Dealers want Subaru models under $20,000

[Variance]

Dealers want Subaru models under $20,000

Automotive News / February 13, 2006 - 6:00 am

After years of asking, Subaru dealers got an SUV, the B9 Tribeca.

Initial sales of the vehicle, which hit dealerships in May, were slow, says Kirk Schneider, chairman of the Subaru National Dealer Advisory Board. But by December, sales approached Subaru's monthly target of 3,000 vehicles, he says.

Subaru reacted quickly to the market and some resistance to the B9 Tribeca's pricing with an incentive, and sales increased, Schneider says.

The Legacy and Outback both have been restyled and dealers are benefiting from the more contemporary look. But dealers still want cars under $20,000 to bring in buyers, he says.

Schneider was interviewed in early January by Staff Reporter Diana T. Kurylko.

What is Subaru's hot product?

All of our products are hot at the right price. The new 2006 Impreza is … in demand. They just redesigned it, and the design changes are nice. It has a little more power, and it appeals to a younger set. It's affordable.

How has the new B9 Tribeca SUV been received in the marketplace?

It started out slower than we wanted it to in the introduction. We sold 2,730 in December - that's approaching where they want to be. It's a very good product. The styling has a tendency to polarize people a little.

Was it priced too high?

Yes, it was a bit high to begin with. Certain models were priced high. There is a $1,000 incentive on the seven-passenger model. Subaru has never been known for huge incentives, but that has helped.

What new products do dealers want?

We would love to see a hybrid - preferably a hybrid Outback or of a car that we have.

How likely is that?

They are working on it, and we hope to see to it in the future. That's the kind of car that the Subaru clientele is looking for.

Did the Outback and Forester benefit from higher gasoline prices and consumers shunning bigger SUVs?

Speaking from my store, we didn't lose any sales from the high prices. We gained some favor and gained some people trading out of big cars.

What new products are on the way?

We will have a redesigned Impreza and a redesigned Legacy in the future. The hybrid is being worked on.

How is the Legacy sedan doing?

When they redesigned it (2004), they made it a much-improved car. Subaru has really worked hard on their product design and engineering, and they have given us the best cars we have ever had.

Is the strategy to move a little upscale working?

That's a hard question. When you talk about premium, to quote Fuji Heavy Industries or our president, Kunio Ishigami, the public has to decide what is premium. It's been a bit of a challenge.

How did GM's employee incentives affect your sales?

Subaru did not match those programs.

That hurt the market as a whole. It takes away any credibility that pricing has. We would have people call and ask about employee pricing - for Subaru that's $400 off, not $10,000.

What is the top priority of the dealer council in 2006?

Dealer profitability is always the top priority that we strive for. If you have a stronger dealer body that's profitable and happy and attitudes are good, that will communicate through into sales.

Does Subaru listen to its dealer council?

They do. I think it's not as good as it's been in the past. Subaru has some strong goals for unit sales, and they are working toward those - 2005 was a tougher year for the Subaru dealer body. You have to get that balance for what the dealers want and what the factory wants.

What has been your biggest disappointment as dealer council chairman?

This year it was probably the introduction of the Subaru diagnostic system. It's the new technology for diagnosing cars in your service department. It's a terrific tool, but the dealer council was not in the loop.

It is a significant investment for dealers to make - about $10,000 or $11,000. There were some things we felt could have been improved in the way the product was designed. It's all Internet-based, but when you get involved with firewalls, initial fees - we could have made it a better and smoother transition for dealers.

What is the No. 1 thing the factory can do to help dealers?

Probably, the biggest key is to try to keep a balance on inventory supply and demand. As they grow, Subaru has to invest advertising dollars based on their objectives. You need to invest more to get to the objective.

What are the dealer council's top concerns?

No. 1. Maintaining dealer new car profitability - it's lower than we want it. We need to have more dealerships profitable in their new-car departments because not all are.

No. 2. We need to increase sales through stepped-up advertising and marketing in order to meet Subaru's higher goals.

No. 3. We want to see a continued effort to shorten product cycles so that we always have new products coming to market.

How is the factory responding to those concerns?

The factory is always doing what they can. They need to sell more cars, too, and they need to do it through the dealer body. We as dealers feel it's the factory's responsibility to establish the brand's image and competitive pricing in the marketplace.

What is Subaru's pricing strategy?

Subaru is trying to be the best car in their class. To do that, they have made significant improvements in safety and convenience features, which moves their pricing a little upscale.

It's a great value, but it is hard at times for dealers to compete. We don't have much in the way of base models in our product line. That would be something we would be looking for - more of an entry level.

What kind of price?

If we could have a Legacy under $20,000 or an Outback under $20,000, that would help.

Are your dealers making money on new-car sales?

Not all of them. That's an area where we could make improvements.

How does your brand handle local marketing? Are dealers satisfied that it is fair and effective?

Subaru is going to release a new advertising program for dealers that could be a real home run.

They have taken a view that dealers know how to retail better than maybe the factory does and will allow you to be in more control of your local marketing, which could be very beneficial for us. It should be released by February.

Does Subaru advertising work? Does the dealer council have a real voice in it?

Our brand advertising does work. They show their ideas, and we can comment on it and have input. We are a smaller manufacturer, and the ad dollars aren't there like some of the bigger brands.

Link: http://www.autonews.com/apps/pbcs.dll/arti...efsect=2006NADA

Edited February 14, 2006 by Variance

[siegen]

"Dealers want Subaru models under $20,000"

More like: "Dealers want Subaru models that don't look like Alfa Romeo's"

[balthazar]

subarus have always struck my as generally overpriced for what you get in return.

Lower prices and removing all that heavy dated cladding would likely really pump up volume.

[Polish_Kris]

There is a rumour that Subaru might import the tiny R1 hatchback to Canada.

[regfootball]

on one hand he gloats about selling without discounts but in the same review he says they want a (discounted) model under 20 grand. well no duh. people don't want to pay 30-35 thou for an Accord knockoff with AWD. discounts bring sales, idiot.

[sciguy_0504]

I would gladly take the "Accord knockoff" over an actual Accord/Camry any day.

[jlgolden]

Subaru, just like many other brands, is challenged to position its products in the US market. It has a loyal base (but still a niche market) in the snowy states, and it's an even smaller player in the Southern states. Good products...yes. With a turbo, even more fun.

**

But unless one drives agressively (dry) or drives in alot of wet & slush, the AWD is not a major selling point. All of the current base models (Impreza, Legacy, Forester) are priced decently. But step up to a turbo model and add few options, and prices crest the $25K mark and run over $33K. Ouch!

**

Around these critical price points, there's alot of tasty competition with more persona and features (Colbalt SS, Altima 3.5 & SE-R, Mazdaspeed 6, Malibu SS, Dodge Charger, Impala SS... all come to mind).

Edited February 16, 2006 by jlgolden