Mazda Financial Services will launch a new bundled insurance product Aug. 1, President Pete Carey told Auto Finance News.
Customers can choose to wrap the new Mazda Protection Product services into the finance contract or purchase them separately from the dealership. The new product services include: vehicle service agreements, guaranteed asset protection, prepaid maintenance, tire and wheel, key replacement and excess wear and use. The service, however, will not include collision or liability insurance, Carey said.
“One of the things that our consumers have really expressed to us is this concept of wanting to have peace of mind,” Carey said. “Mazda did not have their own insurance portfolio, so they were very enamored by having an OEM-branded group of products that can help give customers peace of mind and return the customers to [Mazda] dealerships.”
Bundling insurance into financing contracts is a new response to the old notion that cars have short-term lifespans, commonly referred to as “planned obsolescence,” Carey said. When he started in the industry 30 years ago, this concept was prevalent and customers were replacing their vehicles frequently. “[OEMs] have moved off of that and created vehicles that are truly 100,000 miles-plus, as long as [the consumer] takes care of it.”
Previously, Mazda Motor of America had a private financing label agreement with Chase Auto, called Mazda Capital Services. When that agreement ended in March, Mazda entered into a new private label financing agreement with Toyota Financial Services, now called Mazda Financial Services.
The new suite of service offerings is something of a trend. Toyota Financial Services runs a similar program, Toyota Insurance Management Services, Carey said. Through this insurance service, dealers can offer comprehensive collision insurance to their consumers, in addition to service contracts. Porsche Financial Services also launched in June 2019 a pay-per-mile auto insurance program in Illinois and Oregon, in conjunction with its leasing and financing programs.
Mazda Financial Services has an outstanding portfolio of about $1.7 billion as of July 21, Carey told AFN. Mazda Motors, which was plagued by coronavirus shutdowns, was the only OEM to report positive YoY sales in June, jumping 10.9% to 25,326 units. In the past, the OEM hoped to sell between 250,000 and 270,000 vehicles annually, he said, but when the new Mazda factory currently under construction in Huntsville, Ala. opens, the goal is to sell “400,000 vehicles [per year] and finance as many of them as makes sense for us as a company.”
Originally published on Auto Finance News