What Went Right, Wrong at Modernized Dealership

MANHATTAN BEACH, CA – When Mazda North American Operations sought to reinvent itself five years ago, part of the plan included transforming the dealership process.

Dealers can get edgy when auto makers talk like that. That’s because home-office retailing brainstorms can turn into level-5 hurricanes that damage dealership operations.

Mazda’s modernization plan was bold and inventive and called “the Retail Revolution,” prompting some hand wringing. After all, people die in revolutions.

Plans called for participating dealers to build new facilities of a building-block design with radiant green, orange and blue accents.

Also called for were wireless technologies and computer terminals throughout the showroom so shoppers – with or without sales help – could go online to configure vehicles, review specifications and compare products and prices.

Bountiful Mazda in Bountiful, UT, became the first dealership built to those specifications. The new facility opened in 2003.

In retrospect, what could have been done differently?

Paul McDonald

Not much, says Paul McDonald, who along with his brother, Michael, co-owns the suburban Salt Lake City store, one of Mazda’s best-selling outlets in the U.S.

Oh, a few things didn’t pan out. But for the most part Mazda’s ambitious initiative was a good idea, McDonald says at an E.N.G. automotive conference here.

“I give Mazda an ‘A’ for effort,” he says. “They’re trying. And it worked for us.”

He had a few initial reservations going in, starting with the color scheme.

“I gagged when I first saw the green, orange and blue,” he says. “But it ended up being pretty nice.”

Of Mazda’s 700 dealerships in the U.S., about 70 sport the new look.

But it goes deeper than just appearances.

It is about crafting a dealership experience geared to Mazda customers, who are among the youngest in the automotive market and consequently tend to be Internet savvy.

Mazda wanted a flowing transition for them so that the online usage continued when they entered the showroom, says McDonald, who also is an information-technology consultant.

“We’re a wireless hot spot, and it’s surprising how many dealerships don’t offer that,” he says. “We have PCs throughout the showroom. Believe it or not, 70% of dealerships don’t.”

Also on the floor is a Sony Play Station 2 featuring car-chase games for entertainment purposes. “It’s a big attraction until a little kid steals the controls,” McDonald says.

Bountiful Mazda, the first “Retail Revolution” dealership.

Among original ideas that fizzled was placing a plasma TV screen in the dealership to run promotions and notify service-department customers when their vehicles were ready.

But technical difficulties nixed that, “so now the TV is just a TV,” says McDonald. “But it looks nice.”

Also looking good on paper but failing in reality was an outdoor service lane for customers to line up in their vehicles, while service advisors processed repair orders using hand-held wireless devices.

But the severity of Utah winters proved too daunting – snow drifts would buried the drive-through lane – and the advisors found the hand-held devices too user unfriendly.

“It took forever to do repair orders with a stylus, although it worked well with simple orders like quick lubes,” McDonald says.

Last year, Bountiful Mazda, which employees 39 people, sold 730 new vehicles and 370 used units with a 2.7% net return on sales.

About 35% of sales stem from Internet leads, which can be as high as 380 a month, McDonald says. He hopes to hit 40% by the end of the year.

“The Internet is the key, but the learning curve is long in training people how to handle Internet leads,” he says.

Much of the success depends on the Internet manager holding sales personnel accountable.

McDonald says: “It’s a matter of asking, ‘Where’s this sale at?’ ‘Where’s this appointment?’ How come this prospect didn’t show up?’

The dealership uses a customer-relationship management system designed to track prospects, where they are in the sales process and what vehicles they are interested in.

“The goal is that when customers walk through the door, we know who they are and why they’re here,” says McDonald. “We’re not quite there yet.”

Despite technology, it’s still a people business, he says.

“Do we make mistakes? You bet. Do we make course corrections? Sure. I mystery shop and discover things. Equipment can break down. So can people.”

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