How Hard Would It Be For Mazda To Do This?

[Guest2018]

Something another member of this forum just posted in the CX-9 section brought this whole question back to life for me: Is The Current Dealer Model Broken and What Should Replace It?

I put this here because most eyes are here in the CX-5 section which makes sense - they sell more of them. I want to bat around an idea that I've been thinking about lately. Nothing brand new but it does have a little twist to it.

Given that I just paid over twelve dollars for a few drops of touch-up paint (no kidding), this question revives my clarion call for significant changes to the pre and post sales customer experience as we know it within the Automobile Industry. How hard would it be for a company like Mazda to step out and make such a change by offering direct to customer sales and technical support and is now the right time for Mazda to do it?

As Mazda redesigns its fleet of vehicles through the new Kodo Design Language platform, would it make Mazda stand out even more boldly as an auto producer, if it brought into existence a Direct Sales model and Direct Service, Repair and Maintenance model to its broad base of customers world wide. I think it would distinguish Mazda in ways that would really make its brand and its offering stand out even more and well beyond what the new design language can produce on its own.

Benefits to the Mazda Customer?

- Lower pricing for new vehicles
- Lower maintenance, service and repair costs
- Higher confidence in the Direct OEM experience

Benefits to Mazda?

- Increased sales volumes across the board
- Increased revenues through delivery of maintenance, service and repairs
- Much stronger customer satisfaction coupled to ironclad customer loyalty
- Broader market penetration world wide
- Enhanced stock price
- Enhanced new development capital

A classic Win/Win. I don't see how Mazda could lose here. Sure, it would take time and cost to build out the infrastructure but that would be recovered in a relatively short period of time as a new stream of sales/revenues began flowing as a result of the new services being offered to a new breed of highly dedicated Mazda owners and customers. But, how Mazda goes about delivering such service would be just as important (if not more) than the service itself.

So, for brief moment, just assume that a drastic change is needed in the current model for how we buy our vehicles and have them serviced after the sale. Then, turn to the question of how. How would Mazda implement Direct OEM Maintenance, Repairs and Service to its current and future base of customers?

Well, what if it went something like this:

When you need service, Mazda would send a Maintenance Concierge to your home or office, swap like vehicles with you on the premises and then bring your vehicle back after service is complete. If you own a CX-5 then you get a CX-5 of equal or greater trim value as a loaner until your vehicle is returned to your home or office. What if you need repairs and your vehicle is not operable (cannot be driven)? In that case, a Mazda Maintenance Concierge drives a like vehicle in convoy with a Mazda flatbed tow truck to your home or office with the same net result at the end. Your vehicle is towed on a flatbed to the nearest OEM Mazda Repair Facility, you get the CX-5 of equal or greater trim (because that's what you own now) and your personal vehicle is returned to your home or office as you designate upon completion of the work.


How Could Mazda Physically Structure This?

This would allow Mazda to carefully and strategically locate its physical service centers to make the logistics work in their favor and at lower operating costs than most dealers have right now. Other than pure politics and protecting sacred cow pre-historic business models that don't work, I don't know why this is not being done right now throughout the industry. Mazda could easily drive down the ongoing operating costs of these OEM Repair Facilities because it won't have the overhead associated with needing fill an entire storage lot with new vehicles of the current and next years model. It can construct (or renovate) dedicated space that functions as Pure Play Maintenance and not both maintenance and sales.

So, the size and scope of these facilities can be greatly scaled down to facilitate lower operating costs. And, though the total size of the facility would actually shrink relative to a full scale dealer lot, the actual floor space dedicated to maintenance and repairs under roof would increase in relative size - again making the operation more efficient internally (a very important factor to consider).


How Could Mazda Implement Delivery?

When we recently purchased our new 2017 CX-9 Signature, we got a Welcome To The Family of Mazda type of letter form the CEO. In that letter, the CEO explained how grateful they were that we selected Mazda and how committed they were to making sure our Mazda experience was second to none. That's essentially what the letter was intended to communicate and I think it did it rather well.

