Subaru says dealers are lagging on service

Doll: 'Retailers need to invest their profits'

Doll: “Retailers need to invest.”

NEW YORK -- Subaru dealers continue to set sales records in the U.S., but they are not keeping up in their service departments, the brand's U.S. president says.

"We just don't have enough service capacity," Subaru of America President Tom Doll told Automotive News during the New York auto show in April. "With all the vehicles that we've sold over the last five to seven years, the retailers need to invest their profits in expansion."

Subaru's sales success is outpacing retailer capacity investments, he said.

Led by two of its most successful nameplates, the Outback and Forester, the automaker sold 615,132 vehicles in the U.S. last year, a 5.6 percent increase from the previous record of 582,675 sales in 2015.

To put the brand's capacity dilemma in perspective, Subaru sold 182,898 Outbacks alone in 2016 in the U.S. That is nearly equal to the brand's total sales volume in 2006 -- 200,703.

Since late 2013, Subaru has offered financial incentives to its retailers to expand and invest in their service departments. Doll said more than 400 of the brand's 630 U.S. stores have opted into the Fixed Operations Expansion program, exceeding the automaker's expectations. But the network's service capacity is not keeping pace with the growing opportunity.

"I always say all profit is temporary," Doll told Automotive News. "If you're not investing the bulk of that profit back into the business, at some point, you're going to fall further and further behind."

Doll added that in some metropolitan areas, service departments already are operating on double shifts and weekends but still can't keep up with demand due to the high sales volumes.

"Now they need a bigger footprint," Doll said. "If they've maxed out adding shifts or adding technicians and service advisers or expanding their hours, now they have to actually build out. If you ever go to some of our locations in the Pacific Northwest or Southern California, we're in great spots. The issue is they're too small. Given the size that we're selling, we need them to expand their footprints a little bit."

With Subaru targeting a 9 percent sales surge in 2017 for a ninth straight year of record U.S. results, it's clear there's going to be even more service customers in the future.

Additionally, two key model introductions are on the horizon, a redesigned Crosstrek and the three-row Ascent, which both figure to further cash in on the crossover craze and contribute even more sales to the brand.

The Ascent alone, which fills a glaring product gap, could boost the automaker's U.S. sales by as much as 60,000 vehicles annually.

You can reach Jack Walsworth at -- Follow Jack on Twitter: @jackwalsworth

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