Subaru turns to smoother terrain for new customers
Subarus, comfortable, utilitarian, and all-wheel-drive, have long had a loyal following in New England and other regions where weather and terrain often pose challenges. Today the company is looking for geographic and demographic expansion. Thomas J. Doll, 25 years at the company, is executive vice president and chief financial officer of Subaru of America, a division of Japan's Fuji Heavy Industry Industries Ltd. Doll recently spoke with Globe reporter Royal Ford. Q Where besides New England is Subaru strong?
A North Carolina, the mid-Atlantic region, and New York. Also in the Northwest, from San Francisco on up, Salt Lake City, Denver. And believe it or not, Southern California's starting to come on.
Q Is that because people out there go into the mountains or out into the deserts?
A Exactly right. It's perfect for Subaru. If you're out in the LA Basin, the distances aren't that far and our car fits right in. It gets good gas mileage, it's all-wheel-drive, you've got the mountains nearby, you've got the beaches. And with that active lifestyle we think we should be selling 10,000 more cars out there by accident.
Q Where do you want to be stronger?
A We don't want to ignore the traditionally strong markets, but at the same time we're under-represented in some of the Sun Belt markets -- California, Texas, and Florida.
Q Did the world ever expect a 300-horsepower, which you usually get in high-performance cars, to show up in a Subaru?
A It goes back to the early 1990s when we were getting into rally racing. When we were in our "funk" -- 1987 to 1993 or '94 -- we were struggling and trying to figure it out. But then Fuji began to win all these rally championships and we knew in the mid- to late-'90s, as we were launching the Outback and the Forester, that we had to evolve the brand.
And as you know, our Boxer engine is a high-performance engine -- that's why Porsche has it -- and they turbocharge it, which is what we're doing. The cars handle well, they're as strong as hog's breath, and they go through the snow.
Q There's a huge new wave of "crossovers" -- vehicles smaller than SUVs, but which offer space, utility, and all-wheel-drive. Subaru has been building smaller versions for a long time while others, like Ford Motor Co. with its SUVs, are downsizing to get into the crossover market. There's some irony that, in order to expand your offerings in this market you had to go bigger and build the Tribeca. Was that a difficult move?
A It's a logical extension of the Outback. One of the things the Subaru customer was saying to us was that the Outback and the Forester are nice, but we needed something a little larger. Their families were growing; they needed a little more space and a little bit more luxury, features like DVD and navigation.
Q At one point Subaru focused on a lesbian market in its advertising. Did that work?
A In the marketing research that was done, as far back as the early '90s, there was a tendency for our cars to be attractive to gay and lesbian people. They essentially told us and we developed programs to take advantage of that. It's an active lifestyle; the income levels and education levels are quite high. The car fits.
Q So who are your buyers tomorrow? Is it a young crowd?
A How many cars do you think people buy from the time they're 55 until they die? It's nine. That's a lot of cars. And look at all the people who've come into our country over the past few years. They're raising families, they're building houses, and they're going to be in the market. And we also have one of the most loyal customer bases -- I think we're number three in brand loyalty. And we don't even have a truck or a small car. What we're trying to do is expand the number of people who would consider Subaru.
Q Safety has become a big issue. How far have you spread electronic stability control, which some studies say sharply cuts the risk of getting in an accident?
A By next year, it will be standard on everything except our lower entry-level models.
Q So why not just make it standard on everything?
A Ultimately we will, but the way the engines are built, the engine control modules, doesn't allow it. And of course, we have all-wheel-drive in everything we make because we want our customers to be safe. It's our DNA -- it's who we are. 