How are you doing, Martin? Thanks for joining us today.
Great, Mike, thanks for having me.
Would you call yourself a car guy?
I remember as a little kid riding around in my parents’ car and being able to identify every model and every variant of cars I saw on the road, so maybe that makes me a car guy. I certainly have an interest in cars.
Mt first new car I ever bought — the only new car I ever bought — was a Mazda, but I’m not a petrolhead to the extent that I’m a slavish follower of motorsport.
What was the Mazda that you owned?
A Capella? Wow. And do you think it’s important that automotive bosses like yourself have that passion for the automotive industry?
Yeah, I think it does give you an insight from time to time. We’ve had interactions with other brands and you talk to people that look at it as if it was a tube of toothpaste or something, and you think ‘these guys really don’t approach it in the same way’.
And cars are an emotional thing in people’s lives, mainly because of the amount of money they have to invest in them! So yeah, I think it helps if you’ve got a bit of passion for the product.
What’s your background, Martin? Have you always been in the car business?
No, I actually started as a finance guy. We’ve had three managing directors of Mazda Australia, all finance guys. I spent about 10 years, before Mazda, working in different industries like food and packaging and stuff like that.
I did get offered a job with the Ford graduate program when I left uni, but I’d already accepted another role. It took me about 20 years before I ended up back in Ford by default, through the Mazda connection.
And so how long have you been working for Mazda now?
Long time, 30 years this year.
Wow, that’s quite an anniversary. Have you always been based in Australia? Or have you worked in other regions?
Well, I started in Brisbane, because they were the distributor up there, but within 12 months Mazda Australia was formed, because the distributor said it got too hard as the currency got very volatile. So we eventually moved head office to Melbourne, and I followed a couple of years later.
Then, in 2007, I got the opportunity to become the head of the global marketing division in Japan, which was a big honour. I spent three years there, then three years as VP of sales for Mazda in Europe before coming back here.
And where were you based doing that?
In Cologne. Head office is in Germany. They have a big operation in Antwerp as well, in Belgium, but there’s like a central office running all the different countries in Europe.
So you’ve seen a perspective from Europe and Japan, what is it that actually makes the Australian market unique?
I’ve had time to think about it because people often say, ‘what’s an Australian car consumer like?’, and the way I’ve personified it, is Australians like European design and European quality, but they prefer American powertrains because of the distances they have to drive sometimes.
That sort of personifies that Australian consumer.
I guess one of the differences here is the Japanese brands have done quite well, because the cars they make haven’t had to compete head-on with the locals.
So in Europe they would have to compete with the Volkswagens and the French brands directly. In the US the big brands make those size cars as well. So you have to compete with them, and it’s a different environment and a bit harder to get a foothold.
I think they’ve had a long consistent place in the Australian market, so it reflects the Japanese brands being a bit more prominent here.
And of all the Japanese brands, it’s Mazda that sits behind only Toyota as most popular, and you’re the most popular brand that doesn’t actually make anything here. You [personally] must face some unique challenges within Mazda, I imagine? This is one of the biggest regions anywhere in the globe.
Well we’ve have a few unique advantages with Mazda here. The Mazda product I think follows a European styling ethic, if you like, and a technology ethic, which I think has given them a uniqueness amongst the Japanese brands.
So that’s been good from our perspective. From a local operational perspective, as I said earlier there have only been three managing directors, they’re all Australian, they’ve all been developed internally, we’ve sort of run the company from our own perspective and I think with the distractions of the 90s and the Ford involvement with Mazda, we were able to fly under the radar for a while to establish the business here.
Once we established that success, success does breed an ability to give you a seat at the table in Japan and some confidence and trust from them. That’s the status we’re in at the moment.
That’s not something all Australian arms of brands enjoy. You said before there’s only been three managing directors, and they’ve all been Australian, and that’s not something that’s often the case – a lot of companies bring in their CEOs from overseas, like a training ground. What benefits does being an Australian, with an intimate knowledge of the market, give you?
