Car industry marketing distress ‘worst ever’

MAZDA Australia managing director Doug Dickson this week said he had “never seen the industry in such marketing distress – ever” as he announced lower prices across Mazda entire range, effectively applying a planned import duty cut almost three months ahead of its official implementation.

Import duty on passenger vehicles comes down from 10 per cent to five per cent from January 1, resulting in showroom price reductions of about three per cent, but Mazda is already advertising its lower prices – even though its 2009 sales record is the second-best in the industry after the rampant Hyundai.

“We’ve had a very good year,” Mr Dickson told GoAuto at this week’s CX-7 facelift launch.

“We’ve had a better year than we thought and we’ve actually improved market share. In the last 15 months, while the market has been down overall about 13 per cent, we’ve only gone down 6.2 per cent.”

Late last year, Mazda Australia’s sales plan for 2009 was for 68,000 sales and – even though year-on-year sales have continued to fall, now stretching to 15 straight months – the company has lifted its market share from 7.9 per cent to 8.5 per cent and is on track to sell 74,000 vehicles this year.

Left: Mazda Australia managing director Doug Dickson.

Overall, the market fall has slowed in recent months, dropping only 3.5 per cent in September compared with an overall 13.1 per cent decline for the first nine months of the year, but has yet to record a month of sales higher than the same month a year earlier.

“I don’t want to sound negative at all because I’m not, but the improvement is really only in the rate of decline,” said Mr Dickson.

“In the 15 months since the GFC first started to hit our industry, we’ve been down year-on-year each month. Overall there’s been a 13 per cent decline in sales, so we’re yet to see one month of year-on-year improvement.

“What that means is that there are production commitments by every manufacturer and they need to meet their commitments, so there is pressure on pricing and certainly some very aggressive promotional activity that you can see in the papers. That promotional activity seems to be more at the moment than what it was this time last year.

“It may well be that the market’s about to improve, and I’m sure it will, particularly in December, for example, when we get the final tranche of the 50 per cent investment allowance. There will be big activity there, but generally what happens is all it does is spike one month and then you get a drop-away the next month. You’ve seen that happen with the various scrappage incentives around the world.

“What we’re looking for is a sustained increase in demand from the ordinary private buyer. There’s been a bit of improvement from business buyers, but the private buyer is lagging behind a little bit, so there’s still some time before the ordinary Australian sees the improvement in economic indicators and translates that into parting with his hard-earned money and buying a motor car.

“But the economic indicators are all pointing in the right direction, there are high levels of consumer confidence and I think the pricing pressure has gone down with the yen/Australian dollar stabilising. Interest rates are going up, but are nowhere near the figure the Reserve Bank is looking at.

“There is so much activity, it will start to spark the market. That adage that there has never been a better time to buy motor cars is pretty true.

“Anytime soon we’re expecting the big lift.”

Mr Dickson said he is not worried about Hyundai’s rapid rise in the market, having this year gone from 4.4 per cent market share to 7.0 per cent, saying he is only concerned about meeting his own sales expectations.

He said that favourable exchange rates were helping Hyundai’s “aggressive pricing”, but expects the notoriously volatile Korean won to settle down again.

“We don’t concentrate on any one particular competitor,” Mr Dickson said of the Hyundai threat.

“They’ve been very successful in exploiting some price reductions (and) I’m not sure how they’ve funded that. If it’s exchange rate funded, then that’s a cyclical thing.

“Every competitor in the market affects us and we didn’t get to be number four by sitting around on our thumbs.”