Subaru of America's 2020 U.S. sales result was an outcome the automaker was not used to in recent times. It wasn't a record.
For Subaru, the COVID-19 pandemic's impact first felt in March and April of 2020 lingered throughout the first half of the year and later snapped two streaks for the automaker: 11 years of U.S. sales records — which began in 2009 — and 12 years of annual increases, which began in 2008.
But despite sales dropping 13 percent to 611,942 for the year, some bright spots appeared for Subaru and its retailers toward the end of 2020.
Subaru's monthly sales increased in September, October and December. The brand's sales also rose in the fourth quarter, albeit slightly, 0.3 percent to 175,382, while Subaru's U.S. market share also rose, 0.1 percent, to 4.2 percent, according to the Automotive News Research & Data Center.
On the product side, the freshened Crosstrek subcompact crossover, with an available larger engine, went on sale in late summer.
Adding a more powerful 2.5-liter engine to the Crosstrek's lineup has allowed Subaru to attract buyers who previously thought the vehicle was underpowered, said Patrick Wergin, executive vice president at Annapolis Cars, which has two Subaru dealerships in Maryland — Annapolis Subaru and Gateway Subaru in Delmar
Wergin, 49, is in his second year as chairman of the Subaru National Retailer Advisory Board. He spoke with Staff Reporter Jack Walsworth. Here are edited excerpts.
Q: How was 2020 for Subaru retailers?
A: 2020 for Subaru retailers was a good year considering everything that was happening in the market and in the United States with dealing with COVID.
Needless to say, it was a challenging year, not only for our staff, but for our customers. 2020 really showed resilience within the Subaru retailers. We were able to adapt and were able to make the changes needed to keep the sales going forward.
Obviously, as with many other brands, we had some inventory shortages in the summer. But the strong demand allowed us to end the year with a strong sales pace. The Outback and Crosstrek were great sellers for the year.
Subaru sales were up in the fourth quarter and up slightly in December. What's your outlook for 2021 as a Subaru retailer?
We're feeling optimistic. We have the new Crosstrek 2.5-[liter] that is out right now. The newer engine will allow us to get some more market share. We have a lot of new product that's coming this year. As always, new product is good for the brand.
What are dealers expecting in terms of product this year?
What we're looking out for this year is that we have a new BRZ. We also have new product that is coming. We're going to put a little splash in the market when it comes out. But we have new product that we're excited for that will help us in the future.
The BRZ is a unique model in the lineup. It's more of a lower-volume model, but what has having a sports car meant for retailers? What are they expecting for the new one when it goes on sale?
With the new one, we're looking to give it a little bit of a breath of fresh air with a little bit more engine performance and design cues. We just hope they'll bring some newer buyers to the brand.
What are the some of the challenges retailers are facing in 2021?
As of right now, the biggest challenge we face is going to be COVID. We're not sure how it's going to mess with our market. We're not sure with the lockdowns that are out there. And of course, with anything this year, we're not sure if there will be any more production issues or part shortages.
Historically, Subaru's inventories have always been on the leaner side, but how are retailers feeling about inventory levels in 2021?
The plan is to take as many cars as we can from Subaru Corp. We're excited with that fact because we feel that we could have done a better job in 2020 if we had more inventory. We're excited with the possibility of more availability this year.
Beyond crossovers, are there other areas where you'd like to pump up the inventory levels?
Subaru has done a great job with the product mix with the sedans that are in the market right now. We're excited for the possibility to have more Outbacks, higher levels of Crosstreks and the Forester. Those are in the segments that are really growing.
Are Subaru's production and inventory levels coming back in line with demand? Do Subaru retailers see progress throughout the year in terms of inventory?
We're hoping to actually have a product bank for once with the brand.
Retailers are very resilient. We've been able to sell from very, very low days' supply many times and we still hit sales targets. But we're actually looking this year to grow a little bit of a sales bank so that we can keep gaining market share.
What would having a sales bank mean for retailers?
I think if we have a sales bank, we'll actually be able to properly have the proper models and model mix that clients are looking for. In some cases, because we don't have the proper models or the mix, we're losing to our competition.
Quite a few automakers have decided to abandon the sedan market, but Subaru has stayed in it with the Impreza and Legacy. Do Subaru retailers see perhaps an opportunity to grow some share with the Legacy and the Impreza?
A couple of retailers that I've spoken to, we've seen it is an opportunity for the vehicles, with our unique statement with all-wheel drive in a sedan, and that we can get some market share in that segment.