It gives you a way to talk with the dealers and build trust with them. One of the things that we pride ourselves on is that we have a strong partnership with our dealer network, and because of our success in that we’ve also got a strong partnership with Mazda in Japan.
If you’ve got that trust through the pipeline it gives you that ability to do things consistently over time, and one of the things that we’ve done with our dealers is we grew our volume and our share in the market without adding or ‘over dealer-ising’.
So the dealers have benefited as well. They’re a strong network, a stable network. We have that trust between one another.
So is the flipside of your success maybe that you have extra pressure on you from Japan compared to your contemporaries in other markets?
Ooh, I don’t know if we have more pressure than our contemporaries, because they have a lot more work do to. We do stand out amongst the Mazda markets, the major Mazda markets, as one of the more successful ones.
The pressure it puts on us is they want us to keep growing and performing, because we do set a benchmark in the Mazda world, and we do get held up quite often as a best practise market for Mazda.
We do get a lot of visits. I think there are people floating around at the moment here from South Africa and Thailand, doing some work with us, I think we’re getting the Canadians and Russians coming over shortly, we’ve had the Vikings and the Germans here, so we have a lot of people coming here to understand what we do.
I guess the trick is, we’re not an overnight success. We didn’t wake up one day and say ‘this is how we’re going to be’. We’ve evolved and improved things over time, and when you explain that as a business model it’s very easy to write down, so they start implementing those things, but six months later they say ‘it’s not working yet’.
It takes a long time to build up that trust, that consistency, that continuation to actually grow the business. It’s not something you can do overnight.
You’ve got to have a bit of patience?
Patience. I mean, we’re blessed with a product cycle that’s been very strong, and the current cycle I think would be the best ever, so that does help. But I think it helps more with us because we’ve got the business basics right.
We may have gone a little forward here. Can you just give us an insight into what the MD’s role actually is in a nutshell? What is it you do?
Basically the managing director’s role is to stand back and make a sort of strategy. I’m fortunate that I came back after six years overseas into this sort of role, and so the first thing I did was reset the organisation structure.
When I say the organisation structure I mean the structure that reports to me. I tried to set up a team, three operational people and three support people, that are my sort of inner cabinet if you like. And we have a weekly meeting on a Monday where we got through what’s happening at the time.
I’ll have, maybe twice a month, 1-to-1s with each of those to dig deeper into each of their areas, keeping the dealers on a path, keeping the staff on a path, so the path isn’t inconsistent with what we’ve done in the past.
But things are changing in the industry, local manufacturers leaving, different things happening in terms of technology and so forth, so we have to prepare ourselves for that and set ourselves in the right place for that, so we’re making some strategic changes that you have to take people along with, you can’t just sort of get up there one day, say ‘this is what we’re doing’ and just expect everyone to follow, they have to believe you.
I don’t get involved in day-to-day stuff so much, and nor should I, because I’d expect those six inner guys to do that, and so I am trying to build that culture of empowerment and self-management.
One of the biggest decisions to come out from Mazda Australia, at least publicly, in recent times is the massive price cut on the MX-5. It’s going to be 50.0 per cent cheaper than the outgoing car at base level. That’s almost the same price as the original was in 1989.
Do you think it can make as big an impact on the market as the NA did, which we’ve got right behind us?
Now, I remember actually taking you on a drive where you got to drive the NA, NB, NC back-to-back.
That was a highlight.
That was a highlight. And you sort of said ‘I get it now, what this culture of MX-5 is all about’. And as MX-5 has aged, up to the NC model, it got more sophisticated and more advanced, but it sort of lost a little bit of its origins, that lightweight pure fun sports car, and it got a bit more expensive.
So I think what Mazda Corporation wanted to do was bring it back to its roots, if you like. If I go back to the original NA, we had a ‘camel hump’ demographic profile. We had a lot of young people driving it, and then a lot of people re-living their youth post-children, or even in retirement.
