Thursday, November 27, 2014
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Small is beautiful for the Subaru brand

Holding market share and boosting basics are still the niche carmaker’s strategy.

Tom Doll is the accountant at the helm of Subaru of America Inc., which has  headquarters in Cherry Hill. The firm’s game plan for waiting out the downturn is to stress fundamentals, such as extra attentive service. “Customers have long memories,” Doll said, “particularly when times are tight.”<br />
Tom Doll is the accountant at the helm of Subaru of America Inc., which has headquarters in Cherry Hill. The firm’s game plan for waiting out the downturn is to stress fundamentals, such as extra attentive service. “Customers have long memories,” Doll said, “particularly when times are tight.” ALEJANDRO A. ALVAREZ / Staff Photographer

The bloodbath in Detroit hasn't trickled over to Subaru of America Inc., with headquarters in Cherry Hill, which posted a slight increase in car sales for 2008 and gained its highest market share ever. Sales for 2009 are down only 2 percent, according to its latest year-to-date figures.

Partly, that is a lucky function of being a small, niche automaker without a Big Three industrial base to sustain after car sales dropped off a cliff. Partly, it is a virtue of having seen the handwriting on the wall before the cliff dive. Tom Doll is the Villanova- and Drexel-trained accountant at the company's helm.

By the numbers: Detroit's business model assumes that Americans will buy about 16 million cars a year, but since September's market crash, volume has plummeted to less than 9.5 million.

"When you have that sudden a shift, it makes it very difficult for mainstream-type manufacturers to be able to adjust," Doll said. "Honestly, it's not fun what's happening out there."

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  • But Subaru, Doll said, is slightly better off because of its niche status. "We shouldn't have the ups and downs like everyone else," he said. "We kind of bat out singles."

    Subaru's niche is smallish, rugged crossover vehicles for outdoorsy people of comfortable means. Even its sedans come with standard all-wheel drive. About 21 percent of buyers pay cash. The company sold 187,699 cars in 2008, and it now holds a 1.9 percent market share, its record high.

    The smart move, pre-downturn: Doll said he recognized in 2005 or 2006 that an economic reckoning was nigh.

    "You could see that people were leveraged up and using home equity to secure their lifestyle - because you could see wages really weren't moving up.

    "I'm not a genius. I think people in the industry knew in their heart that this was coming," he said. "You just didn't know when."

    So, Subaru lowered prices on the Legacy, Outback, and Forester lines, Doll said, "our key product lines."

    You live, you learn: As an import brand, Subaru was battered by a weak U.S. dollar in the '80s. Prices for its cars skyrocketed, and sales collapsed. On corporate performance charts, the period from 1987 to 1994 is labeled "Valley of Despair."

    Subaru climbed out with the introduction of its hit Outback wagon, memorably promoted by Crocodile Dundee star Paul Hogan.

    So while the shock of September's economic crash left Doll reeling - "talk about gray hairs," he said - he has taken the long view. "I've been in this business since 1982, and I've seen the ups and I've seen the downs."

    WWJWD? Doll joined Subaru in 1982 as an internal auditor, rising through the ranks from the finance side. For market insights, his go-to guru is Pimco's Bill Gross, "a fellow I follow religiously because the guy is right more than he is wrong."

    On leadership, he is an acolyte of former UCLA basketball coach John Wooden, "who's really a national treasure."

    At Subaru, "we talk about the importance of being able to change your philosophy," Doll said. "And if you ever studied him, his teams in the '60s were kind of smallish: I think his centers were 6-5, but they worked with absolute precision.

    "Only as his name recognition got bigger did he get the big recruits like Kareem Abdul-Jabbar and Bill Walton. So then he got size on his teams, and he adapted."

    Doll's big man: Demographics. Doll and his wife, Linda, have two teenage sons. The older one is 17, and fortunately for the automotive industry, so are a lot of other youngsters.

    "We were doing a college visit at Penn, and they told us that the high school graduating classes of 2008, 2009, 2010, and 2011 are the largest graduating classes ever in the history of the United States."

    Doll expects this to affect the automotive industry.

    "What happens when kids are 16 or 17?" he asks. "They want cars."

    Immigration is another favorable demographic trend for carmakers, he said. And with Americans now scrapping three million more cars a year than they buy, demand for new wheels will eventually build.

    The smart move, moving forward: Doll said Subaru's goal was to hold its new market share as demand bounces back. "Say the market recovers to 14 million unit sales; 1.9 percent of that - I'm pretty good at math - that's like 270,000 unit sales."

    The company's strategy as it waits out the downturn is to lay down a groundwork of strong fundamentals, including extra-attentive customer service. "Customers have long memories," he said, "particularly when times are tight."

    Find the hidden home team: Subaru's U.S. headquarters is on Route 70 in Cherry Hill. Its national call center is up the road, in Pennsauken. "I'm always amazed how a lot of people don't know there's a car company right in the back yard," Doll said. "I think if they did, we'd sell more cars here."

     

     

    Becky Batcha DAILY NEWS STAFF WRITER
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