Subaru certain to set U.S. sales record in 2009, while other brands struggle

Subaru Passes 200,000 in U.S.; Next Up 300,000

Dec 9, 2009

Through November, Subaru’s U.S. sales were 193,578 in 2009, up 14 percent from the year-ago period, according toAutoData Corp. For the entire U.S. market, auto sales were down 24 percent in the same time frame, to about 9.4 million.

That makes Subaru a shoo-in to pass 200,000 units in the United States for the second time since the previous record of 200,703 was set in 2006. “We think we can sell 300,000,” said Subaru Executive Vice President Tom Doll, in a Dec. 8 interview. He added that’s not going to happen any time soon.

Subaru is even getting business where it wasn’t expecting it. For instance, many Subaru cars weren’t even eligible for the U.S. government’s Cash for Clunkers program last summer, yet Subaru sold around 17,000 cars through the program, according tospokesman Michael McHale. Not only that, they were virtually all first-time Subaru buyers, he said.

Subaru is attracting record levels of buyers who are new to the brand, McHale said. At the same time, brand loyalty is above average, according to J.D. Power and Associates.

Within the industry, this is typically depicted on a graph with one axis as high “conquests” versus low conquests, and the other axis high loyalty versus low loyalty. Subaru is in the coveted upper-right-hand quadrant, with high conquests and high loyalty.

According to the most recent J.D. Power Customer Retention StudySubaru loyalty was above the industry average, at just over 50 percent. That may not sound very high, but the industry average was only 48 percent. Honda was No. 1 at about 65 percent loyalty, but the numbers fall pretty sharply after the Top 5 brands, which did not include Subaru.

The alternatives all have their own distinct drawbacks. Low conquests and low loyalty are obviously not where anybody wants to be. It’s safe to say Isuzu, for instance, was in that space beforeIsuzu pulled the plug on U.S. sales earlier this year.

Other brands, like Kia, have good success attracting new people, but lower-than-average loyalty. That’s expensive, because it’s a truism that it costs a lot more marketing dollars to attract a new customer than to keep an existing customer. Keeping customers who otherwise would be forced to go elsewhere is a big reason why Kia is adding models in new product categories.

The other extreme isn’t any good either, even though on the face of it, extremely high loyalty sounds desirable. High loyalty and low conquests is where Cadillac and Buick used to be, before the latest generation of new products started to turn it around. They were sometimes jokingly called, “the last car you’ll ever buy,” because the age of the average buyer was so high.

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