As the model aged, it got more comfortable, so that kept the older people in, but the younger people didn’t go with the price. So I guess what we can do now is with the new model — we have two engines, a cheaper entry variant — so we’re looking to re-awaken the excitement of open-topped motoring and real interaction with a car to a younger generation.
Was it the success of the the Toyota 86 and its sub-$30k price that really made you guys sit back and say ‘hey, we really do need to cut that price back’?
Ahh, yes and no. They certainly did reset that bar, if you like, but read industry comments — especially out the US — and [it’s about] ‘young people aren’t interested in cars anymore and don’t want to buy cars’. I think 86 proved that was rubbish. if the right car comes out they’ll get involved with it.
MX-5 does have something unique, that feel of open-topped motoring, that speed and excitement when you’re low on the ground and have nothing around your head. I think it’s something that’s not common these days, and it’s a good time to be out there and doing it again.
So you don’t subscribe to the theory that young people aren’t interested in cars like they used to be?
No, not at all. If I go into an environment where those people are around, they want to talk to you about cars as much as my generation does.
Alright Martin, let’s take this thing a little bit broader. What would you describe as your overarching business philosophy?
Partnership. That’s our overarching philosophy at Mazda Australia, and that’s partnership with whoever we deal with, whether that’s upstream back to the factory and head office, with our dealers, our suppliers, and even our customers to some extent.
And with partnership and consistency over time comes trust, and we’ve done some recent research because we’ve been re-looking at the whole customer-experience-type model, and ‘trust’ comes out as the key word.
People don’t mind buying cars, they don’t mind negotiating on cars, so long as they feel that trust factor in there, then they get comfortable and are willing to do the deals. So we do have that with our dealers, I think we can do better with our customers, and I’m pretty sure we have it with our head office, managers and colleagues.
The boss of one of your biggest rivals, Toyota, recently told me he thought his customers were sick of having to haggle. He’s ordered his dealers to have a set price and make it a bit more simple.
I did read that, yeah.
Is that something you guys might apply as well?
No, no. No matter which way you look at it, a lot of people have a trade-in, there’s always a bit of understanding about what that car is worth, certainly there’s more information online for the customer to work that out, so that’s where the trust factor comes in.
I don’t think it’s going to happen anymore that a customer walks in and has looked up online what their car is worth and suddenly the dealer undercuts that by multiple thousands of dollars. I don’t think the opportunity is there anymore, so we do need to be aware of what information is available.
But people still realise there’s a whole-of-life cost, there’s a transaction cost, there’s a changeover cost, and it’s not possible to make them a one-size fits-all, because not every customer is the same. Either way they’re buying the car, there’s finance involved, novated leases, so I think it’s a bit simplistic to say that.
Our research showed that customers expect some sort of negotiation in the process, they’re not afraid of that. What worries them is if they’re getting stuffed around or they lose that trust factor. That’s where it falls over.
I always found it a fun game to play.
Yeah well some people do, exactly.
Recently you were appointed treasurer of the Federal Chamber of Automotive Industries (FCAI), which is the Australian automotive industry’s peak body. What does that entail?
It sounds a lot more upmarket than it actually is…
It does sound very prestigious…
The FCAI has a reasonably sized budget, in the numbers of millions of dollars which comes from subscriptions from the manufacturers, but also from selling market data and so forth.
So they have a responsibility to the board, in terms of staffing and what sort of research or what sort of projects they undertake. There’s a budget, there’s a monitoring of their expenditure and preparing the following year budget.
But there are clerical people that do most of the number crunching, it’s just looking over the numbers.
I’ve heard some say that with all the battles it chooses to fight, the FCAI is a little bit too aligned with the three local car-makers – potentially at the expense of the importer brands, of which you guys are the biggest.
Does that assertion have merit, and, if so, how is the FCAI trying to change that direction?
