Mazda, Hyundai small gains are big deal as industry struggles

LOS ANGELES — It's rare that a 0.6 percent sales gain can feel like a watershed moment, but Hyundai is celebrating its return to positive numbers in July as a launch pad into a hopefully brighter second half.

And for Mazda, that launch has already happened. July's 3.4 percent increase came on top of an 11 percent rise in June, which put the automaker back in the black after an otherwise crushing second quarter.

The two brands are rare bright spots in a U.S. retail market dragged down by deserted showrooms and plunging sales.

Both Mazda and Hyundai crashed into the red in March along with the rest of the industry. But since then, they have been two of the industry's better performers. Hyundai was down 18 percent in the January-June period, and Mazda fell 7 percent compared with the first half of 2019. The light-vehicle industry as a whole was off 23 percent in the first half of this year. Most automakers did not report U.S. sales numbers in July and won't do so until the end of the third quarter.

One key to the comeback for both Hyundai and Mazda — other than generous incentives similar to those being offered across the industry — came from a key pivot to crossovers. Both brands previously relied on car-heavy lineups.

They also both benefited from having inventory rolling in from overseas while competitors' U.S. factories were shut down or gradually returning to full capacity.

"Our SUV sales continue to do all of the heavy lifting for us," said Randy Parker, vice president of national sales for Hyundai Motor America. "SUV [retail] sales were up 16 percent in July, fueled by Palisade, Santa Fe and Kona. Tucson also did extremely well for us."

The new Palisade three-row crossover, which debuted a year ago, nearly doubled its sales in July to 8,404. The subcompact Venue, a new model for 2020, added 1,620 sales and beat the Accent sedan it eventually will replace. Another crossover, the subcompact Kona, was new for the 2018 model year and sold 7,077 vehicles in July for an 11 percent gain over last year.

In the first seven months of the year, Hyundai's sales are down 15 percent, much of it a result of the drastic reduction in fleet sales to rental companies.

Parker said Hyundai will continue to apply its aggressive retail strategy for the rest of the year. The brand's retail market share has risen by 0.7 percentage point to 4.7 percent, the largest gain among any brand year to date, Hyundai said.

"We're adapting to this as the new reality and we're just fighting our way through it," Parker said.

Although Hyundai was quick to ratchet up incentives on some models in response to the market downturn, the overall incentive spend is actually down year over year.

Part of that comes from a better mix of crossovers such as the Palisade, which has been in high demand since launch and doesn't require big discounts.

Mazda's gains have also come from its renewed focus on crossovers and promotions that more closely match those of bigger automakers, including 0 percent financing for 60 months and no payments for 90 days.

The new CX-30 crossover that went on sale in November was good for 20,743 sales in the first seven months of this year. That helped compensate for plummeting deliveries of the Mazda3 and Mazda6 passenger cars and the aging CX-3 subcompact crossover.

For the broader January-July period, Mazda's sales are down just 5.5 percent to 152,954.

"Our marketing plans were interrupted by COVID-19, yet CX-30 is still seeing success," Jeff Guyton, president of Mazda North American Operations told Automotive News. "In fact, July was our best month ever," he said of the CX-30's results.

Another focus has been the three-row CX-9 crossover, a vehicle loved by the automotive media but mostly ignored by consumers in one of the industry's hottest segments. But CX-9 sales are now up 13 percent in the first seven months of the year, to 15,786.

"We've been focused on building the brand, and the success of CX-9 the last few months is a part of those results," Guyton said. "Over the last year, we have made several product enhancements, including captain's chairs, hands-free power liftgate and 9-inch full-color touch-screen display. That has helped its growth."

Looking forward, Mazda is quickly transforming its dealerships through a facility upgrade program. It also launched a new finance captive, Mazda Financial Service, this year through a partnership with Toyota Financial Services. The brand also is pushing sales of certified pre-owned vehicles, which saw a 25 percent sales increase in July, nearing a record.

Also helping Mazda's retail performance, Guyton said, is its new ad campaign — "Rediscover the Road" — which promotes a family drive as a responsible alternative to staying indoors.

"Our approach is to help people safely navigate this new normal in a positive, uplifting way, and our sales performance in recent months helps validate this approach," he said. "In this era of uncertainty, we can all relate to relate to the notion of taking a break and hitting the road."