Where are you from originally, Jeff?
Jeff Guyton: Akron, Ohio. My grandfather built tires. My dad was a doctor but in his second career worked in health and safety for BF Goodrich. So I'm an Akron kid — car nut. That led me into working at Ford. My first job with Ford was in Hiroshima, almost 30 years ago. Then 10 years later because of the company's interest in Mazda, then I had a chance to go and work in Hiroshima again but this time with a Mazda business card. I said to our dealers ... if you think if you ever wake up and you think it's difficult to sell Mazdas in the U.S., you need to go try to sell U.S.-made Fords in Japan in 1990. That was tough.
I took over the European operations just after the Lehman crisis, so I've seen tough times and good times. I think we've built in Europe, in five or six countries out of 20-something, but including Germany — sort of No. 1 in dealer satisfaction with the brand — positions that we've kept now in Germany for four years, four years in Poland. And a number of other countries. So I'm hoping to bring that to what Moro-san's already started to do here in the U.S. Because we've started — he started — a real transformation of the Mazda brand here in the U.S. with an ever-expanding group of engaged dealers. And we're going to make a real good journey for them.
So with Jeff's return, you'll focus on these big-picture issues — some are technological, some are political — and you'll focus on operations, selling cars and keeping dealers happy?
Moro: We don't have any particular lines. This is how we have worked together for the last 10 years — over countless bottles of wine.
On trade, President Donald Trump has thrown many wild cards into the deck. There's the possibility of tariffs on all imported autos or auto parts.
The U.S. and Japan are entering bilateral talks.
The United States-Mexico-Canada Agreement is yet to get approved. How do you piece all that together, and what are you hoping to see?
Moro: First of all, I think NAFTA 2.0 — the evolution of NAFTA — we are monitoring how the three countries' congresses approve that. Might be [a] slightly longer delay, but possible, I think. There is quite universal agreement that 232 (tariffs based on a threat to U.S. national security) is harmful to everyone. So Mazda is part of a coalition to really search for good, fair and open trade all the time. And I hope that is the case, but there is no guarantee.
You announced a diesel variant, the CX-5, here at the show, and I have to ask why. What makes diesel the right play for Mazda at this time?
Moro: I think everybody is zigging and we're zagging — so that is always Mazda. U.S. consumers are not particularly big fans of EVs yet. Manufacturers are pushing EVs, but that is for consumers to decide. So we have to have a kind of market solution.
Is part of the thinking that this is an opportunity for Mazda to scoop up some of those old VW diesel buyers?
Moro: I'm not particularly saying VW customers, but there are diesel fans out there, including pickup truck [owners]. So there's some awareness in the market, but they didn't have a product in a crossover in the range of a price that they could afford.
Do you have any other thoughts?
Guyton: The diesel thing, if you will ...
Scandal, I think, is what we usually call it.
Guyton: Yeah. And that's right — maybe the right story or the right title because in Europe, I think some of the spin has gone into pivoting away from diesel and into something else. Whereas the issue was behavior, not technology, right?
So you have a number of people misbehaving. And then we get this sort of overarching discussion about diesel. The technology of diesel is still fundamentally good. And I think provides — for long-distance drive and high-torque applications — really a very fitting product. The Mazda diesel engine in Europe is seen as a tremendous product by customers and by journalists, and so we're bringing that here.
Tell me about working with Toyota.
Moro: The partnership with Toyota is pretty good on both sides, I think. One thing I like is it is about a fair partnership. ... And that is little by little expanding right now.
Guyton: We announced for 2018 the pooling of the brands for CO2 compliance [in Europe], for example. … Mazda has announced we're going to use Toyota Financial Services in Australia to support the dealers. So there are a number of areas, although the centerpiece is obviously Alabama, where we're busy now. We have really low unemployment, so hopefully we'll be able to find 4,000 people … who are good people wanting good- paying jobs.
And next-generation EV technology together with Denso and some other Japanese partners.
I think a lot of us saw Mazda looking for a partner and assumed it would be similar to the Ford relationship, but it hasn't developed that way. How do you see it?
Moro: I think it is fair to say when Ford left Mazda, Mazda was alone. We developed a strategy [to] focus our limited resources, we decided to focus on internal combustion engines. In the past, it was like a kind of Ford-Volvo-Mazda joint platform. I think when we asked Toyota to help us or support us to develop a hybrid vehicle, so that Mazda, to get access to that technology much more quickly, I think we started working together more.
That was interesting because you are using the same hybrid technology, but Prius and Mazda3 have driving characteristics that are so different. So they thought, wow: Same system, very different — unmistakably Mazda. They also see Mazda develop a series of powertrains: Skyactiv-G, Skyactiv-D, 2-liter, 2.5 diesel, 1.5 diesel. But the number of engineers is only 10 percent [as many as Toyota has]. So they see Mazda's engineering efficiency, which according to Toyota, that they don't see [internally].
Guyton: There's an excitement about keeping the characteristics of the two companies unique even though there is a small cross-sharing. But the uniqueness is what is valuable — not the togetherness, as in the Ford time.
Help me understand how the investment in the dealerships really helps.
Does it attract more people? Does it make them more comfortable making a big purchase?
Moro: Our new brand facility, we call Retail Evolution, is designed by our car designers. Which is pretty different because they are thinking about how are they going to showcase our beautiful product in the right environment? And our dealers love it. … Because it's very different — kind of the feeling of a boutique. So that's changed the perception in each local community about Mazda. Because in the past, our facilities ... were a little old-fashioned. Now it's pretty different: First class, unmistakably premium. The customer's expectation of Mazda in that local community — totally changed. And also, dealers start understanding: Great product, great facility — people behave different.
The workers, too?
Moro: Yes, totally. So it is important to me to put them into the right business operation model: Focusing on customer experience, focusing on loyalty, retention.
Guyton: And so far, it seems to be working, because the shops who have been open now — some have been open now for two years, or continuously for a year — and those, the profits are up, sales are up [30 percent] in those stores and they are consistently having … better results than their older counterparts. In Europe, we had a philosophy that buildings don't sell cars but people do. And I think that is true, but there's a catalytic effect that's happening here. We're a relatively small brand for whom those shops are also a permanent sort of advertising: permanent awareness and changing the mindset of who this brand is. And it's always on, you know? So it's an important investment — not only in the bricks and mortar but also in the image of the brand in the market, which I think is quite relevant.
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