Certainly historically that’s how it started, and going back there were more manufacturers. That has been changing gradually, as the local manufacturers have lost a bit of share.
And there is a vibrant importers group within the FCAI that operates in parallel and discusses the issues that affect the whole industry.
Certainly for the next couple of years before the Fords and Holdens of this world depart from local manufacturing, there are still a number of issues that involve government interaction that they will need to deal with, and the FCAI has the expertise for that.
But going forward they are working on what their model will be, and there are plenty of issues: parallel imports, CO2 regs, safety, genuine parts — how people get their cars repaired…there are plenty of issues we need to be monitoring and having a single voice on, I think.
Of all the issues, probably the hot button topic of the moment is parallel imports. (Then) Assistant Minister Jamie Briggs is in favour of opening up the importation of new or near new cars and allowing people to do it themselves rather than through organisations such as yours.
What are the pitfalls and risks of that?
Look, I can understand the rationale, because there is some evidence that people are buying things online and parallel importing their own things. But by and large they tend to be low value, low impact items such as clothing, computers, what have you…
When we’re talking about cars we’re talking about a higher-value item that has more risk involved. We’re a RHD market, there’s only two RHD markets that would have the same standards in terms of safety and emissions etc, which is the UK and Japan, so really they’re the only two markets you could import from.
Both those markets have significant differences in terms of they’re not a hot climate, so cars will have some differences in relation to that. They have different frequencies for things like navi, for radio, what have you — [that] also require adjustment.
Those things are not going to be able to be fixed by individuals. The other things that happens is we operate under the ACL, the Australian Consumer Legislation, which puts a big onus on us to look after customers well into the future.
If you bring in your car as a private importer, you lose a lot of that protection, because we can’t necessarily fix that car if it’s not a car we import, or if it has features we can’t protect. There are a fair number of consumer risks.
The crucial one is safety… we only know the cars we import. If someone brings in their own car, we won’t know it’s here, so we won’t be talking to that customer unless it comes to our notice, so there’s a risk that car travels on with a safety defect that won’t get fixed.
There are big issues.
Parallel imports also have the potential to take sales from organisations such as yours, so isn’t there a vested interest in car company managing directors opposing the opening of this legislation?
There have always been enthusiasts importing their own cars, exotics and sports cars, like last-to-run RX-7s and RX-8s which went on after we stopped importing, where people say ‘yeah I want one of those’.
Ability to do that still exists. This is really about the government extending it and sort of encouraging people to go and buy their own cars, so once you sort out being able to import a car, making sure you’re actually saving money, and there’s always this idea that ‘I’ll save 10 grand, or 20 grand’ or whatever it is, they forget to look at the tail end where they’ve got this imported car and nobody wants to buy it in Australia, and suddenly they’ve lost 10 grand or even more, so the whole-of-life is another big issue.
We know people want to buy particular cars. It may be annoying to us if a car gets launched in Japan before it gets launched here and suddenly one of those arrives here, but in reality, no, I don’t think so.
We really look at it from a consumer perspective. The risk goes to them, we take the risk now on any cars we import, it’s very hard to take the risk on any car they import themselves, because we don’t know what it is, we don’t know where they got it from, we may not even be able to service it.
You take a Euro stage 6 car, it has a lot more on-board diagnostics than Euro 4 or 5 in Australia, so even if we plugged our machines in, it wouldn’t speak to the Euro 6 cars.
It’s just going to make the owner experience sub-optimal, and while we don’t have to support those cars under ACCC regulations or comments, people are still going to see the Mazda badge on it, so we don’t like it from that perspective either.
Let’s say the legislation gets past, it’s all exactly as the government [at the time of interview] wants it to be – will it even affect sales of brands like Mazda all that much?
No, I tend to think to justify bringing it in on your own, it’ll either be a model we don’t import… but mainly it’ll be where they see a big price variation, and I tend to think that’s only going to happen at the high end.
So maybe more the German and Italian brands than the Japanese…
… for example.
