Subaru exec: Safety and phone connectivity sell cars
What sells a car?
No. 1: Safety, which ranks right up there with reliability for cars, said Thomas Doll, president of Subaru of America.
But then, “for the younger buyer, the Apple CarPlay and the Android Auto are very popular,” Doll said.
“They hook their phones up. They have all their music and everything on the phone, and through the phone there’s a device that allows you to access the head unit with your own music. So, you can listen to your own songs instead of the radio. Satellite radio is popular with the older generation. They like to listen to Howard Stern, Seventies on Seven, Eight on Eighties, or whatever they are.”
Q: What about cup holders? You’ve got to have a space for that latte.
A: Oh yeah, they’re important. We have 19 in the three-row SUV coming up. That’s the Ascent, which we’ll be launching in May or June. It’s going to be the largest Subaru we’ve ever had.
Q: You said in our interview that car sales are down this year and you aren’t sure why.
A: The average age of a car is over 11 years, 11.2 years. So, it’s really interesting in the car market today, because you’ve got the older vehicles, like you were mentioning with vehicles that you drive. You’ve got a lot of the newer vehicles that are out there. So, there’s this great mass of cars. Cars just last longer. Our job is to try to turn that fleet over faster. If we could turn the fleet over faster, obviously, we’d sell more cars.
Q: So, how do you deal with that?
A: You have to adjust production. Fortunately ... we’ve been able to keep our demand. While the market was down, we were up 6 percent, 7 percent through the first six or seven (months) of the year. We’re hopeful, obviously, that continues through the second half of the year. But, this year we’re going to be up, probably, maybe 6-8 percent, or something like that, in our total volume. But, not like past years where we were up 25 percent, 26 percent.
Q: You keep hearing that millennials love public transportation and services like Uber or Lyft and that they really don’t want to own cars.
A: That’s not true. I think it’s kind of blown out of proportion because when the kids come out of school these days they have a lot of college debt. They can’t really afford to buy a new car. When I graduated from school, I think I had $2,000 worth of debt. I started (earning) $12,400 a year. So, my income level compared to my debt, was like 6 times. Now these kids come out and they’ve got $100,000, $80,000 of debt and they’re maybe starting for $40,000, $50,000.
Q: Given that, how can you even save for a car, let alone a house?
A: That’s the point. So, their purchase of a vehicle is delayed. It’s not that they’re not buying. It’s just that it’s been delayed, or unless their parents buy them a car. They get married, or have a child or something and the parents want them driving around in a safe vehicle.
Q: Or, the parents give them an older vehicle and they buy the new car.
A: That happens a lot with us. ... We don’t have a lot of vehicles in the used-car market, because our customers tend to hold the cars for so long, and they stay in the family.
Q: Sounds like your success is your biggest challenge.
A: There’s an old saying in the car business. The best used cars make the best new cars. The reason for that is if the used-car value is high, the customer has equity in that vehicle that they can use upon trade-in for their next car. That keeps their payments affordable. It keeps the customer being able to move up in trim level and get the latest and greatest in terms of technology.
Q: What makes a great car salesman?
A: You have to let the customer buy. You can’t sell too much. Car salespeople want to sell, because that’s what their job is. Instead, let the customer tell you how they’re going to use the car. Then you try to fit them into the vehicle that they need.