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Polishing the diamonds: Mazda, Mitsubishi push for store upgrades

Upgraded Mazda and Mitsubishi dealerships feature sleek architectural designs and are switching from bright colors to black and white.

TOKYO — Both Mazda and Mitsubishi are struggling to elevate their brand images, and both are now banking on ritzier dealerships in the U.S. to help them move upmarket.

Mitsubishi Motors Corp. kicked off its retail overhaul July 4, saying it will introduce a new exterior and interior design for 5,000 stores worldwide in the next six years.

The push already has started in the U.S. with two dealerships, one in Huntington, W.Va., the other in Lewisville, Texas. Those upgrades will be finished by this fall, and Mitsubishi expects to get at least 25 of its 354 U.S. dealerships redesigned by the end of March 2019.

"The intent is to ensure consistent image of all outlets globally and enhance customer satisfaction," Mitsubishi CEO Osamu Masuko said last month while previewing the campaign to shareholders in Tokyo. "This will help further instill our brand in the markets."

Mitsubishi's campaign mirrors an upgrade that Mazda Motor Corp. started in 2016 and plans to accelerate through 2021. In fact, the similarities go right down to the colors: Mitsubishi's new color scheme is black, white and gray—Mazda's is black, white and silver.

Renderings of the new Mitsubishi look show a sleek black dealership with a diagonal "Dynamic Slope" signature element across the facade. Inside, a black and white motif lends a modern, technical ambiance evoking the brand's new ambitions in electrified vehicles.

Mazda's proposed look also goes heavy on black, but gets wood trim for a warm, natural feel.

The common goal is to imbue the brands with a more premium air, replacing bright-and-shiny with cool- and-sophisticated.

Masuko: Aiming for consistency

'Drive your Ambition'

Mazda's new look supports its "right price" brand strategy of boosting transaction prices and volume without resorting to incentives. Mazda has been holding the line on spiffs in an attempt to cultivate an upmarket reputation for stylish design and sporty handling.

But its U.S. volume has barely budged in recent years. In 2013, Mazda sold 283,946 vehicles. Last year, it moved just 289,470. Market share actually dipped to 1.7 percent, from 1.8 percent.

Outgoing President Masamichi Kogai, who became chairman in June after handing the reins to Akira Marumoto, said the company's next step is strengthening its U.S. retail network.

"We will build dealer shops that can well accommodate customers, have enough space for a full display of cars, secure enough service staffers and offer them the needed training," he said in May while outlining the plan at Mazda's financial results announcement.

For Mitsubishi, it is about shattering its longtime image as the bargain-basement brand. Mitsubishi has refocused on marketing and brand management under the guidance of Nissan Motor Co., which acquired controlling interest in the smaller Japanese carmaker in late 2016.

"Our brand is evolving, and we need to reflect this in each and every customer touch point," said global marketing and sales chief Guillaume Cartier, a former Nissan executive.

Mitsubishi's upgrade dovetails with the "Drive your Ambition" brand message it introduced last year. The company is striving for a coherent feel across everything from dealerships to websites to motor shows. The campaign is also underway in Canada, Australia, Thailand, Indonesia, Vietnam and Russia.

About 40 Mazda dealerships in the U.S. have been overhauled, and 50 are in the process of being redesigned.

Mazda is also in the middle of a global dealership upgrade. In the U.S., it is pressing for the renovation or new construction of 300 next-generation stores by 2021. From 2018 to 2021, Mazda will invest $362 million to revitalize that U.S. network.

About 40 of Mazda's 582 U.S. dealerships already had been overhauled by the end of March. Another 50 redesigns are underway, with 35 cities tagged as priorities.

Mazda hopes fresh looks improve customer satisfaction and stoke sales. The goal is to lift average annual sales at each so-called next-generation branded dealer to 1,000 vehicles a year.

Upgrades also are being rolled out at dealerships in Japan, China, Taiwan and Thailand.

According to Yasuhiro Aoyama, Mazda's managing executive director for global marketing and brand enhancement, sales at upgraded stores increased by 14 percent last year, compared to Mazda's global sales increase of 5 percent.

Mazda is targeting U.S. sales of 400,000 vehicles a year by the fiscal year ending March 30, 2021. A new assembly plant it is building with Toyota Motor Corp. in Alabama will help fuel that volume.

Renderings of the new Mitsubishi look show a sleek black dealership with a diagonal "Dynamic Slope" signature element across the facade.

The Maeda touch

But so will better looking showrooms, Mazda believes.

The directive came at the behest of Managing Executive Officer Ikuo Maeda, Mazda's global design chief and final arbiter on branding. Not too long ago, Maeda was stunned to witness Japanese dealers renovating their facilities with the same tired look they had been using for years, said Hideaki Tanaka, manager of the carmaker's Brand Style Development Department.

That didn't make sense to many in the company, when Maeda's design studios had made big strides penning some of the most eye-catching and stylish vehicles coming out of Japan.

"In terms of car design, we are becoming on par with premium brands," Tanaka said. "Maeda-san wants to raise the level of the brand and make sure the vehicles look just as beautiful in the store. So, we want to elevate the touch points in the store, just was we elevate the vehicles."

Naoto Okamura in Tokyo contributed to this report.

You can reach Hans Greimel at hgreimel@crain.com -- Follow Hans on Twitter: @hansgreimel

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