Mazda's demo little secret

THE Mazda3 may be Australia’s top-selling car so far this year according to official sales data -- but a special investigation by Carsguide has unearthed the industry secret that is driving its sales. A staggering one-third of Mazda3s sold in January and February were so-called “dealer demonstrator” models -- more than four times the industry average for “demo” vehicle sales, which is 7 per cent.

Confidential industry figures obtained by Carsguide show Mazda registered almost twice as many “demonstrator” vehicles than market leader Toyota (4500 versus 2500) in the first two months of this year, even though Mazda sells less than half as many vehicles overall than Toyota.

“Demonstrator” cars are intended to be vehicles that a dealer has put on the road for customer test drives. The showroom typically receives a bonus from the manufacturer for devaluing a brand-new car by registering it and putting kilometres on the clock.

But in recent years it has become common practice for car-makers to use “demonstrator” bonuses to disguise discounts on brand-new undriven cars. It’s a good deal for buyers but not a true reflection of the popularity of some models on any given month because, although the cars may be declared as sold in the official tally, they may not yet be in customer hands.

The confidential figures also showed that Nissan and Mitsubishi sold a high ratio of demonstrator vehicles last year (16 and 14 per cent respectively), which partly explains why their sales hit the brakes at the start of this year. Dealers are reportedly still trying to clear stock that was declared as sold in 2013.

Mazda has enjoyed a squeaky clean image in the industry because it typically does not resort to large-scale “demo” deals. But the secret sales breakdown shows 14 per cent of Mazda’s total sales in 2013 were “demonstrator” models.

Mazda’s “demo” count began increasing in September last year, the confidential figures show, as it was nearing the end of the race for top-seller status against the Toyota Corolla (which the Corolla in fact won).

Mazda “demo” sales increased then even further at the start of 2014, representing 24 per cent of total sales in the first two months of this year, the confidential figures show. By way of comparison, only 6 per cent of all cars sold by market leader Toyota in 2013 were “demonstrator” models.

Mazda Australia spokesman Steve Maciver says the high “demo” count is a reflection of the previous model Mazda3 being in runout, and the changeover to the new model. However, industry insiders say the figure is still unusually high and point to other examples of runout models that haven’t seen such a sharp spike in “demo” deliveries.

“We’re not playing funny games like everyone else. We’re not playing with numbers to artificially inflate the market,” said Mazda Australia spokesman Steve Maciver. “It’s all down to Mazda3 being in runout and nothing else. As of March you will start to see our demo levels return to normal.”

Mazda Australia boss Martin Benders said the demo deals were a "one-off" and included 1000 examples of the new model Mazda3, normal practice at the start of a car’s life.

Mazda Australia said production of the outgoing Mazda3 model ended several months ahead of the production start for the new car. “To meet anticipated run-out demand we had to accept delivery of several months of stock all at the one time,” said Mr Maciver. “When we ordered our Mazda3 runout stock, the market was up year-on-year but by the time it arrived the market had slowed resulting in higher than normal stock levels.”

He said dealers helped digest the cars by “turning over” their courtesy cars and other dealer fleet vehicles. “During a conventional run-out we're normally able to adjust orders but with the unique situation of having to commit to several months of Mazda3 stock at once, we weren't able to react to the slowing market at the end of last year,” said Mr Maciver. “In order to manage these stock levels we had to ask dealers to register more demos, a large number of which were used to more regularly replace demos and courtesy cars.”

Meanwhile official sales figures due to be released later this week are expected to show that the Toyota Corolla returned to the winner’s podium in the March sales race -- after the Mazda3 led the first two months of the year -- but the Mazda3 is still ahead in the year-to-date tally.

The Mazda3 now has a healthy lead over the Toyota Corolla, with 12,100 sales edging further ahead of the Corolla’s year-to-date tally of 10,300, preliminary figures show. The Mazda3 was the car that ended the Holden Commodore’s record 15-year winning streak in 2011 and led the market again in 2012. It was the first time a foreign car led the market since World War I, according to automotive historians.

But the Toyota Corolla won the 2013 new-car sales race after swapping the monthly sales lead three times with reigning champion the Mazda3. The Mazda3 led the first three months of the year before the Corolla landed its first win for 2013 in April, and then led the year-to-date tally for the first time in June.

In the end, the Corolla was the top selling car for eight months of 2013, including the last four in a row. Incredibly, the Corolla’s 2013 tally was only its fifth-best annual result (the record was 47,792 set in 2007), another sign of the fragmenting market that has killed local car manufacturing.

This reporter is on Twitter: @JoshuaDowling