Interview with James Muir, President and CEO of Mazda Motor Europe
Part 1: Mazda's growing markets in Europe Let's talk first about the results of Mazda Corporation. At the end of April Mazda in Hiroshima announced all-time record volumes, 1.36 million vehicles. And all-time record profits, of about 1 billion dollars. Which were the strongest markets? And the fastest growing markets?
The real headlines were: growth in Europe and growth in what we call the Four-A-markets. We had a remarkable improvement in Australia, just one of Mazda's strongest markets. However, we had good growth everywhere apart from Japan. And we made improvements in China.
As far as Europe is concerned, we increased sales by over 25,000 units, which is about an 8 to 9 percent improvement. For a fairly stagnant market, this is a good result. We recorded strong growth in the UK – and spectacular growth in Russia. There we almost doubled our volume. But we not only improved our volume in that booming market, but also our share.
How about another interesting and difficult market, the UK?
We are doing well in UK. We keep growing steadily every year. We were at 54,000 units last year, and we are targeting a little bit more growth for this year, around about 57,000 or 58,000 units. The share is around 2 percent, and for the private sector it's about 2.5 percent. What are the factors of success? Well, investment in the brand, strong, logical, credible pricing, establishing a good network with no compromises focused on the Mazda brand. A good management team with continuity over time, a highly motivated and empowered team. I think it is a combination of things, but with a clear strategy.
So what about the other European markets?
I believe that Mazda can grow in mature, stagnant markets. And we have ambitions in those markets. Modestly, but still to grow and to improve our footprint. And to achieve a level of what I call sustainability in any market where we operate. Today the Mazda brand is at different levels of maturity depending on which country you are looking at, even within Western Europe. If you look at Germany, our strongest, most successful market, we have a 2.2 or 2.3 percent share of the market, but in France we are at 0.7 percent market share. And that's a level that I believe is not sustainable. You cannot leave the business at this level. Sustainability is about: enough cars on the road, self-generating awareness, enough through-put through the dealer network to provide the dealers with a revenue-stream that they can make money from. If you have dealers that sell many brands and the Mazda contribution is one car a week - it's not going to last for very long. To be what the German word "pra"sent" expresses, you need to be at 2 percent market share.
But that is quite a target for some countries. France for instance.
France is a good example. I have high hopes for France. When you find that you are not making enough progress, then you have to question – not the strategy – but really the basics of your business. And that is what we have done recently in France. We took over distribution from the independent distributor in 2001. The previous distributor had known for some time that they had to go. So they had begun to disinvest in the market, and they lost a lot of dealers.
Of course, the Mazda2 is the perfect car for France.
They should love it.
They should. And they will. So we go back to France, we evaluate again – and we buy them time. As we look at the business in Europe, we see growth in a number of places. The tremendous growth that we have seen, these growth engines provide us with room and time to see whether or not we have everything right. All the conditions right for a strong, powerful business for the future in some of our more traditional markets. And this is what we are doing in France. And in Germany.
Some more highlights from last year?
It makes me happy when our shareholders are happy and when our employees are also happy. That's the most important thing. Obviously, our dealers being happy is key, but I think most of our dealer network is happy. But there are still some markets where we are challenged, where we need to make things better for our longer-term partners.
Highlights. We had a few in terms of taking over distribution in a number of markets where we achieved significant growth. These would be the Czech Republic and Slovakia, in Belgium. We have done well in Norway and Sweden where we took over distribution. We also had a spectacularly good year in Greece. We are beginning to see a lot of growth out of Romania, Croatia. We are going to open a new sales company in Poland which will be, I think, tremendously successful. And we are going to be opening in Turkey and later in the year in the Netherlands also, where I see opportunities for growth.
We have also been very successful in Switzerland, and I feel a strong sense of positive momentum in Switzerland. The dealers are earning good money, their volumes are coming up. We have been pretty aggressive in our pricing approach. We have sent a strong signal to the dealers that we don't want to exploit this country as a milk-cow. It has always been a high-price, high-profit market, but it is actually a very price-sensitive market. But if you price properly and responsively, you will get your reward through the high mix, the high grade models the Swiss customer likes to buy. Now we have a winning formula in place, and nothing breeds success like success.
A lot of successes last year, but also some challenges. Germany was a very difficult market, as the private sector dropped nearly one half compared to last year.