Subaru confronts BRZ challenge

Subaru Australia has been allocated just one eighth of the BRZ inventory Toyota Australia boasts for its almost identical 86 model, according to local MD, Nick Senior.

Yet the smaller importer is facing a similar level of demand for the BRZ, which is very close to the 86 in price and specification. The problem for Subaru is likely exacerbated by the fact that Toyota can't seem to meet demand for the 86 either, possibly prompting some Toyota customers to consider the BRZ in its place.

Subaru seems to be so hard-up for BRZ stock that the importer hasn't even laid on press vehicles for the car's local launch; so not even a small fleet of five or six cars for the media could be spared. Instead select media outlets drove the car in the weeks ahead of the launch, and subsequently published driving impressions after the press embargo lifted.

The supply and demand imbalance doesn't look like going away in a hurry either. As motoring.com.au reported recently, the importer stopped taking orders for the car once it became apparent that supply was not going to meet demand for some time.

Speaking with motoring.com.au correspondent Feann Torr last week, Nick Senior explained the background and also outlined ways the company will keep customers interested in the new sports coupe, even if they do have to wait.

FT: "BRZ supply is small, just 201 models for the entire year, and 50 of those are demonstrators, so really only 150 available to customers for six months, until new allocations come in 2013. Why so low?"

NS: "There's a deal between FHI and Toyota in Japan and I don't know what that is, but at the end of the day when you filter it down Subaru gets so many, and then all the Subaru markets around the world [get their allocations]. They're pretty small numbers."

FT: "So, will you renegotiate for more cars in 2013?"

NS: "If we can get 40 to 50 per month next year I think that is not a bad level for us. We have to take into consideration that cars like this have a huge excitement and appeal in the first 12 to 18 months and then we know that the two-door market is almost a finite market. If we can maintain exclusivity and give customers a chance to have good retained value out of their car, that's not a bad number [40 to 50 per month]."

FT: "Spec-adjusted, is the BRZ offering good value compared to the Toyota 86?"

NS: "I think when you look at a GTS 86 compared to our model, drive away price adjusted, we're about $1000 less than the Toyota but they have sat nav, so its marginal. But then we have free servicing thrown in."

As we reported over the weekend, Subaru Australia is restricting buyers to an online purchasing system. This reduces the need for dealers to carry stock, any one unit of which may or may not be the right specification for the majority of buyers. During the interview, Mr Senior would not rule out reviving or retaining the online buying tactic in the future.

FT: "How long before we'll see more of this online selling strategy? Could dealers move to save costs by selling online?"

NS: "Dealers are getting more and more internet savvy. They're getting a huge amount of leads generation  online — some of them — and I think we'll see the dealers over the next five years really change some of their operations by using the internet.

"There is no doubt more and more transactions will be done online in the future."

FT: "The button was pushed in December 2011 to do the online sales thing — why did it take more than six months to develop the online BRZ buying portal?

NS: "The security, the amount of legals you have to go through in terms of online finance, the different state regulations, and incorporating the online system with your logistic cycle so it knows when cars are coming. We have done 18 months' work in six months; it's a huge amount of work. And the obstacles and issues that come up that we never dreamt of on day one."

Senior explained it costs $3000 minimum deposit to buy a car online, credit card or pay pal only. The balance is held in abeyance, pending finance.

FT: "Did you get the Go ahead from Japan head office?"

NS: "We talked to them about that; said this is how we want to do it. They recognised the situation we have with limited numbers."

FT: "Will you rule out online sales in future?"

NS: "I won't rule it out."

FT: "You prefer to go back the normal method of selling BRZ in 2013, at dealerships?"

NS: "I want to provide a customer experience but also want a dealer network that is nurtured and profitable and wants to continue to reinvest in the brand. And at the end of the day we'll weigh up what's the best way forward for all the stake holders."

Mr Senior revealed during the presentation to the press that Subaru was migrating to fixed-price servicing for the BRZ. And the importer is absorbing the charges dealers would have previously passed on to the consumer — such as the dreaded pre-delivery.

"The delivering dealer will still get a fee from us which will be equal to his full dealer margin, less the amount for freight, PDI, fuel and advertising as those costs will now be borne by us.

"It's given us the ability to look at trialling a few different things. Obviously three years' free servicing is something we haven't done before. Toyota has a service schedule so by bringing this to market a slightly different way, it's given us the opportunity to muck around with a couple of things. Much like the online selling, we'll trial that, see how it goes and see what the feedback is."

— with staff

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