure those big goals remain within reach? Implementing a plan to get on “the growth trajectory in a sustainable manner as quickly as possible,” SVP of Retail Ops Tim Manning wrote to dealers. Mazda wants to better convert website traffic into engaged leads.

It’ll do that by…

• Doubling down on incentives. Mazda is now allowing dealers to offer an additional 3.5% discount (!) for advertised price and lease payments on the CX-5 and CX-50 models. 

• The goal Mazda told dealers? “To align your pricing closer to transaction prices and convert additional traffic into engaged leads and, most importantly, incremental sales.”

More incentives = more cars sold. Simple as that.

Worth noting, though: This isn’t just a Mazda play. The average manufacturer incentive spend increased 11% to $3,120 last month, up 102% annually. And incentives as a percentage of average transaction price increased to 5.9% in March, the highest level since July 2021, according to Cox.

The Senior Superlatives of Auto are here. Most improved. Most underestimated. Most likely to succeed. I brought Alan Haig, President and Founder of Haig Partners, on the show to discuss his POV on the biggest brands, his strategy for selling dealerships for $100M, and the biggest flops in auto. Listen now.

AI regulation is coming. At least, that’s what Scott Gunnell, President of JM&A Group, told me in this jam-packed episode. We also talked about the future of F&I roles, negative equity entering back into the market, and much more. Listen now.

Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Impel, Auto Hauler Exchange, Haig Partners, Widewail, and Upstart for making these episodes possible.

Sure, you recognize the name. But did you know Valvoline is so much more than just a lubricant supplier?

For its dealership customers, Valvoline is an integral part of their business. Valvoline supplies world-class products…but also provides hands-on training and expertise, service lane technology, service advisor sales training, marketing support and promotions, and a full portfolio of lubricants and preventive maintenance chemicals.

This means Valvoline provides more value than a typical supplier, allowing dealers to consolidate their fixed-ops vendors and suppliers and focus on moving their business forward.

Click here to get in touch with Valvoline.

We’ve got tons of great jobs (in addition to our own) hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Thinking about making a move? OPENLANE is hiring for a ton of roles across the country right now. Pensacola, Omaha, and Portland, to name a few.

• Love pizza, bagels, and (apparently) earthquakes? Open Road Auto Group is hiring a sales genius in NYC.

• Got a knack for growth? Automated loan payment service AutoPayPlus is bringing on an agency development manager.

Looking to hire? Add your roles today—it’s 100% free.

• Tesla stock took a hit last week after the company reported a drop in vehicle deliveries in Q1—the first annual decline since 2020.

• And in other Tesla news, the company reached a settlement in the case over a 2018 car crash that killed an Apple engineer operating his Model X on Autopilot.

• Here’s a ranking of the top 150 dealership groups, per Auto News’ data.

• Ford is bringing back stair-step incentives to  move F-150s from dealer lots. 👀

• More and more millennials are calling lawyers for a specific reason: They’re facing auto repossession.

Thanks for reading. Have a great week, and I’ll see you next Thursday.

—CarDealershipGuy

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