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Subaru reveals premium strategy

Subaru’s UK dealers will be expected to deliver a more premium-orientated service in the coming years as its management begins a drive to reposition the brand upmarket.

Managing director Peter Kinnaird believes the future lies in making Subaru an aspirational, high quality marque, with strong customer loyalty.

“We say that Subaru has been one of the best kept secrets in the car business for too long. We have tremendous customers and great products that, in the next few years, will allow us to increase the volumes and prices to position ourselves as a premium brand,” he says. His desire is to align Subaru between the Japanese volume carmakers and established luxury premium brands such as BMW.

Critical to that positioning will be improvements in the dealer network coverage and quality.

Kinnaird is happy with the franchise’s network of largely owner-driver businesses and small groups. But he also wants dealers with experience of winning conquest sales from premium brands. Standards will be raised, but Kinnaird insists his dealers will not be left facing excessive levels of showroom investment.

“We’re not talking about BMW-style gin palaces, we’ve got to be realistic. But we want investment in the quality of people and processes at our dealerships rather than just quality of brand,” he says.

“We have to do this in a simple and commercial manner. We know profitability in the retail trade is the only way to drive through improvements, so we have to make this a very profitable franchise.”

He admits profitability is “not where I want it to be” at present, and says some dealers are discounting to achieve sales, but he hopes to wean them away from discounting.

Next year, Subaru UK will move to a new headquarters near Birmingham, complete with dealer conference and training facilities. But Kinnaird says his immediate objective is to raise awareness and “get Subaru on more shopping lists”. This year his marketing spend has increased 50% to £7.5m, the most Subaru UK has ever spent.

The brand already has a loyal following, among ‘petrolheads’ with the Impreza and among more conservative, often rural, customers with the Forester and Legacy. Kinnaird expects to add the seven-seat B9 Tribeca SUV to the UK market within a couple of years, introducing Subaru to a new segment.

“Some customers will trade up but it will also attract new people who want an SUV but who’ve driven our competitors and found them wanting dynamically,” he says. “Tribeca will have good off-road capability but also drive well on-road, in keeping with our brand values.”

Subaru also plans to broaden the Impreza’s appeal by bringing variants to market that have the power and handling of the WRX but are more subtle to cater for a more conservative buyer. It is also developing turbodiesel and hybrid engines in its traditional boxer configuration.

Ten-year contract for The Funding Corporation

International Motors, the UK distributor for Subaru, Daihatsu and Isuzu, has signed a 10-year contract for The Funding Corporation (TFC) to be its preferred supplier of point-of-sale finance and wholesale funding to dealers with those franchises.

The £1bn deal will see TFC launch a fully branded financial services business for Subaru, Isuzu and Daihatsu on October 14. It will create 30 jobs at TFC’s headquarters in Chester and offices around Britain.

Bob Edmiston, chairman of both TFC and IM Group, says: “There is a strategic need to secure a competitive point of sale finance company for dealers selling our vehicles.” The three franchises currently arrange £80m to £100m of retail finance a year, but Edmiston expects this to increase.

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