Subaru dealers: Getting enough vehicles is big challenge
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Phil Porter Age: 58 Dealer since: 1994 Dealerships: Center Subaru, Torrington, Conn.; Subaru of Jacksonville, Jacksonville, Fla.; Subaru of Orange Park, Jacksonville, Fla. Average monthly sales in 2012: 125 new, 100 used Quote: "BRZs are nearly impossible to keep in inventory, and it is hard to have a halo car that is made of 'unobtainium.'" |
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Subaru's biggest problem is a lack of product, its dealers say.
The brand has had four straight years of record sales and wants another sales record in 2013.
Factories in Indiana and Japan can't produce vehicles fast enough, said Phil Porter, chairman of the Subaru National Dealer Advisory Board.
Subaru-maker Fuji Heavy Industries Ltd. has said it will expand the Indiana plant's production capacity and will determine the final details of the expansion by March 31.
The new BRZ, a coupe developed jointly with Toyota Motor Corp., is especially popular, Porter said.
But even with sales growing, dealers say they need vehicles -- such as a hybrid and a seven-seat replacement for the slow-selling Tribeca SUV.
The hybrid is coming this fall, but there's no word on the larger vehicle, Porter said.
Porter was interviewed by Staff Reporter Diana T. Kurylko.
How was 2012 for Subaru dealers?
In one word, excellent.
Why?
It is the fourth or fifth year of record sales with pretty substantial increases -- 260,000 in 2011 in the U.S. market and last year we were north of 330,000.
What problems do Subaru dealers face this year?
Getting product. It is a wonderful problem, but a problem. Seemingly as Fuji Heavy Industries, the manufacturer in Japan, and the plant in Indiana increase production volume, the sales go up.
We are in a fortunate position. If you asked any dealer in the country what is the issue, it is: "I need more cars."
What else can Fuji do to give you more vehicles?
They have taken action to increase production both here in the U.S. and overseas.
What do you hope to accomplish as chairman of the dealer council?
We have been very fortunate over the last five or six years to have developed a great relationship as a dealer group with the manufacturer. It is my hope to continue to build on that foundation. We are in a unique position that the manufacturer understands and wants to better understand the U.S. market and they have open dialogue with us.
Are Subaru dealers profitable?
Yes. The percentage year-to-date through November is north of 90.
Are they making money on new-car sales?
Yes. While there is pressure on gross profit and new-car sales everywhere, the value proposition and the need for more product is helpful for dealers to maintain gross.
What is Subaru's dealer facility improvement program?
We have a Signature Facility program. The first one rolled out 10 or 12 years ago and we are in a Phase II improvement program for a more current look. There is some factory participation based on sales volume.
Is the program mandatory? When must the changes be made?
Again the relationship with Subaru is very good. There is flexibility in time depending on how long you have been a Signature Facility dealer. It is mandatory for new dealer points.
Will dealers be required to do new exteriors and interiors?
My store in Connecticut was a good example of Phase I and II. Phase I had a stone brick tower and tan with oak wood treatments inside. Phase II is gray slate towers with gray and cherry wood treatments.
Has the BRZ coupe that went on sale last year become a halo car? Is it bringing you conquest buyers?
Availability has been so difficult and in some respects it does bring different folks to the brand. BRZs are nearly impossible to keep in inventory, and it is hard to have a halo car that is made of "unobtainium." It certainly has sold very well.
How many on average do dealers get a month?
Initially, they gave six-month numbers to each dealer. And the number you received was based on the prior year's sales of WRX and STI. I can't tell you what an average dealer got. It was certainly in the single digits on a monthly basis.
Did Subaru underestimate the popularity?
No I don't think it was underestimated. Subaru was cautious with a two-door car with rear-wheel drive. And of course there is a partner in the car -- Scion dealers get it as well.
Do buyers go to Scion if Subaru dealers are out of BRZs?
I do not know. What I do know is it is a benefit to Subaru to have our boxer engine at Toyota dealerships. It broadens the exposure to our boxer engine.
Do BRZ buyers want discounts from Subaru dealers because the Scion version of the BRZ is cheaper?
No. Frankly the sense that I get from people I have spoken to is they like the cars a little better equipped.
How has the new XV Crosstrek crossover been accepted?
In late November, that car had the lowest day supply of any vehicle in the industry. It simply is another in the succession of product successes that we have enjoyed with Subaru.
Why?
It is priced right and sized right. That small SUV segment is just on fire, and we have the right car for that segment hands down over any of the competition.
Who is the XV attracting?
Only from my experience dealing with customers on the lot, it is certainly bringing a younger buyer to us -- single women and younger families.
How much younger?
Some in the 20 to 30 range. Our products do skew a little older. Just like the Impreza and Impreza Sport Wagon, they are attracting a younger buyer to our brand.
Have Subaru sales picked up in the South?
We are making great progress.
What about Subaru is catching on?
In some respects there have been some dealer improvements and there also has been a focus on growing the brand in opportunity markets on behalf of Subaru. Where the brand is heavily accepted, in the Northeast, West, the Denver and Salt Lake City markets, it is strong and consistent and gets brand recognition.
For Subaru to get to sales of 400,000 and more, it recognizes that opportunity markets will have to contribute.
Markets such as?
Florida, Texas, Southern California -- the South.
Tribeca sales have struggled. Are dealers asking for a seven-seat vehicle, and what is the response from Subaru and Fuji?
We are presently in conversations about the need for the right-sized seven-passenger for the U.S. market.
No resolution?
Not presently. However, the manufacturer has shown a willingness to listen. It is an issue for our product line. We need to have a seven-passenger when families get larger and have a couple of children. We lose them to other brands. The manufacturer recognizes that is a gap in our product line.
How have dealers become more involved in vehicle design and development?
Over the past six or seven years they have involved us in very early looks on future products and in prior years we did not enjoy that.
What is different about the new Forester that goes on sale this year? How did dealers influence the product?
It is the next in terms of an excellent evolution of an outstanding product.
What Subaru has done with the 2014 Forester is like what they did with the old generation Legacy and Outback -- made it roomier with a minor increase in length and wider.
The new Forester looks a little huskier and more SUV-like than the current generation. It will offer the interior size that the current one doesn't, improved gas mileage and finally, electronics that our customer expects such as Internet-based radio and mobile attachability, iPod applications, Bluetooth and the like.
When the product was being developed, there were conversations on what to change and what not to change and what customers are looking for. The engineers absolutely delivered on those conversations.
When will you get a hybrid and which model will get it?
The hybrid is something we needed for our brand. Our customers are extremely green and eco-friendly. Based on the footprint of our customers, the hybrid will do well. It is coming out in the fall. On which [model], I don't know.
What are Subaru dealers doing to attract more service business? Is the factory helping?
We recently moved from a long-standing program to Care Connect. It offers dealers much more flexible marketing via e-mail or phone or even mail than the prior program and brings us into the 21st century. Subaru of America was in front and spearheaded the program.
What are the highlights?
It is real-time information on who was in your store, what they did and how to reach out to get them back. The biggest highlight is you can identify who did brake repairs and when and by e-mail or phone or mail market brake jobs. It is an industry-leading program.
You have a new vice president of marketing who came from the digital marketing world. What changes do Subaru dealers need?
It has already improved by leaps and bounds over the past couple of years. Our digital marketing focus has reacted to changes in Web-based marketing. Dean Evans, who is the new chief advertising executive, his background was digital and so in terms of recognizing and reacting to digital marketing they have done a real good job. c
