The "majority" of Mazda Motor Corp.'s U.S. dealers are unprofitable and saddled with high inventories of new vehicles, a key dealer leader said. Sales have lagged as Mazda leadership works on redefining the brand.
"My personal opinion is that Mazda would rather spend their money on marketing their brand than incentivizing their vehicles," Paul Passarelli, the outgoing chairman of the Mazda National Dealer Advisory Council, told Automotive News.
Mazda has assured its dealer council it will fix the problems this year, Passarelli said. He has full confidence Mazda leadership will come through.
"I've noticed, from being on their dealer council for the last three years ... they identify a problem, and they'll come to market with something," said Passarelli, executive manager of Garden City Mazda in Hempstead, N.Y., and Huntington Mazda in Huntington Station, N.Y.
Passarelli said that when Mazda moved from advertising incentives to promoting the brand, its sales stalled. Mazda finished 2016 with 297,773 new-vehicle sales, down 6.7 percent from a year ago.
"With new marketing initiatives that Mazda's going to roll out to us in the new year, we're hoping to get the traffic in our showrooms going in a positive direction," Passarelli said.
Last year, lagging sales pushed dealers' average days supply of new vehicles to about 75 days, above the widely accepted industry norm of 60 days, he said.
If the days supply keeps climbing, dealers will not order new vehicles from Mazda until they sell the old ones, he said.
"We're hoping that the manufacturer notices that and helps incentivize these vehicles to help to move these vehicles off the dealers' lots," Passarelli said.
Mazda's new North American CEO, Masahiro Moro, has been pushing to drive the brand more upscale as part of a strategy that also includes improving customer satisfaction and increasing dealers' profit margins, Passarelli said.
Mazda's dealer council supports Moro's plan, he said, adding, "Will it happen in one day? No. His plan will probably take a couple more years before we see the fruits of it."