However, what if that letter went on to describe something additional, something truly unique in the entire gas powered automobile industry. What if that same letter from CEO Masamichi Kogai, went on to explain a new kind of post-sale experience of truly remarkable Technical Support that you could expect to look forward to receiving from Mazda. How much more confident would such a letter make you feel about your new purchase:

Dear highly valued new Mazda family member,

Your new journey with Mazda has just begun. Our goal at Mazda is to make certain that your entire ownership experience is covered form A-Z with everything you will ever need to get the most from your new Mazda vehicle. To make your ownership experience as trouble free as possible, we would like to take this time to introduce you to our On-Demand Mazda OEM Maintenance Service program. At no additional cost to you and for the life of your warranty (or extended warranty), Mazda will provide personal Concierge level service to you whenever you need maintenance, service and/or repairs to your vehicle. At Mazda, we're doing things different.

We call the core service our On-Demand Mazda OEM Maintenance. You interact with the service through your On-Board Mazda Connect System. When you authorize scheduled maintenance, service and/or repairs to your vehicle through the Mazda Connect System, we take care of the rest. Mazda Connect Version 61.000.001 contains the the On-Board version of the On-Demand Mazda OEM Maintenance Service which works seamlessly through the Maintenance screen of your Vehicle Status Monitor.

The On-Board Service will monitor your vehicle's performance, critical systems and components. Upon detection of a maintenance and/or repair signal from your vehicle, you will be given several options to schedule a service appointment in real-time through the Mazda Connect System. Pressing the Yellow Button on your Maintenance screen will immediately put you in contact with an On-Demand Mazda Maintenance Representative via your SmartPhone's Bluetooth connection who will assign and dispatch a Maintenance Concierge to your home or office at a time that you designate appropriate. The Maintenance Concierge will bring you a replacement vehicle equal to or greater in trim value and then deliver your personal Mazda vehicle to nearest Mazda OEM Maintenance Facility.

During the time that your personal vehicle is in our care one of our Mazda OEM Maintenance Facilities, you can expect that our Professional Mazda OEM Technicians will handle your vehicle with the utmost in care and consideration. All of our Professional Mazda OEM Technicians are also trained to follow our industry leading Customer Vehicle Protection Protocols. That means that your vehicle will be treated with the dignity, honor and respect that it deserves and that you expect as our valued customer. In turn, this guarantees that your vehicle will never suffer extraneous damaged while under our care and will be returned to you in better condition than when we initially received it. That's our pledge to you as our value customer. Once work has been successfully completed on your vehicle, it will be returned to your home or office by a designated Maintenance Concierge.

If your vehicle is inoperable and cannot be driven, a Mazda Transport Vehicle and your assigned Maintenance Concierge will arrive at your home or office at the time you designate. You will then be given a temporary replacement vehicle of equal or grater trim value and your personal Mazda vehicle will be professionally transported to the nearest Mazda OEM Maintenance Facility for professional Mazda OEM diagnostic evaluation, repairs, maintenance and/or service.

If for any reason maintenance, repairs and/or service are necessary and your Mazda Connect System is inoperable or you simply wish to arrange delivery of your temporary replacement vehicle and pickup of your personal Mazda vehicle by other means, we have an App for that! Either Android or iOS, our On-Demand OEM Concierge App allows you to conveniently schedule your temporary replacement vehicle delivery and pickup of your personal Mazda vehicle, just like the Mazda Connect On-Board version of the On-Demand Mazda Maintenance Service. You can download the App right now from Google PlayStore or the Apple AppStore. If you need help downloading a copy of the On-Demand Mazda OEM Maintenance Service App, please visit www.mazda.on-demand.maintenance.com.

At Mazda, we don't just deliver state of the art vehicles. We also take pride in delivering to all our valued customers flexible, innovative, convenient 21st century OEM Maintenance & Repair services that you can trust and rely upon to be valid and necessary. All from the comfort of your own home or office, you can expect personalized Concierge level care with any necessary maintenance, service and/or repair to your vehicle through our On-Demand Mazda OEM Maintenance Service Program.

We hope you enjoy both the driving and ownership experience of your new Mazda as much as we did making it.

Thank you for choosing Mazda and welcome aboard!


Now, clearly I'm no copy writer, but what stops a company like Mazda from doing this right now?

 

[banjos-n-beer]

Like you said, Tesla is currently up against politics and a business model of yesteryear. If Mazda were to somehow align with them it might help increase their desired premium status, as would the post sale service.