Ok, crystal ball time now — where do you think the industry will be in 10-20 years time? What will some of the hallmarks be that we don’t see now?
I wish I had a perfect crystal ball, Mike. There’s a lot of hype around at the moment, hype about connected cars, hype about autonomous-driving cars, electric cars and those sort of things.
But I read a report just today actually by Goldman Sachs which looked at megatrends in the auto industry, and I think they’re a bit more buttoned down and a bit more calm about what’s going on.
So certainly powertrain development, the move into electrics whether they be hybrids or PHEVs or pure electric, their comment was most of that is driven by legislation like in California or the 98 grams of CO2 in Europe, so they’re driven by regulation not by demand.
So their forecast was that for at least the next 10 years, at least 75 per cent of the industry would be driven by internal combustion engines, in some form or another, and that’s where Mazda is fighting, making those engines super-efficient.
The connected car, the autonomous car, they speculated that most of the technology is going to be in trains and certain buses, controlled environments rather than out in the general public.
[There’s] no recognition that the way people own cars and drive cars is being fixed by those autonomous driving models, is being challenged.
One thing they did comment on was that while powertrains are getting more efficient, the weight of cars hasn’t come down an awful lot. So, lightweight technology, and that’s another area that Mazda’s very interested in.
So some sort of tech to reduce the weight of cars to contribute to efficiency will come in. And I think connected cars in the sense of where we could conceivably monitor the car, and the way it’s used, and service according to that, rather than you come in every six months or whatever.
We’ve done that on a kilometre basis now, we say ‘come in when you do 10,000km, don’t do it every six months’, so getting it more in line with the way people drive their car. So I think we can do that more with technology.
So there are ways still to improve the experience, the ways cars interact with people. But the fundamental freedom and flexibility of owning your own car, getting into it when you want to, going from A to B when you want to and enjoying the experience is still not being replaced by anything that’s happened.
And where something like Tesla happens, where they have an engaging or enticing vehicle package, the existing manufacturers can move into there quite quickly.
What about in 2025, will we see Mazda as Australia’s top-selling car brand?
Look, I don’t think so. The number one brand at the moment is Toyota, they have many many more models than we do, they sell to a lot more buyer segments than we’re interested in dealing with, so they’ll always have that ability to sell more than us.
But we’re quite happy with where we are at the moment. We’re a solid number two for the first five months of the year. We’re near the top in private buyers, which are the people we’re still focused on.
We do have an interest in talking to people who do have a choice in their car, but may buy it through their companies (novated leases), so we’re looking at that as an extension of our target buyer.
So I think we’ll sort of sit where we are and it’ll be a matter of whether we can find a couple more niches with product…
Do you actually care about rankings or pecking orders? Does it actually matter if you’re second or third or fourth?
Look, being second in the marketplace does give you some advantages and some abilities, but no, we want to stay true to who our buyers are and we want to stay true to what our product is.
I think that’s one of the advantages that Mazda has had: in the last 15 years we have developed our products along a consistent trajectory, where style is important, where the way a car drives is important, and where the experience the customer has with the product is important.
A lot of car brands try to jump around to what’s hot, but we’ve stayed on a consistent path, and I think that helps build trust with the consumer as well. They understand who you are.
I’d be remiss not to ask this one for all our enthusiasts out there. When are we going to see another Mazda rotary?
The rotary is exceptionally important to Mazda, I think it drives a lot of the ways that Mazda thinks, the fact that we signed onto rotary as early as the 1960s and basically were the only company to commercialise it…
It really does drive a lot of the ways Mazda thinks… I think MX-5 would not have happened unless Mazda had that sort of thinking process.
I think in 2020 it’s Mazda’s 100th anniversary of making cars, and I think there’s a significant anniversary on the horizon for the rotary as well, so I’d like to think that Mazda’s working on something in that respect, maybe a Skunkworks.
Would go well in Australia no doubt…