Mazda Motors Europe President Jan Brentebraten says Mazda won't cancel dealer contracts and set up regional marketing units in Europe, as Honda plans to do. But he says it will move aggressively to cut distribution costs here. Brentebraten was interviewed by Automotive News Europe Correspondent Georg Auer.
Mazda is doing well again in Europe. Are you satisfied?
There is a lot to be done, especially on the distribution side. We have great product and we can do a better job in taking it to market.
Has Mazda returned to its former high standards of quality?
I think the product quality is absolutely superb.
And customer satisfaction?
It is improving. In some markets local studies show we have a way to go, while in other markets our customer satisfaction performance is quite good. Quality is a major asset for Mazda.
What are your sales goals?
First we have an objective to grow the volume. We decided three years ago that we wanted to grow the business to 300,000 cars in Europe by 2000. Now we are on track.
We reached 209,000 three years ago, and achieved 238,000 last year. We are forecasting 265,000 this year.
We want to be the industry leader in customer satisfaction and we have put various initiatives in place to achieve that. Our third objective is to improve the financial position of Mazda in Europe.
How will you achieve that?
We are trying to take as much cost out as possible. We are reducing the cost of shipping parts from (Mazda's parts depot in) Antwerp to our dealers in Belgium, Spain and Portugal by delivering directly to them. We will probably start direct delivery of parts to all of France next year.
We are doing similar things with vehicle logistics. We will carry out the predelivery inspection work in Antwerp and ship cars directly to dealers in the Netherlands, Germany and parts of Switzerland. We will do the same thing in France at the beginning of next year.
This allows us to save an enormous amount of money. France is a good example. The distributor there has been able to sell the vehicle storage area, the parts warehouse, the predelivery inspection operation and the head office building.
We are working on doing this in more markets. Removing intermediaries takes structure and cost out of the chain.
Will you follow Honda's lead and create three hubs in Europe - in England, France and Germany?
We will take administrative costs out, but we will have dedicated sales and marketing people in all the markets. We want to tie those markets closer to Mazda Motors Europe rather than to regional centers. There has to be local competence.
Will you cut the number of dealers like Honda is doing in Germany?
We need the dealers on the spot. We don't want to slash the number of dealers. But we have to take out back office work from the dealers. It is more rational to do this centrally.
How much of the price of a Mazda car is attributable to distribution costs?
It varies by market. It is around 30 percent, plus or minus 5 percent. The exception is Denmark with its high taxes and prices.
What is the profit margin?
We have a way to go to get to Honda's level of 8.5 percent. But there are massive chunks of cost that have been taken out, and more have to be taken out in the future.
Capacity utilization is equally important. We have about 100,000 units of excess capacity. Sales are improving in Europe and North America, but Japan is in a slump.
Are you going further into countries in East Europe?
We are now going into Russia, which is a market with enormous potential. We are centering on Moscow, Yekaterinburg and St. Petersburg.
We are capitalizing on Ford's knowledge of the Russian market. (Ford owns 33.3 percent of Mazda.) They have been there for a long time, and have invested a lot of money to find out how the Russian market works. They have the expertise on homologation.