Mazda: No longer the industry's best kept secret

Mazda had a banner year in 2023, closing up 23 percent with sales cresting 363,000. The brand ended 16,489 sales shy of the company's record of 379,843 set in 1986.

David Hodges, chairman of the Mazda National Dealer Advisory Council, attributes the growth to an engaged dealer network, strong product portfolio and support from Mazda leadership.

"We've got a great team in Mazda," Hodges said. "The strength of the dealer body and the relationship the dealer council has with leadership is one of the great positives of this brand."

Hodges expects that momentum from 2023 and two new crossovers on the horizon — the CX-70 five-seater and a hybrid variant of the CX-50 — will help Mazda exceed its 2024 sales goal of 400,000. Mazda has also said it's targeting 500,000 sales in 2025.

As far as electric vehicles, consumer demand for the plug-in variant of the three-row CX-90 is high, and Hodges, chairman of Hodges Management Group, which owns two Mazda stores in northeast Florida, believes plug-in hybrids and conventional hybrids are the right products for the current market.

Mazda has been strategic to wait on EVs, Hodges said, instead taking what the brand calls an "intentional follower" approach. It plans to roll out a battery-electric roadmap in the second half of the decade.

Hodges, 51, spoke with Staff Reporter Carly Schaffner about Mazda's transition to the premium space, its measured approach to electrifying its fleet and letting the market dictate demand. Here are edited excerpts.

Q: What were the key takeaways for Mazda dealers in 2023?

A: We used to say we're the best kept secret in the auto business, but we're not a secret anymore. People are starting to figure out that Mazda makes unbelievable cars with great reliability, great resale [value] and are easy to maintain. And we're moving into that luxury segment and performing extremely well. I think most dealers are engaged and will say they love the brand.

Were there any notable challenges?

Rising interest rate environments are always difficult. We saw our competitors start to become more aggressive, especially once they had inventory on the ground later in 2023.

High rates will still be a challenge in 2024. What is Mazda doing to help its dealers?

We stay nimble — something Mazda does really well. They listen to the council and are very open to feedback. That allows us to combat these challenges and be measured in how we attack the market. And we do it in unison. It's a breath of fresh air to work with a brand that truly listens and values their dealers.

What will Mazda have to do to reach its next sales milestone of 400,000 in 2024?

Based on what we saw in 2023, we are well on track to exceed 400,000 sales. It's a realistic expectation. [Mazda CEO Masahiro Moro] and the rest of the Mazda team are incredible supporters of the North American market. It's not going to be easy, but with our new product entries and the increased momentum we've seen and how December closed, we are well within reach to eclipse sales of 400,000 in 2024.

What do you think will be the big topics for Mazda dealers at the NADA Show?

We have some insight about long-term product plans, but dealers will be curious to see what's down the road. Dealers are eager for the new CX-70, which is [launching soon]. Also, inventory [will be a topic]. We've been blessed with strong inventory positions.

What does Mazda's new-vehicle inventory look like, and what is the expectation for days' supply next year?

I give credit to Mazda leadership for making sure the U.S. has cars. They did that all throughout the pandemic and through last year. We're very bullish that inventory will not be an issue. We're well positioned for spring and to have sustainable growth going forward. We don't have any specific model concerns and are going to operate with a full lineup.

What is Mazda predicting for vehicle margins on new and used vehicles for the year, and has there been any restructuring?

There are always minor tweaks to make it easier for us from an operational standpoint but it's a very stable margin system. Mazda has been very understanding, and that helps all of us drive more volume and take better care of our customers.

Has Mazda discussed any increase in incentives for 2024?

Mazda has four [sales] regions, and they all report on what's going on in the marketplace, and one of Mazda's great strengths is responding when and where it makes sense. You'll always find that Mazda will be competitive, which put us as dealers in a great value position versus our competitors. We'll see incentives where they're needed to move specific model lines to continue to grow the business.

[For example], in early November we saw sales were starting to stagnate a bit, specifically with CX-5, and so the council recommended a 0 percent for 60-month [offer]. Mazda listened, figured out a way to fund it and launched it in December, and we had the best December we've ever had.

What is Mazda's leasing outlook for 2024? Do you expect to see any deals or increased penetration?

The relationship with Mazda Financial Services has been incredible, and leasing is one of the strengths — having a repeat buyer and being able to keep those customers in Mazda. We've been through a cycle with that now, and it's been very positive. As far as penetration levels, it'll be competitive, and it'll be line by line based on where there's a need.

Do Mazda buyers prefer to lease over purchase?

We see more leasing as the products continue to move upstream. [For example], the CX-90 PHEV is a strong leased vehicle. A lot of it depends on the model, but the more upstream we move, the higher percentage we'll see for leasing.

