Mazda commits to private buyers

MAZDA Australia managing director Vinesh Bhindi is not tempted to pursue fleet sales in response to the ongoing new-vehicle market decline, viewing it as a short-term solution that would ultimately harm resale values for its largely private-buyer customer base.

Speaking with GoAuto at the CX-30 small SUV launch in Victoria last week, Mr Bhindi said reduced consumer confidence was “the real issue” affecting private-buyer sales, largely arising from tight lending conditions with the stagnant housing market as a contributing factor.

Mr Bhindi also named Australia’s ongoing drought conditions as a major factor that would continue harming the automotive sector beyond bushfire recovery efforts and the as-yet unknown economic effects of the Coronavirus outbreak.

However, he remained optimistic that federal tax cuts and the potential for further interest rate reductions by the Reserve Bank of Australia (RBA) could help stabilise sales to private car buyers. He was also hopeful that a recent relaxation of credit in the housing market could be replicated in automotive.

Come what may, Mr Bhindi remained adamant that Mazda would remain focused on private buyers and not “take the short-term wins” of selling to fleets.

“The easy way would be to say, ignore what we’ve done that has worked very well for us and our customers to go in this (fleet) direction,” he said.

“We have to remain true to who we are; we are private buyer focused. What that means with regard to numbers is secondary to our focus on mums and dads who buy one car at a time.

“Most people would say it (fleet) is an option but where my mindset is thinking, doing that in the short term would actually harm the private buyers because to do large fleet and government deals you have to offer significant discounts which destroys resale value.”

Mr Bhindi defended Mazda Australia’s decision to reposition passenger cars such as the Mazda2 and Mazda3 to a higher price point at a time when sales were contracting, claiming the higher level of standard safety technologies would serve to future-proof the cars when they reached the used market and boost residuals.

 “Our value proposition is built on providing features and options to a customer … in terms of protecting the value five years down the track,” he said.

“Private buyers do understand that value proposition; business buyers might have a different objective but from our point of view our products and specifications are targeted to what private consumers have told us they value.”

Mr Bhindi said the new Mazda Assured finance scheme that launches in March and will provide customers with a guaranteed future value for the end of their repayment term will “offer the consumer a solution which currently they have to find outside the Mazda ecosystem”.

“That’s not to say Mazda Finance will offer a quicker, easier (lending option); that’s just not on the cards,” he added, agreeing that it was undesirable for Mazda Finance to be perceived as a sub-prime lender.

“How the lending institutions are required to qualify risk is standard and published. All providers will comply, as will Mazda Finance, but under those rules they are allowed their own ways to evaluate risk and I think that’s where the differences are.”

Tight credit market aside, Mr Bhindi said the economic concerns of consumers were “all perceived” as the Australian economy was “in a reasonable position”.

“In 2020 we should see a gradual rebound in house prices, which generally reassures consumers of their wealth and eventually can lead to a boost to housing construction,” he said.

“Add to that tax cuts and possible adjustments to the interest rates by the RBA, which will slowly flow into the economy therefore lifting incomes and helping consumer confidence. All of which helps stabilise private sales for the industry.”

But for now, Mr Bhindi said private buyers were ploughing “any wage growth or any tax savings are going into their savings”.

“They are building up their reserves due to the uncertainty or the lack of confidence they have in the next one to five years about the economy or their personal situation,” he said.

“From our point of view, we are focused on providing a compelling value proposition to a consumer – if they are ready to buy.”