Mazda Financial Services proves fruitful for consumers, dealers

In April 2020, amid a worldwide shutdown that halted auto manufacturing across the globe, Mazda Motor Corp. was evaluating whether it would be able to open its global manufacturing facilities — including its plant in Hiroshima, Japan, where the automaker is headquartered.

Mazda North America Operations, which was then importing all of its vehicles from overseas or Mexico, was working against the tide to launch a full suite of automotive finance and lease options in the U.S., backed by Toyota Motor Credit Corp.

"While it was a very challenging time to get systems aligned and dealers trained on the new processes, delaying the launch was never a consideration," Tom Donnelly, Mazda North America Operations CEO, told Automotive News. Mazda and Toyota were aligned in getting the program started, despite the hurdles, he said.

The program was a replacement for the existing partnership Mazda had with JPMorgan Chase that ran from 2009 to 2019. Called Mazda Financial Services, it gave Mazda its first captive lender dedicated to the growth of the brand and the success of the dealer body while delivering exceptional customer service.

"Against extenuating circumstances," Donnelly said, "we booked our first contract on April 1, 2020."

At the same time, consumers had retreated to their residences to stop the spread of COVID-19 and the auto industry was at a standstill, waiting for production to restart and dealerships to reopen.

"When COVID first started, there was nothing more important than health and safety," Brandon Apon, general manager of Mall of Georgia Mazda in Buford, Ga., told Automotive News. "Everyone was thinking in the back of their mind about how we were going to stay in business, but at the forefront really was the safety of family and community."

By the time Mazda Financial Services came into play, the lockdown had already caused a massive slowdown in the industry.

April 2020 sales had dropped nearly 47 percent to 711,346 vehicles, compared with the same month in 2019, according to the Automotive News Research & Data Center. Through the first four months of 2020, sales were off by over 1 million vehicles, a decrease of 21 percent.

Mazda's sales slid 44 percent to 10,940 vehicles, compared with April 2019.

"In April, no one was buying cars, but there was a perfect storm coming into May because we had ground stock — probably more than we needed," Apon said. But now the company had a captive lender committed solely to Mazda loans and interested in seeing specific stores succeed, he added.

In May, Mazda sales of 24,933 vehicles represented just a 1 percent decrease compared with the year before and in June, dealers sold 25,326 vehicles, an increase of 11 percent. Mazda ended the year flat with sales topping 279,076 vehicles.

At launch, Mazda Financial Services offered a 90-day payment deferral on both new and used Mazdas for eligible customers who opted to finance through the program, as well as additional incentives for first responders and others who worked in essential businesses and needed to buy a vehicle.

"If there was a situation where their job was putting them on the front lines, Mazda wanted to give them some opportunities to stay in vehicles affordably," Apon said.

Mazda Financial Services offered its 500-plus dealer network reduced rates and interest on floorplan loans — what dealers borrow to finance the vehicles they sell — plus the option to defer payments on the principal for real estate and working capital loans.

Apon said that Mazda Financial Services "knew what the dealers were going through and the challenges we were facing and they gave us assistance where we needed it." In turn, he said, the lender received more business and loyalty.

"They had the leverage to help us when times were tough, and we've seen over the past several years how the dealers were able to repay that by growing the [Mazda Financial Services] business and strengthening that partnership," Apon said.

Dealer sentiment for the partnership is still "overwhelmingly positive" and the brand's market share is at an all-time high, Donnelly said.

According to data from the company, Mazda's market share in 2020 prior to the partnership was 1.9 percent compared with 2.4 percent in the first four months of 2023.

Idaliz Maldonado, general manager of Hello Mazda in San Diego, told Automotive News that Mazda Financial Services is looking to ensure that every experience it provides is good all the way around, not just with the customer, but with the dealership.

"They're super helpful in maintaining rapport and a relationship with the client all the way through if it's a lease or a purchase," Maldonado said. "They make it very seamless. They also are aggressive on their financing rates."

In the face of rising interest rates, Donnelly said that both Mazda North America and Mazda Financial Services are committed to providing fair and competitive rates and programs across the automaker's portfolio that "benchmark" against competitors.

For the most part, Maldonado said, Mazda has really competitive rates across every model line.

"We actually just experienced it where we had clients come in with higher [pre-approved] rates and they were able to secure with [Mazda Financial Services] at a lower rate, which is very competitive compared to the market in general," she said.

Mazda Financial Services has also helped electric vehicle buyers capture a $7,500 federal tax credit if they opt to lease the brand's sole battery-powered entry, the MX-30 subcompact crossover.

Sold only in California and in very low volumes, the Mazda MX-30 is imported from Japan with battery assembly and mineral sourcing completed outside of North America, making it ineligible for the incentive if consumers buy or finance the EV.

When buyers choose to lease the MX-30, however, Mazda Financial Services can pass the $7,500 federal tax credit along to the customer at a reduced cost because the lender is the technical owner of the vehicle. A provision in the law says that if a commercial entity owns the vehicle, the made-in-North America battery barrier does not apply.

Maldonado said that the money factor version of the lease for the MX-30 is more competitive than any other available. The money factor is the rate given for leasing, she explained.

Mazda Financial Services "is using the federal incentive to reduce the costs of that rate, which is helping attract consumers to the MX-30," Maldonado said.