How has Mazda's Retail Evolution facility program helped to change the brand's image?

Nationally Mazda has 284 [completed] Retail Evolution with 50 more in the pipeline. It's an enhanced environment for the consumer — they feel it. Our associates feel it. It takes Mazda upscale, where it truly is with its cars. You feel like you're walking into a luxury showroom — and you are walking into a luxury showroom — because the cars now match the store, and the buyers are responding in a very positive manner.

What has it been like selling the CX-5 and CX-50 compact crossovers side by side?

They are two different cars, and they each have their own strengths. We've seen buyers that will look at both, but they certainly lean into one or the other. I do believe we'll see a one-to-one sales volume as production begins to increase [on the CX-50].

How have the new larger platform vehicles changed the game for Mazda?

When you marry CX-50 and CX-90 with the Retail Evolution facility, [which showcases] the premium attributes of the brand, customers are responding well. Dealers are providing exceptional experiences, and we encourage people to drive a CX-90, especially the PHEV. It provides 30 to 40 miles of range for around town. Our customers say they go a month or six weeks without filling up their tanks. The CX-90 is technologically advanced, and the fit and finish is luxury. Same with the CX-50. They are two great vehicles that have elevated the brand.

How will the CX-70 fit into the lineup?

The CX-70 will be a welcome addition that will broaden the appeal of the brand. It gives our customers another option — we've never had a two-row midsize [crossover]. It's complementary to the showroom we have now its own unique way. It also puts the dealers in a position to find the best solution so we can meet and exceed our customers' expectations.

What did dealers say about the discontinuation of the MX-30?

That car was California based and was more of a niche vehicle that some people had and loved. But Mazda learned quite a bit from the MX-30 and was able to apply that to these new alternative powertrain strategies. Right now, PHEVs and hybrids are the right technology for the current market. Mazda has been very thoughtful on giving us those products, especially with the CX-90 PHEV and the CX-50 hybrid that's coming.

What is missing in the lineup?

I'd love to have a small pickup truck, but our showroom is more robust than it's ever been. Our greatest opportunity is increasing awareness and encouraging consumers to come drive a Mazda. Japan is preparing for an electrified future, and that will be introduced later this decade when we expect consumer demand to increase.

What are dealers saying about Mazda's EV strategy to be an "intentional follower"?

Mazda has always been strategic, thoughtful and intentional with their business model — they have to be with the resources that they have, and this is no exception. We've seen great acceptance in PHEV, and other brands are seeing great gains with hybrids across the U.S. That's the right technology for today's conditions. Not to say it won't change as time goes, but I'm thankful Mazda has been strategic and intentional about the EV space.

Mazda says it anticipates EVs to account for between 25 and 40 percent of its global sales in 2030. What do dealers think about this goal?

Anyone you talk to from a dealer or OEM perspective will tell you the industry is more fluid than ever right now. I have confidence that Mazda is going to listen and respond to the voice of the dealer body and, more importantly, to the voice of the customer. That will drive the future.

Being fluid and nimble is a great strategic advantage in a market like this because it changes so rapidly. If you asked this question two years ago, everyone was saying ICE is done in two, three, four years. And it just hasn't happened that way.

What are your thoughts on legislation that seeks to completely phase out the sale of gasoline vehicles?

I think we should listen to the customer. That's rule No. 1 in capitalism. When you start telling people what they should drive, that's when you have multiple problems. As dealers, our job is to find the right vehicle that fits what the customer is trying to accomplish. If we don't listen and just tell them something we want, that doesn't end well for us. That's what you'll find if you continue to try to legislate what people driving or buying.

Mazda and Toyota have a collaborative relationship. Are dealers supportive of the partnership?

We love it. The relationship with Mazda Financial Services has been game changing for us. I think it's a win for dealers, for Mazda, for Toyota and for the customers. There are a lot of things Toyota is gleaning from Mazda in manufacturing that they are sharing. Mazda is more Mazda than it's ever been. I think the partnership is bearing fruit for everybody involved.

Does Mazda offer any type of installation program for customers who want a home charger?

That's one of the things we're working on. Hopefully, we'll have something in that area this coming year. There are certain roadblocks when you're dealing with third parties and people's homes, and we just have to be careful. But we do want to be their trusted adviser and help them as much as we can. So, we're doing a lot of research to find solutions for our clients to help them achieve their charging goals.

What are your thoughts on Mazda's announcement that it will use Tesla's charging ports on its future EVs?

From a dealer perspective this allows customers the confidence and convenience in additional charging options as they consider [a future EV] from Mazda. It's a win for Mazda's customers and a win for Mazda dealers.