 

[rj_make]

Well now.. I didn't receive any communication from Mazda's CEO after my purchase. I did however get a payment statement... [emoji53]

 

[Unobtanium]

If Mazda did all that I'd never buy one. It would be the next tesla. Overpriced, and all the froofroo would turn into excuses for crap vehicles because all the money would go to arse kissing instead of quality control. Just like a tesla.

 

[NelsonLewis]

If Mazda did all that I'd never buy one..

Me either.

 

[Aviboy97]

Not only is it a legal issue for direct sales to customers, you would have 700+ dealer franchise owners to be bought out costing Mazda BILLIONS to do so.

Then there is the assumption you made that the cars would cost less. Wrong. Mazda would then have to employ tens of thousands of people across the nation costing millions more is overhead.

There is a reason manufacturers went to the dealer model to begin with. It saves them money.

Can never and will never happen. The dealer model isnt broken. The experience varies and thats the problem. There are plenty of good quality dealers out there.

 

[old-school]

If Mazda did all that I'd never buy one. It would be the next tesla. Overpriced, and all the froofroo would turn into excuses for crap vehicles because all the money would go to arse kissing instead of quality control. Just like a tesla.

Yup^^^.


Gag! Is Mazda that hard up for attention, for sales? Would the substantial increase in price to accommodate such diaper changing justify itself on a middle class brand?

Apparently even Bentley doesn't offer that degree of babysitting: http://fblod.com/wp-content/uploads/...bentleyESP.pdf

All I want is one AWD CX-5 model with a manual trans behind the 2.5L, AM/FM radio and AC. Please. Simple.

It's all about the ride.

 

[fdew]

it's a great dream. I am glad tesla is doing it. I have never experienced any added value from a dealer and I don't expect to. I bought used cars for many years so I could avoid dealers.

 

[Xeler8ing]

The opening statement is all well and good but people forget this point... Mazda is just not big enough to do any of this. They simply don't have the cash nor resources to do such a thing.

The above sounds exactly like what European Luxos or Lexus or sports car manufacturers would do and they all can... because the are either large motor vehicle companies or are backed by such companies. Mazda is neither.

 

[Red MC]

Tesla lost $619M last quarter, and the trend is the more vehicles they make, the more money they lose. So far, the production rate of the Model 3 is about an order of magnitude less than what was planned. If they can't even make money on their high priced models, it will take a miracle to make the Model 3 profitable. In contrast, Mazda actually makes money.

Cessna CJ4 - Your model for white glove, door to door service is wonderful, but wildly unrealistic for the price class you bought into. Would you be willing to pay extra for the rental vehicle, the extra cost for towing your vehicle to/from the repair facility, and the cost of having the rental vehicle dropped off and picked up from your door?

Converting over to a direct sales and service model would require them to either buy out most of their dealers, or abandon their dealers and build new dealerships of their own. They don't have the capital to do that, and they would risk killing their sales in the interim. I'm also not certain that Mazda-owned dealerships would necessarily offer a better experience than franchised dealerships. More consistent, sure. But better overall - not without spending more I would think.

 

[Unobtanium]

it's a great dream. I am glad tesla is doing it. I have never experienced any added value from a dealer and I don't expect to. I bought used cars for many years so I could avoid dealers.

i actually have, both GM and Mazda. Nothing but great experiences and both dealers have stepped up when a "gray area" in vehicular work came up. I have very positive feelings toward both companies when it comes to the integrity of their dealerships when dealing with issues.

 

[Chris_Top_Her]

Tesla lost $619M last quarter, and the trend is the more vehicles they make, the more money they lose. So far, the production rate of the Model 3 is about an order of magnitude less than what was planned. If they can't even make money on their high priced models, it will take a miracle to make the Model 3 profitable. In contrast, Mazda actually makes money.

Cessna CJ4 - Your model for white glove, door to door service is wonderful, but wildly unrealistic for the price class you bought into. Would you be willing to pay extra for the rental vehicle, the extra cost for towing your vehicle to/from the repair facility, and the cost of having the rental vehicle dropped off and picked up from your door?

