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Subaru Goes From Snowbelt to Sunbelt

New dealership in Texas represents a fresh look and a new strategy.

PLANO, TX – Subaru of America Inc., long strong in northern states, now wants to step up sales efforts in the South for its all all-wheel-drive lineup.

On an appropriately hot day in October and at a new showcase store in this Dallas suburb, Subaru proclaimed its plans to increase sales in warm-weather markets, including Phoenix, Miami, Dallas and Southern California.

“Subaru vehicles have always been extremely popular in the snowbelt – New England, the Pacific Northwest States and even the Denver area,” says Subaru of America President and CEO Kunio Ishigami. “As we continue to grow and expand our business, areas like Dallas are among our top-priority markets.”

He spoke of the Southern strategy at the official opening of Subaru of Plano, billed as a next-generation “signature facility,” a dealership featuring an airy interior and a curved facade of glass, Formica-like panels and metal trim.

It is the first of “antenna” stores that Subaru plans across the country to gather consumer preferences and retail experience feedback (using customer relationship management software) and send back to parent company Fuji Heavy Industries Ltd. in Japan.

“In order to gain market share in Dallas, we know how important this feedback is,” says Ishigami.

The 31,000-sq.-ft. (2,880-sq.-m.) dealership’s fresh brand-image design is to be adopted over time by dealers across the country, says Stephen Gale, Subaru’s director-corporate facilities.

“Subaru dealerships are the most important customer touch-points and one that we need to invest in and continuously enhance,” Ishigami says.

Subaru of Plano cost more than $5 million and was built in nine months. It is owned by Subaru of America and leased to dealer David Thomas, who plans to purchase it.

The lease-to-own plan will be used to build more new dealerships, says Gale. One is in the works in Los Angeles.

Thomas will run the store with business partner Phil Dunnet, who is the dealership’s general manager. They also operate Subaru of Dallas, about 15 miles to the south. They formerly ran a Nissan dealership in Odessa, TX, for 18 months before opening the Dallas Subaru store.

“David and I bought the Dallas franchise three years ago from a dealer who was dualed with another brand, and it wasn’t working for either brand,” says Dunnet.

The partners are veterans of the Texas-based Carl Sewell Automotive Companies, with dealerships throughout the state. Dunnet ran Sewell’s fixed operations; Thomas was a top salesman at a Lexus store, selling an average of a car a day for 3,000 days.

“I sold cars against David for a while, and it was torture,” Dunnet recalls.

At the new dealership, Dunnet proudly points out big windows that allow customers in the service department waiting room to see what is going on in the 18-bay shop area where five auto technicians work.

“A lot of Subaru owners are technically oriented, and they will be right at home looking in on the ‘operating room,’” says Dunnet.

An open feeling throughout the dealership is for customer-psychology reasons as well as architectural statements, says Dunnet. “We want to convey the feeling that nothing is hidden, that there is nothing under the table.”

The dealership employs 30 staffers, 12 of them in sales. Thomas says he will place special emphasis on e-commerce. His second-floor office is next to the Internet department.

“A big focus will be to build a great e-commerce dealership,” he says. “It is our biggest opportunity. We’re here to try new ideas.”

One of them is to include high-quality digital photos of vehicles posted on the dealership’s websites. “Great digital photos of cars is a key to Internet success,” says Thomas.

Towards that end, a special outdoor pod, adorned with flagstones, was built in front of the dealership for photo shoots of vehicles that will be featured online.

The pod was located so that it offers perfect natural lighting for photographs between 2 and 4 p.m., with the dealership serving as an identifiable background.

Thomas says his first sales trainer was his mother, who taught him a valuable lesson early on. She said, “‘Be nice.’ Everything else follows from that.”

He says his success as a car salesman came from “keeping it simple and straightforward” as well as tenacious customer follow up and prospecting.

“Every time you sell a car, that customer should be good for, not only repeat sales, but also three to four referrals,” he says.

He is not out to revolutionize the way cars are sold, he says. “I just want to streamline the process a bit.”

Subaru of Dallas sells about 400 new and 400 used cars a year. Thomas hopes to do about the same at Subaru of Plano, located along a stretch of dealerships on West Plano Parkway. A Mercedes-Benz store is on one side, a Chrysler-Jeep-Dodge store on the other.

Plano is an upscale suburb of about 200,000 residents in the sprawling metro Dallas area known as “the Metroplex.”

The grand opening of the new dealership featured an appearance by Subaru Rally Team USA driver Travis Pastrana. He is one of the most highly decorated X-Games athletes in history and the first to do a double back flip on a motorcycle.

A young crowd packed the showroom to see him. He signed autographs at a table in a glassed-in wing of the dealership that otherwise will be used as a designated spot to deliver cars to customers.

“It is a special section where taking delivery becomes sort of a ceremony,” says Hiro Kamagami, Subaru’s vice president-market development. “Then the doors open and the customer drives off. We started it at dealerships in Japan.”

The showroom is big enough to display five cars comfortably or just about every model in the Subaru lineup that includes the fullsize Tribeca cross/utility vehicle, the small CUV Forester, the Impreza and its 300-hp WRX derivative and the Legacy and its Outback derivative.

“We could fit more cars – as many as eight – but it would get crowded and hurt the open feeling we tried to create,” says Kamagami.

For the ceremonial opening of the dealership, Pastrana skidded his pocket-rocket Subaru Impreza WRX STI across a watered-down patch of the front parking lot, stopping on the photo-shoot pod.

“Some dealerships have no idea what cars like the WRX STI are capable of,” says Pastrana. “But this dealership does.”

Subaru manages to avoid going schizophrenic while appealing to two different customer bases: people seeking vehicle safety and those drawn to performance vehicles.

The AWD aspect of Subarus appeals to drivers wanting extra traction in snowy climates. Consumers in Sunbelt states and Southern California tend to be drawn to the performance characteristics of the WRX.

But Subaru, as part of its widening sales strategy, is selling AWD benefits across the land to both sets of buyers.

“Dallas customers might think they don’t need all-wheel drive, but we know they will want AWD once they have a chance to experience the tremendous and relevant benefits this technology provides,” says Ishigami.

Asked if Subaru of Plano will sell safety, AWD or performance, Dunnet says, “All of the above.”

Of Subaru’s 595 U.S. dealers, 123 are in the sunbelt, including 18 in Texas.

Subaru of America is on track to achieve another all-time sales record in 2006, striving to reach a milestone 200,000-unit goal, says Timothy Colbeck, Subaru’s vice president-sales.

“We sold 196,002 last year and we are 3% ahead of that going into the fourth quarter,” he says.

Subaru’s market share is about 1.2% in the U.S., about half that in Dallas, says Colbeck.

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