Marketing conundrum

December 20, 2006 Over $100 million in new product has been damaged in transit between your factory and dealer network. The shipment is insured, but what do you do with the salvaged goods, some of which appear undamaged?

If you’re Mazda and the product is 4,700 new vehicles that were stranded for months on a listing ship, you send them to the crusher, according to this article on Autoblog.

As the comments on Autoblog show, it’s an interesting marketing conundrum. It seems wasteful to destroy the vehicles, but when you consider the brand damage that Mazda could suffer if defective vehicles entered the market, their decision is sensible. Add to that litigation risk, the cost of testing the salvaged vehicles, and the near impossibility of insuring that the vehicles ended up disassembled in a scrap yard, and the logic of the decision is clear.

It’s a shame that the vehicles couldn’t be sold at a steep discount on an “as-is” basis, but as one Autoblog commenter noted, “Anyone who’s spent time around bargain-bin shoppers knows they can have unrealistic expectations and big mouths.”