Converting over to a direct sales and service model would require them to either buy out most of their dealers, or abandon their dealers and build new dealerships of their own. They don't have the capital to do that, and they would risk killing their sales in the interim. I'm also not certain that Mazda-owned dealerships would necessarily offer a better experience than franchised dealerships. More consistent, sure. But better overall - not without spending more I would think.

Also that subsidy for electric cars may be going away. $7,500 to help someone who is probably making better money than most buy a more expensive than average car... ok

 

[RG_Flyer]

Also that subsidy for electric cars may be going away. $7,500 to help someone who is probably making better money than most buy a more expensive than average car... ok

Agree. The electric car subsidies are ridiculous.

As far as Mazda is concerned, the appeal for many over the years was the availability of fun-to-drive, simple, affordable and reliable cars. Mazda has tried going upscale before with the Millenia without success.
Most Japanese makers had to develop luxury brands -Lexus (Toyota), Infinity (Nissan), Acura (Honda) to launch premium models as their base brands were considered reliable yet economical options. Mazda tried to launch the Amati luxury brand in the early 90's but couldn't make it fly.
I think Mazda will lose some of their base if they keep moving into the crowded upscale market and their products lose appeal to some current buyers (e.g. 2017 CX's softer suspension and lack of manual tranny is a turnoff to some).

 

[Guest2018]

Like you said, Tesla is currently up against politics and a business model of yesteryear. If Mazda were to somehow align with them it might help increase their desired premium status, as would the post sale service.

That would we an interesting marriage or at least close relationship to see form out of what is an already broken dealership model. From a timing standpoint, I can't help but think that now is not a bad time for Mazda to do something extraordinarily bold - given their desire to implement "Kodo" throughout their line-up. If "Kodo" means "Soul of Motion," then "Soul of Customer Care" would be spelled what in Japanese, exactly? I don't know - maybe that too is something for Mazda to start thinking seriously about.

Soul of Maintenance
Soul of Repair
Soul of Customer Service

These are the kind of themes that I don't find in other car companies except Bentley, Rolls Royce, Bugatti, Pagani, McLaren and Koenigsegg to name highly compressed short list of manufactures who truly do care about your total ownership experience. It is a shame that to get that level of service (care after the sale) you either have to buy a Supercar or a Super Luxury Car.

Well now.. I didn't receive any communication from Mazda's CEO after my purchase. I did however get a payment statement... [emoji53]

Hmmmmm. I purchased a few months ago. Maybe this is something new for Mazda - not 100% sure. I thought it was a nice personal touch, though I knew it did not come directly from the desk of the CEO. GM never sent me anything like that after I bought their "flagship." So, don't feel too bad.

Hope the payment statement was not too big.

 

[Guest2018]

If Mazda did all that I'd never buy one. It would be the next tesla. Overpriced, and all the froofroo would turn into excuses for crap vehicles because all the money would go to arse kissing instead of quality control. Just like a tesla.

Tesla is developing new automotive technology. Any company taking on such an enormous challenge is going to face higher costs by definition. That's part of the price of admission for innovation - somebody has to pay for it. Without true innovation humanity makes no progress towards the sustainable world that people like Elon, consistently talk about and do something about every day of their lives. The quality of a Tesla is also going to be subject to the maturity of the new technology that embodies it. As that technology matures, the quality curve steepens. Again, somebody has to push the edge of the envelope in order to advance innovation and open doors to a new paradigm and future of sustainable energy development and consumption. Tesla, is exactly what the worlds need more of right now, IMO.

As new technology comes on-line, QC is always going to be an issue and Tesla knows this full well. The QC curve will come down from negative instance as the tech matures. This take time. If you really knew what the early days of Commercial Jets were actually like when they were towed to the maintenance hanger for routine scheduled FAA service, you would never want to fly commercially again - ever. Today, commercial jet maintenance is light years ahead of where it used to be in cutting off problems before they begin. Why? Because commercial aviation aeronautical engineering as a technology has matured. We simply understand more now and can implement designs that greatly reduce the negative instance curve and thus QC and QA soars.

Give Tesla time. That's all they need.

 

[ColoradoDriver]

Tesla lost $619M last quarter, and the trend is the more vehicles they make, the more money they lose. So far, the production rate of the Model 3 is about an order of magnitude less than what was planned. If they can't even make money on their high priced models, it will take a miracle to make the Model 3 profitable. In contrast, Mazda actually makes money.

