Subaru of America, on pace for its 10th year of record U.S. sales in 2018, continues to battle issues with service capacity.
It just can't get enough.
"The issue is making sure that we have enough capacity in order to service the cars that we have out there," CEO Tom Doll told Automotive News. "We're continuing to work with our retailers on ways that they can enhance their capacity — whether it's adding lifts or bays or facility expansions — that in many cases are necessary. If we're not able to service the vehicles that we've already sold, eventually it's going to put a cap on how many new car sales" the U.S. sales arm can achieve.
Doll said keeping up with service demand goes beyond lifts and bays, and will include sufficiently sized waiting areas and having enough loaner vehicles for customers.
"All of these things have to be thoughtfully considered, working with our retailer partners to make sure they're anticipating the growth," he said. "We're constantly working with our retailers to show them what's going to happen."
Subaru is aiming for U.S. sales of 680,000 vehicles in 2018, which would mark an increase of 5 percent over 2017's total of 647,956 sales.
The 2019 Ascent, a three-row crossover that arrives at retailers this month, is expected to help fuel the brand's sales growth this year. In addition, the Forester, one of Subaru's staples in the U.S. market, was redesigned for the 2019 model year and arrives in U.S. showrooms this fall.
Simply put, the product pipeline is flowing. Which means potentially more sales.
And more service needs.
But given Subaru's breakneck growth in the U.S. during its decadelong hot streak, its service departments would be busy no matter what happens in terms of future sales, Doll said.
"Even if sales, for example, stay flat for us over the next couple years, the fact of the matter is, because of the units-in-operation growth and just the way this service works, that really for the next few years, [Subaru dealerships] are going to see increasing repair order accounts and so forth," said Doll. "Because the vehicles that are in warranty or customers that are coming back for repair or maintenance work are now going to be coming back for those types of services that the retailer would be providing."
In late 2013, Subaru began offering financial incentives to its retailers to expand and invest in their service departments under a program named Fixed Operations Expansion, or FOX.
That program ended on Dec. 31, 2017, Doll noted. Roughly two-thirds of Subaru's retailers participated in the program, exceeding the automaker's expectations.
While two-thirds may not seem stunningly high, Subaru dealerships that are supplied vehicles by Boch Enterprises were not part of the program.
Boch Enterprises, led by flamboyant CEO Ernie Boch Jr., is an independent distributor for 64 Subaru dealerships in New England — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Last year, Boch Enterprises sold close to 65,000 vehicles of the brand's U.S. total of 647,956, or roughly one vehicle in 10.
Even though the FOX enrollment window has passed, "we still have retailers that are finishing up construction, because that takes time," Doll said.
He added that the automaker is looking at its options for future programs.
"We are continuing to develop other programs that might take the place of FOX or would allow us to participate with the retailers in helping them to improve their franchise and their facility plans, whether it's on the new-car side or service side or even used-car side."
