Fuji Heavy Industries Ltd., the maker of Subaru vehicles, has strengthened its position as a premium brand by focusing on all-wheel drive, continuously variable transmissions and horizontally opposed engine technologies. Now Fuji, of which General Motors owns 20 percent, hopes to develop other technologies by taking advantage of its partner's financial and engineering clout.
Kyoji Takenaka, 54, who took the reins as Fuji president on Wednesday, June 27, discussed alliance strategy with Staff Reporter Yuzo Yamaguchi in Tokyo last month.
How do you intend to strengthen the Subaru brand further?
We have developed core technologies that have helped boost the value of our brand. But that has hit limits in recent years. Customers' values on a product have varied in Japan and the United States. So now we must shift our attention to what the market demands and what the market needs. For example, we'll launch the ST/X pickup next year. Also, we will develop the SG/X, a sport-utility, jointly with GM.
What's your role as a GM group member?
We're trying to achieve synergies in developing products and technologies, and in marketing, logistics and procurement. In the United States, we are going to jointly develop a vehicle based on a new concept instead of just rebadging our products. We have strong technologies in all-wheel drive and continuously variable transmissions. We'll keep updating our awd technology by committing all of our resources to it. We'll share that with GM; that's the biggest role we're going to play.
What do you want to get from GM?
We need GM's support on big projects like fuel cell technology, which requires huge amounts of money to develop. We can't afford to go it alone in areas like that.
So what technology comes after awd for Subaru?
We want to combine some new technology with awd. We don't have a specific idea in mind, but we want to develop a technology in the area of safety. Current technology protects a driver in a crash, but our thinking is to produce a vehicle that can avoid a crash.
How do you see GM's strategy in Asia?
To be honest, GM's strategy in Asia, especially in the Japanese market, hasn't worked well. As each of GM's three Japanese affiliates - Subaru, Isuzu and Suzuki - has its own specialty, each should support GM in its own way. We have formed the Asian Alliance Council to discuss an alliance strategy, and I hope we can produce better results.
GM often is criticized for trying to sell vehicles in Japan that don't meet Japanese preferences or needs.
GM has no r&d capabilities in Asia and, therefore, they can't make products tailored to the region. That gives GM no choice except to bring in products from other countries. So GM's alliance partners should share the technologies they think GM needs to develop products for Japan.
Are the alliance partners considering joint r&d?
We've just started discussing the possibility of setting up a joint r&d center in Shanghai, GM's Asian headquarters. We're moving toward working together to develop our technologies with GM. I think that will help boost the value of our alliance. When you join a big alliance, the tendency is to try to quickly become cost-competitive by making products on a huge scale. To do that, you typically share a platform with your partners. But that isn't necessarily the right answer. A European or American car should be different from a Japanese car. If you're too quick to share a platform with someone, that could lead to a failure.
Given that, aren't you concerned about rebadging GM's Zafira minivan as a Subaru for the Japanese market? The Zafira isn't an awd vehicle. Doesn't that contradict Subaru's DNA?
We need to expand our product lineup to keep our customers in the long term, and we need a vehicle like the Zafira. We think the Zafira is OK because it has good cruising performance. What is Subaru? It's awd and cruising performance. But when we started discussions on the vehicle, GM was offering only a 1.8-liter engine. That was something we didn't want to put into our showroom. So we decided to bring in the 2.2-liter vehicle. And, hopefully, we will develop awd for the next Zafira. Chances are pretty high that we will do that.
You said you are planning to sell 50,000 units a year of the new vehicle. Are you thinking about exporting it?
We will build them at the Subaru-Isuzu Automotive plant in Illinois, so the United States will be the main market. But we want to make it a global vehicle that can be sold in Europe, Japan and Australia. We hope to export about 20 percent of total output.
What badge do you suggest GM put on its own vehicle?
We would appreciate it if GM could pick a brand that can get the most out of our jointly developed car. I can't say any more.
What would you think about badging it as a Saab?
Saab has been positioned as a premium brand in the United States. In that sense, they're close to us. But each of us has a strong character, so it might be hard for the two of us to work together.
Would SIA also produce GM's version of the new vehicle?
That's part of our discussions. I think it's one of several options.