Cessna CJ4 - Your model for white glove, door to door service is wonderful, but wildly unrealistic for the price class you bought into. Would you be willing to pay extra for the rental vehicle, the extra cost for towing your vehicle to/from the repair facility, and the cost of having the rental vehicle dropped off and picked up from your door?

Converting over to a direct sales and service model would require them to either buy out most of their dealers, or abandon their dealers and build new dealerships of their own. They don't have the capital to do that, and they would risk killing their sales in the interim. I'm also not certain that Mazda-owned dealerships would necessarily offer a better experience than franchised dealerships. More consistent, sure. But better overall - not without spending more I would think.

(iagree)

Also that subsidy for electric cars may be going away. $7,500 to help someone who is probably making better money than most buy a more expensive than average car... ok

Agree. The electric car subsidies are ridiculous.

As far as Mazda is concerned, the appeal for many over the years was the availability of fun-to-drive, simple, affordable and reliable cars. Mazda has tried going upscale before with the Millenia without success.
Most Japanese makers had to develop luxury brands -Lexus (Toyota), Infinity (Nissan), Acura (Honda) to launch premium models as their base brands were considered reliable yet economical options. Mazda tried to launch the Amati luxury brand in the early 90's but couldn't make it fly.
I think Mazda will lose some of their base if they keep moving into the crowded upscale market and their products lose appeal to some current buyers (e.g. 2017 CX's softer suspension and lack of manual tranny is a turnoff to some).

Agreed on the electric car subsidies.

To the bolded, honestly, already have. The 2017 CX-5 does nothing for me. I am really not a fan of that move to try to go upscale. I didn't enjoy sitting in one. It completely lost that "feel" I have sitting in and driving mine. Mazda has a niche, why try to be like everybody else?

Edit: To answer OP's question posed in the title. Incredibly hard. Mazda simply does not have the cash to do this.

 

[Guest2018]

Not only is it a legal issue for direct sales to customers, you would have 700+ dealer franchise owners to be bought out costing Mazda BILLIONS to do so.

Its illegal because it is politically expedient to make it so, not because it is the best model for the consumer, nor because its even rational or logical. In fact, the current model is highly illogical, highly irrational and Consumers suffer as a direct result while the negative instance curve steepens across the Dealer Model. No one is benefiting from the current model other than Dealers, or as one member of this board put it a few days ago, "Stealers."

Then there is the assumption you made that the cars would cost less. Wrong. Mazda would then have to employ tens of thousands of people across the nation costing millions more is overhead.

Studies have actually proven that assumption to be incorrect at best and highly flawed analysis at least. An automobile manufacturer has an almost predetermined cost that it knows about prior to putting ink on the first drafting board, or pixel to the first CATIA render. They know what their development costs will be long before the final product rolls off the assembly line. So, their model is Research & Development cost recovery based, not Advertising and Marketing cost recovery based. The actual Hard Costs component of their balance sheet would rise under the new model.

However, those Hard Costs would be far more than met with the additional revenues that are not Advertising and Marketing cost based and that's the primary key that many naysayers of introducing the new model continually miss. In other words, Mazda OEM would not have to recover nearly the same cost component from Advertising and Marketing as Dealers do today. In addition, Mazda OEM would actually be able to trim floor space requirements to that only necessary for Service, Maintenance and Repairs - once gain reducing Hard Costs well below the aggregate Dealer Model requirements of today. In addition, this would introduce a whole new line of revenues and new revenue potential for Mazda OEM that it does have already and cannot obtain outside of this new model. The Soft Costs for Mazda OEM would once again be more than offset by those additional revenue streams. And, Mazda OEM could optimize and fine tune the operations of such a new model as it would have infinite control over the Logistics of each Mazda OEM Service Center. That gives Mazda OEM internal operational optimization capabilities ability that independent Dealers don't have by logical extension - they are in direct competition with each other.

If the model is done right, consolidation and optimization of all internal business operations would prove to be not only more beneficial to Mazda OEM, but to its Customers World Wide as well.

There is a reason manufacturers went to the dealer model to begin with. It saves them money.

