Mazda Financial Services: Creating a digitally conscious captive [Spotlight]

Automotive OEMs are seeking new ways to meet an escalation in consumer expectations for a seamless and enhanced online car-buying experience as COVID-19 cases continue to rise. Mazda Financial Services , the recently established private label financing arm for Mazda North America, for one, is looking to meet its customers at the digital door. The lender went live April 1, and has already built a portfolio of approximately $1.7 billion asof July 21, said MFS President Pete Carey. Mazda Motor of America, in conjunction, has also been the only OEM to report positive year-over-year sales since the pandemic struck in March, jumping 10.9% to 25,326 units in June. Carey, who also serves as group vice president of Toyota Financial Services , spoke with Auto Finance News about how he’s worked with the Mazda team to construct integrated OEM and captive websites designed to streamline the financing process for dealers and customers alike. [caption id="attachment_78733" align="alignright" width="300"] Mazda Financial Services President Pete Carey[/caption] Carey has been in and around Toyota Financial Services — which reported a $92 billion portfolio in 2019, according to Big Wheels data — since 1993, when he started as vice president of sales. Under his leadership in that position, and as corporate manager of commercial finance, Toyota Financial Services delivered a $100 million year-over year turnaround in 2011. In his 27 years at the captive, he has also been responsible for overseeing more than 800 employees in 33 offices. Prior to the institution of Mazda Financial Services, Mazda had a private label financing agreement with Chase Auto called Mazda Capital Services. That partnership ended in March and was replaced when private label MFS went live. MFS is the first client of a personalized banking plan, Carey said, and a subsidiary company of Toyota Financial Services. “It was our attempt to take the 30-plus years of us doing business as a captive finance company and extend it to the [wider] market.” To that end, Carey shared with Auto Finance News the importance of incorporating the “Mazda Way” into Mazda Financial Services, his playbook for the new private label captive and his advice for lenders: be digitally oriented. What follows is an edited version of Carey’s conversation with AFN. Auto Finance News: What specific operational plays are you incorporating from the TFS playbook into Mazda Financial Services? Pete Carey: When I think about the legacy of TFS, and what we tried to do with that company, it really revolved around two things: One was to help the OEM sell cars, and two was to create an experience that the customer would enjoy and the OEM would enjoy. Really, that is the playbook. That’s really what we’re trying to focus on with Mazda and the Mazda dealers. It’s what we sold them to earn the right to do business with them. And I think it comes down to a very strong level of collaboration. I think Mazda had a couple of different finance sources prior to us, but they believed that they could be taken to a different level of performance if they had a true captive. Initially, we had a really good idea of what worked for Toyota, but what we didn’t know was the “Mazda Way.” We wanted to sit with dealers individually and listen to what they were trying to achieve as dealers and immerse ourselves in what Mazda was trying to do as a brand. AFN: What have been your primary goals for MFS since April? PC: Every OEM has a very specific clientele that they’re trying to market to. So, the marketing approach was something that we needed to become acclimated to. We worked very closely with them on how we would brand those products to mirror what Mazda was representing, in line with their “Feel Alive” campaign. We also needed to build a website and marry it to the OEM website so the customer didn’t have a clunky experience. We had to work out how we were going to handle the Mazda capital customers that think that they’re talking to their actual finance company. How do we engage them to finance with us at their next opportunity? It’s all of those things that started to come into view and we had to sort out. This migration toward the digital platform, and trying to meet customers where they want to be met is so critical. AFN: How does the Mazda Financial Services website integrate with Mazda’s OEM website as consumers look to finance vehicles online? PC: We worked very tirelessly to create a web environment that would connect Mazda Financial Services to the Mazda Motors website. We have to think about somebody buying a car — the first thing they want to do is build a car. We’re not a car company; we don’t build cars. We create finance solutions. But, we need to be in the Mazda North American ecosystem to do that configuration and get the car the customer wants, equipped in color. Then, they want to know what it’s going to cost, what are my options? There is somewhat of a travel path that we create to do that. Then, the hosting platform is where a lot of that computation takes place and where the dealers do their work. There’s all of these systems that need to somehow connect. In the mind of the consumer, you want the two websites to look and feel as consistent as they can. I think it’s a journey that all OEMs and finance companies are on and we’re looking for ways, through the voice of the dealer and the OEM, to enhance it as this online dynamic becomes more prevalent in a path that consumers want to pursue. AFN: What is your strategy for supporting dealer partners in wholesale financing? PC: We believe, as a captive finance company, that many of our relationships begin with wholesale relationships. We have discussions with all of the dealers about where they are and what they’re trying to accomplish. Some of them, quite frankly, are part of a larger dealership enterprise that has many other makes and models and they have a holistic relationship with a key finance organization and they don’t necessarily want to parse that out. Other dealers approach their operation by aligning with the captive finance company that’s associated with brands. I think, of the 30 wholesale relationships we have, they want to be all-in on Mazda and Mazda Financial Services. Secondarily, when we’re going out and there’s 600 dealers, we’re going to take handraisers first. There’s a lot of interest right now and we are vetting that interest based on what we believe to be the priorities of the dealers and their sense of urgency. Our pitch is, we want to be all-in with you and we want you to be all-in with us to do the best we can to help you sell cars and create loyalty amongst your customers. AFN: Ultimately, what advice do you have for lenders and dealerships to successfully navigate the second half of 2020? PC: My advice to dealers is to really invest in some of the things that are propelling this industry toward an empowered, seamless and faster transaction: Be as digitally oriented as they can. I think the pandemic has taught us a couple of lessons. For one, the behaviors of our consumers are changing -- or have changed. Now, is that going to be our new normal? I don’t think any of us really know the answer to that. But, I think this openness to being more targeted, and being more available across different channels has really gotten the attention of dealers, OEMs and finance companies. So, I think this desire to understand the customer better through their behaviors, through data and analytics, is going to continue to differentiate winners and losers. Editor’s note: This feature first appeared in the August issue of Auto Finance News, available now. Auto Finance Summit, the premier industry event, returns October 20-22, 2020, as a virtual experience. The virtual experience will offer the same quality networking and education as past events, all through an online platform. To learn more about the 2020 event and register, visit www.AutoFinanceSummit.com .

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Mazda Financial Services: Creating a digitally conscious captive [Spotlight]

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