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Subaru plans 20% growth in 2008

Several Subaru dealers have fallen out with importer IM Group over poor sales of the Impreza and their 2008 sales targets with some claiming they are terminating the franchise, according to the news story in the January 11 issue of AM.

But Subaru says the target plans are crucial if it is to grow its market share by 20% in 2008, a proposed 8,000 sales. It has asked dealers to agree to a minimum target of 75 cars by the end of the year to retain their target related bonus.

Lawrence Good, managing director of Subaru UK, said the plans follow disappointing sales for 2006, totalling 5,800 units, hampered by run-outs on the Impreza, Legacy and Outback models, and particularly the lack of a diesel engine in the range.

The manufacturer is aiming for a busy 2008. In March, Subaru will begin sales of its diesel-powered Legacy and Outback models, followed by the new Forester in September and Impreza by the end of the year. Although there will only be one unit at first, a two litre boxer diesel with a manual gearbox, Good expects this to introduce new buyers to the brand.

“If you’ve only got a petrol derivative you’re only looking at 20% of the marketplace, and we’re looking for more,” he said. “It’s been a tough year without an alternative to petrol, but we’d be surprised if it’s not more like 40-60% growth with the diesel engine.

“The world for Subaru is changing dramatically. We’re not telling dealers to do or die, the targets are done by negotiation. The minimum for 2008 is 75 cars, if you’re not selling that many you don’t really have a sustainable business. But we’ve got dealers signing up for 250.”

Another indication of the changes is the sales focus for the new Impreza, its biggest selling vehicle, and a model traditionally driven by its high performance turbocharged derivatives. Aimed more at older and female buyers, the new model will be led by sales of the normally aspirated and, eventually, diesel sales. Subaru plans to sell 7,300 units per year by 2010.

But after the Impreza’s lukewarm reception from the press, dealers are reporting slow sales and the targets have met with opposition from some who question whether the new launches will bring the required sales growth. One dealer told AM: “Dealers can’t survive based on last year’s sales. Nobody is disagreeing that sales need to be at least 20% up, but the question is will there be adequate marketing and support?”

Good claimed the new products had been well received by the network, which has recently gained three new dealerships and has 40 prospects in waiting. An extensive marketing campaign is planned this year, including advertising in lifestyle magazines and the national press and radio.

Customers can also choose to have an LPG conversion carried out on any new vehicle, at no extra cost, to help lower running costs and provide a temporary solution to the lack of the more economic diesel. Early signs are that this has been well received by customers, and made the brand’s larger models more attractive. To help push sales of the run-out Legacy and Outback, dealers were offered extra stock of the Impreza WRX as an incentive to sell six or more of the slower selling models.

The changes come as Subaru restructures its dealer network to better meet the needs of its customer base. In October the network was split into three regions; North, Midlands and South, and the Subaru Dealer Reference Forum was disbanded. Good expects to have a more suitable regional replacement for the council up and running in March.

“2008 is not going to be an easy year for the industry, but it’s going to be good for Subaru,” he said. “We’ve got a fabulous product range for 2008, but we’re still a niche brand. We’ve got under 1% market share, and will continue to be a niche brand for people who want to buy into owning a Subaru.”

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