They failed in the past (Ford Retail Network) because of Politics and Politicians who are manipulated and controlled by their own greed. The State Dealer Association is a strong lobby, not just in their respective states but in the congress as well. They, too, have an address on "K" street. The entire Middle Man Establishment has lobbyists controlling and/or manipulating what you buy, when you can buy it and at what price you buy many different products and services. We are not talking about anything new or revelatory here. The reasons for past failures are much-a-do about Politics and Politicking - not logic, not reason, not common sense, not better judgement and certainly not what's best for the Consumer.

This is one of the primary reasons why I respect Tesla so much. The courage and the guts to want to do the right thing is laudable at minimum in my eyes.

Can never and will never happen. The dealer model isn’t broken. The experience varies and that’s the problem. There are plenty of good quality dealers out there.

The dealer model is what kept me from buying new for many years. The dealer model is what kept me away from Ford, GM, Chrysler and Dodge. The dealer model wasted 16 months of my life on something that should have easily been taken care of by the dealer on day one. The vast majority of people I talk with about their dealer experience has something negative to say and to the point where they would not ever buy from that particular dealer again. Dealer Model not broken. No. It is not merely broken - it is nearly shattered in ruins in the hearts and minds of those Consumers who have no choice but to continue using it.

There are some good dealers out there. They are also in the vast (vast) minority and that is the problem. I don't see equilibrium among good vs bad dealers. There seems to be way more (way) bad dealers than good, today. When the balance tips the scales in such a manner, the model is indeed broken.

 

[Guest2018]

it's a great dream. I am glad tesla is doing it. I have never experienced any added value from a dealer and I don't expect to. I bought used cars for many years so I could avoid dealers.

Me, too. I bought none for 15 years because of bad dealership experiences (multiple). I was able to keep the vehicle going smoothly through 230,000+ miles without driving it into a dealership for maintenance or repairs - except once. After that one visit to the dealership where the car was kept overnight, I then began experiencing one failure in the vehicle after another that I had to end up fixing myself.

I discovered nicely cut (razor thin) horizontal lines on the back side of vacuum hoses running to the throttle body - turned away so you could not see the cut until you removed the hose. I discovered incorrect parts being used under the engine cover and connected to the throttle body. I discovered electrical wires coming from electrical connectors that appears to have uniform slits exposing a small portion of wire - again on the back side so you could not see them upon first glance without having a need to remove and inspect. I discovered CV boots that miraculously developed holes in their rubber covers. I discovered a mysterious power steering pump failure only to find the wrong fluid type (it was engine oil) having been used in the reservoir. And, this was just one (1) vehicle I owned and after just one (1) visit to a Dealer's service bay. That was at 85,000 miles. I then went 145,000+ miles without incident except brake replacement, hoses, belts and a new radiator - all installed via DIY.

No. I don't trust Dealer Service Departments. I had three (3) brand new vehicle purchase (all flagships each one) nightmare stories from three (3) different brands and dealers that did not begin until after my first visit to each dealer. I never started having problems with any of my brand new vehicles until I drove into a dealership for service or maintenance. After I come out for service or maintenance, something start falling apart like clockwork. That's not mere coincidence.

 

[Guest2018]

The opening statement is all well and good but people forget this point... Mazda is just not big enough to do any of this. They simply don't have the cash nor resources to do such a thing.

The above sounds exactly like what European Luxos or Lexus or sports car manufacturers would do and they all can... because the are either large motor vehicle companies or are backed by such companies. Mazda is neither.

Yes, they can do it and they can actually make money doing it. They don't do for reasons of Politics. Maybe this side note video will help you understand:

It can be done because the current model is so way overpriced that there is plenty enough room underneath for radical change, transformation and revenue potential for the OEMs that dare do it.

 

[ColoradoDriver]

Yes, they can do it and they can actually make money doing it. They don't do for reasons of Politics. Maybe this side note video will help you understand:

It can be done because the current model is so way overpriced that there is plenty enough room underneath for radical change, transformation and revenue potential for the OEMs that dare do it.

This isn't just about the revenue.

In order for Mazda to switch to your proposed model, they would need a huge reserve of capital to buy out the dealers. They don't have said capital.