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Vinesh Bhindi

MAZDA Australia has partnered with Toyota Finance Australia Limited to give dealers access to a line of services under the Mazda Finance label for the first time in about a decade.

The news has been welcomed by Mazda dealers, and Mazda Australia managing director Vinesh Bhindi told GoAutoNews Premium that “we are very excited about this deal, especially given the recent change in the finance industry”.

Mr Bhindi said Mazda Fiance will make purchasing more convenient for potential buyers.

“We know that more than two thirds of new car buyers that look for financing online will refer to manufacturer websites,” he said. “Mazda Finance is an opportunity to make the purchase process easier for customers in the first place they go looking.

“We did not have a partner for many years. Previously, Mazda Finance existed when Ford Credit was around but that was ended as part of the new Ford Finance direction during the GFC.

“Currently Mazda dealers and customers seek independent finance from mainly two suppliers, Macquarie and St George.”

Mr Bhindi said the radical change made after Australian Securities and Investment Commission (ASIC) decisions directed at the finance and insurance industry in November did not prompt Mazda to make this move.

“We have been working on securing a finance partner for a while and we evaluated all options in the market before arriving at this conclusion,” he said.

Mr Bhindi said the partnership will involve both wholesale and retail.

“All finance providers offer both,” he said. “Our dealers can make their own decisions and so can our customers. This is an alternative in the marketplace and we think it will be exciting option.”

A statement by Mazda Australia said Mazda Finance will be housed in a separate subsidiary company called Australian Alliance Automotive Finance (AAAF) and start operations in the middle of this year.

AAAF will be managed by an independent board of directors and have its own sales and management team, and use its own credit license.

Mazda dealers contacted by GoAutoNews Premium said the alliance with Toyota Finance was seen as a very strong move.

One said he had “looked with envy” at the F&I penetration of Toyota dealers, which he said in one case was close to 80 per cent.

“I believe the average penetration rate of Toyota dealers is around 60 per cent while we are at 31 per cent,” he said.

“Toyota Finance will give us access to retail finance including low-cost full and novated lease finance from a business that has understood how to maximise the changes made in the ASIC changes from November last year.

“For us it’s a great program.”

Mazda MX-5

The majority of Mazda dealers in Australia are believed to be financed by St George. The move to Toyota Finance will make a big dent in St George’s business, another dealer said.

The dealer suggested that the wholesale business – such as floorplan finance – might be provided by an unnamed Japanese banking group, but Mr Bhindi said that was not the case and that Mazda Finance was likely to be the main financier of floorplans.

Asked about expected finance penetration after Mazda Finance starts operations, Mr Bhindi said: “It is hard to say what our penetration will be with this partnership.

“Mazda will have a unique product and will focus on private buyers,” he said.

“We know many of those use finance and we’ll give a competitive and viable alternative and a range of products geared specifically for private buyers.

“In terms of the changes afoot in the auto industry, it is very important for every dealer partner to offer a finance product to their customers and improve their penetration.”

Mazda enters 2019 with predicted sales for the calendar year of more than 100,000 but Mr Bhindi said the outlook for the year “will be flat or decline slightly”.

“The reasons include, in part, the credit crunch as well as housing price adjustment that Melbourne and Sydney are still experiencing,” he said.

“Other economic conditions say to us that this year will be flat or less, or one, two or three per cent down.”

The local finance partnership comes after Mazda and Toyota in December announced plans to integrate their finance arms following Toyota Finance Corporation’s proposal to buy a 51 per cent share in SMM Auto Finance, which provides loans to Mazda’s Japanese customers.

SMM Auto was previously owned by Mazda and Ford and two huge financial groups, Sumitomo Mitsui and Cedyna. Sumitomo Mitsui was, in 2010, Mazda’s biggest shareholder.

Ford pulled out of the financier during the GFC a decade ago and now Toyota will take the 51 per cent from the two finance companies, with Mazda holding 49 per cent.

Mazda and Toyota are also partners in a new factory in Alabama that, from 2021, will make 300,000 vehicles a year badged both Mazda and Toyota.

[su_label]By Neil Dowling [/su_label]

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