IM Group has launched a renewed focus on retail sales for its Subaru brand in order to get the franchise selling up to the volumes its new managing director expects.
Paul Tunnicliffe, IM Group’s new managing director for its Subaru, Isuzu and Daihatsu brands, wants Subaru sales to rise from the current level of just over 4,000 units to nearer 10,000 units a year in the future.
He believes Subaru can remain a niche brand at those levels, but both the network and manufacturer would be having “a much better time of things”.
Tunnicliffe has put a new retail sales programme in place across the Subaru dealer network which expects a minimum of five new car sales a month. If sales executives can hit that target they will be taken on a trip to Las Vegas at the end of the year.
IM Group has recently restructured its business to have one management team for all three of its brands. It resulted in 40 jobs being lost, including previous Subaru and Isuzu MD Lawrence Good who went on to manage a Subaru-owned dealership.
Tunnicliffe told AM: “It was a painful process, but it had to happen. In this current climate we couldn’t cover the amount of overheads we had.”
He believes the business is now on the other side of the restructure and ready to grow. There is now one representative per region from IM Group to deal with the three brands.
Subaru to be IM Group's main focus
Subaru will be IM Group’s main focus. Tunnicliffe said: “The Subaru dealer network has been through a tough couple of years. There was a volume chasing strategy which didn’t help and we were pushing a lot of volume through daily rental which we want to move away from completely.”
A third of the Subaru dealer net-work are performing “really well”, with another third requiring help and a bottom third “not focused,” according to Tunnicliffe.
The network has reduced to 75 since its peak of 112 outlets in 2000, when the average yearly new car sales per dealer was also 26 units higher. Tunnicliffe wants to build it up again, but will not aim for 150 “unlike some rivals”.
He said: “Quality is more important than quantity. I’d rather have a smaller network that love their customers.”
New Legacy and Outback models
Dealers will get new versions of the Legacy and Outback in the fourth quarter of 2009 and both will be available with Subaru’s Boxer diesel.
However, dealers will not be getting a diesel version of the Impreza. Due to the poor exchange rate between yen and the pound, it’s too expensive for IM Group to import the cars and sell at a reasonable price.
The Daihatsu brand is in a difficult position at the moment as supply of cars has dried up, mainly because of production issues in Japan.
Tunnicliffe said: “There is very limited stock available for dealers. I have gone to the executives in Japan and stated the urgency of the situation. Things will be fine into next year, but the situation could become much worse if nothing is done.”
Tunnicliffe sugg-ested that some Daihatsu sites add Isuzu.
He said: “They can share showrooms if there’s space and the standards for the franchise are modest. It could be another option for dealers because of the problems with stock.”
When asked if the franchise was profitable, Tunnicliffe said: “Not enough of the network is at the moment. Much like the rest of the market they’ve had a good time with used car sales lately, but that fillip is going to die down.
“We’ve got to get the balance between new and used right. I find myself needing to remind dealers we are a new car franchise too. They shouldn’t be scared to push new sales.”