I know personally in my operations that we have actually done a better job in that segment with the products that we have due to the other brands leaving the segment.
The Subaru lineup has been updated and expanded. The BRZ is coming this year. Are there any products that retailers would like to have or any that they think are missing from the lineup?
We'd like to have another crossover vehicle because Subaru has a great story and a great proposition in that segment. We're looking for some new entries as crossovers in the future.
2020 was the first full year of redesigned Outback sales. How did that launch go overall? With the return of the turbo engine and the big touch screen, what was the consumer reaction to the redesign?
For the first full year for the Outback sales, we really did a great job as a brand.
Going with the turbo engine really brought some buyers in. The turbo engines did a great job. The refreshment of the interior of the vehicle was very well received by the clients.
How have the Crosstrek Sport and Limited done with the bigger engine so far?
The Sport and the Limited with the bigger engine [have] done very well. It's allowed us to get clients that in the past thought that the vehicle was underpowered. Now, with the bigger engine, it's overcome that objection. We've been able to do very, very well with that new model with the 2.5-[liter] engine.
How are Subaru and its retailers prepping for the impending shift of electrification?
It's an area we're obviously discussing at the meetings we go to. We're working with Subaru to make sure that when we launch an electric vehicle, that it's going to be a smart vehicle. We just want to make sure that when we bring that electric vehicle that it's going to be the best product in that segment. We're actually excited to add a full-electric SUV to our lineup, but details are emerging.
Maryland is one of the states that sells the Crosstrek Hybrid. How has consumer interest been?
Throughout the United States you have different pockets. I know with our two stores, we have done very well with the Crosstrek Hybrid. It's done very, very well. Pretty much every one that comes in, we're selling. We're very fortunate with that within our operations, but it depends on what portion of the country you're in.
Is the Crosstrek Hybrid bringing in a different kind of Subaru customer? Or is it somebody who has been a longtime Subaru buyer?
It's about 50-50. We've taken the traditional Subaru consumer and put them into an electrified vehicle just because they want to be part of the electric movement. We've conquested a lot from other brands with the Crosstrek Hybrid. Believe it or not, we traded a couple Teslas in on them.
How are Subaru dealerships' profitability levels at this point in the pandemic? How sustainable are current vehicle margin and profitability levels as inventory levels improve?
Profitability levels for retailers have been very good this year. Even with our low days' supply, transaction costs increased. Overall, it was a good year for the Subaru retailers profitability wise.
Is Subaru doing enough to promote certified pre-owned sales?
I think this has been one of the best years for the Subaru certified program. Now that we actually have units in operation, we're able to get them back in.
I know personally, our CPO operations have grown substantially. The program is strong and we feel that more brand awareness will help us get more sales.
How have fixed operations been at Subaru dealerships?
Overall, it's been good. We had a good year with it. It's just a challenge that consumers are not driving as much. The service intervals have been spaced out a little bit more than what we're traditionally used to.
Has Subaru de-emphasized any physical facility requirements in favor of elevating some digital ones instead, given that people might be looking online more than going to a physical store? Has the pandemic impacted Subaru's facility requirements?
I know that in the future there's discussions of what the future of the facilities will look like. We're still in conversation with that.
But obviously, the pandemic has redefined what the customer journey is, with purchasing a car or servicing a car. We've been doing either remote sales or remote pickup and delivery for a lot of our service customers. It's redefining how we do things or how the operation is going to be set up for the future with the evolution of the remote sales or remote pickup.
Has Subaru looked into how it can assist dealers to sell used vehicles through a national platform like a Carvana? Are there any discussions like that for Subaru retailers going forward?
We have had conversations. But I think with Carvana, what we've learned with them is that they're letting the customer choose the way they want to purchase the car. I think we can learn from that and can implement that into our operations so that the customer has the choice, whether they want to come into brick-and-mortar, or if they want to do it from the house.
We're using that information, specifically in my operations, to ensure that we can do a better job with the clients' journey and let them choose the way they want to purchase.
Every holiday season Subaru has the Share the Love commercials. What's consumer reaction been to Subaru's marketing? It's been pretty consistent over the past decade; is it still clicking with consumers?
It's still clicking. Specifically this year, I believe it really clicked even more because with everything going on with the economy, with small businesses and small restaurants. This Share the Love really struck a chord. It really resonated that people wanted to come in and take care of their communities or take care of charities that they believe in. It really helped. We heard a lot of positive feedback from clients regarding that.