Subaru is on a roll, and Yoshio Hasunuma, CEO of Subaru of America, says the brand's run of success won't end any time soon.
Hasunuma says fresh product and aggressive pricing helped boost Subaru's U.S. sales 15 percent last year to a record 216,652 vehicles -- in a market down 21 percent. He says he wants to sell at least 240,000 vehicles this year, which would be an increase of 11 percent over 2009. That looks to be a conservative forecast. Subaru far exceeded that target through May, with sales up 40 percent.
Hasunuma, 58, has headed Subaru of America since April 2008. He was previously senior vice president of Subaru global marketing in Japan. Hasunuma was interviewed last month through an interpreter at Subaru headquarters in Cherry Hill, N.J., by Staff Reporter Diana T. Kurylko.
Why have Subaru sales been outpacing the market?
Three things. The first is that since 2000, Subaru of America has improved cooperation with our dealers. Those mutual efforts are starting to show results.
Second, market trends show consumers are becoming environmentally conscious, and that has given Subaru a good advantage. There is downsizing in the market, with the full-size-segment buyers moving into the D segment and the D segment into the C segment. People want vehicles that get better mileage. That trend was proved by the cash-for-clunkers program last July and August, when we sold 17,000 cars and only 700 of the clunker trades were Subarus.
Third, Fuji Heavy Industries has made an effort to bring the right products to the U.S. market that customers demand.
What is your outlook for Subaru for the remainder of 2010?
We recently had a dealer meeting, and Tom Doll [COO], Tim Mahoney [senior vice president of marketing] and Tim Colbeck [senior vice president of sales] and I challenged dealers to sell 20,000 cars a month on average. Over 12 months, that means sales of 240,000 -- at least.
To do this, we need to achieve at least a 2 percent market share. We also know that at this level, about 90 percent of the dealers are profitable.
The Forester will be 3 years old, and the Outback and Legacy have been around for a couple of years. What happens in 2011 when your lineup ages and there are no new products?
I believe we will steadily grow even in 2011. Our products have appeal to the customer and meet their basic fundamental requirements. Subaru has a limited lineup compared with other brands, so we can refresh our products often and make continuous improvement of our models. Customer perceptions change year after year, and we can react fast.
Your market share has increased to 2.3 percent this year. What is your share target as the overall market grows?
When the market returns, we want to keep to a minimum of 2 percent share. The U.S. is the No. 1 market globally, and it has the most opportunity for volume, even for Subaru.
What will Subaru sales in the United States be in five years?
I won't give you a number, but we want to keep at least a 2 percent market share. Naturally, Fuji won't be able to have many more different products, so it is important to sell each line that we have and make sure we increase the throughput of each.
Subaru traditionally has done well in the Snow Belt regions, but you now plan to focus more on Texas, Florida and Southern California. How will you succeed at that?
The Snow Belt remains very important to us, but Florida and Southern California are growth markets in terms of population and so are strategically important markets. So far this year, Dallas was up 84 percent, Florida was up 72 percent and Los Angeles was up 35 percent.
To help in this, in January we changed our field organization from five regions and three zones to three regions and 12 zones -- smaller zones and fields. That helps us focus more on city-by-city sales marketing. This approach is working, as all regions were up in sales.
Subaru has said it aims to improve its design by using more third-party design houses. Can you explain further?
Fuji may hire a consultant design company to study market trends, but Fuji is the designer and will make the final design. We are trying to bring experience into our design. It does not mean outsourcing design.
Will there be a second-generation Tribeca SUV?
Monthly sales are constant but not very high because we need the production capacity for Legacy/Outback. As long as the customer wants the Tribeca, we will continue to supply it.
Does Subaru plan to add dealerships?
There are about 610 dealerships in the United States. We want to maintain the number. Instead of increasing the dealer count, we want to let each dealership increase throughput.
How will dealers handle the increased service demands following higher sales? Do they need to expand operations and add service bays?
Subaru dealers need to improve their customer satisfaction in the service area. Some may need to add lifts or service mechanics. Some may need to improve their facilities. Many new buyers are coming to Subaru, and we need to make sure they stay.
Subaru has said that based on sales projections, it has to increase the capacity of its Indiana factory 40 percent to 140,000 vehicles a year. When will the plant be expanded?
Fuji and the Indiana plant started to take action to increase the production capacity. They need lead time and can do it for the short term with shift optimization. Long term, we need to make investment decisions.
What is your days supply now?
It improved from 30 days to 45 days, and then dealers sold all the cars. We have already started to take action to shorten the pipeline.
How long does delivery take now?
Usually vehicles need a week for preparation. We are now trying to ship them out within three or four days.
How much are you spending on incentives, and do you need to spend more?
It is publicly known that we are among the lowest. It is more important that we show how good our product is. We want dealerships to understand our product strength and convey that to the customers. Our brand wants to focus more on our products and their goodness.
What does Subaru expect to derive from its partnership with Toyota that it didn't gain from the previous partnership with GM?
Our communication with Toyota is going very well. I want to enhance the good relationship we have with Toyota. Camrys are produced at the [Indiana] plant, and we use the best Toyota practices, and Subaru has its own culture. We want to put the two cultures together and create new and better things. And in the future, for environmental compliance, our relationship with Toyota will give us benefits.
What is the status of the sports car you are developing with Toyota?
The joint development is proceeding. We are developing a car that is fun to drive and is safe, to give peace of mind to customers. We can't discuss the specs or capacity or power or drivetrain except to say we are using Boxer engines. Since this is a joint development, Subaru and Toyota need to release information at the same time.
Do you want to add a smaller car the size of the Toyota Yaris or Honda Fit?
In the U.S., the B segment will grow based on customer perception of environmentally friendly vehicles. At the same time, multiple-vehicle ownership is growing. Right now the B segment is a 300,000-unit market. I think it will be a 1 million market in the future.
What does that mean for Subaru?
It depends on the growth of that market, and it is necessary for us to study it.