Repeating Subaru's US Sales Success in Mexico

Q: What changes has Subaru experienced in the Mexican market during recent years?

A: The market has been very flat but Subaru has grown 235%. The main issue we have in the Mexican market is the availability of cost-competitive financing, as costs are still very high compared to the US. Even so, our objective is to get close to 3,500 unit sales by the end of 2015, particularly by utilizing our new models. In July 2015, we introduced the BRZ, which is a joint development with Toyota. Additionally, new models of the Outback and the Legacy families were launched in the Mexican market in November 2014. This strategy is coupled with our dealership growth expectations. By the end of 2014, we opened four new dealerships in the country, and we plan to add another five in 2015, taking us from 14 to 23 in only two years.

Q: What has been the initial feedback on the new models Subaru has launched?

A: The initial reviews have been really positive. The features we added have completely changed the Outback and the Legacy, both physically and in terms of performance, but we have kept them at their original prices. Subaru is usually perceived as an expensive brand by consumers, but it is still priced below our German competitors. However, with these new models we are now at the same price level as Mazda and Acura, and we are hoping to have large penetration in the SUV segment.

Q: What have been the major challenges for Subaru in the market, and what is the company doing to overcome them?

A: Between 2010 and 2012, a very difficult situation arose as a result of the global economic crisis and the tsunami. Subaru only has two plants, and one was shut down because of this catastrophe. Our main challenge now is getting customers familiar with the Subaru brand. Marketing has been one of our main focuses, even though, surprisingly, 45% of our sales come from referrals. We have been doing a lot of advertising, but word of mouth recommendations are one of the best ways to spread brand awareness. Subaru is the ninth largest brand in the US, where we sell 1,500 Subaru cars every day. The huge success Subaru has had in the US has permeated into Mexico and it has given us some momentum, at least in the north of the country. During 2013, we launched a strategy to reach a 1% market share in Mexico by 2019, meaning we must sell 6,000-7,000 units in 2016 to ultimately meet our target of 10,000 by 2017.

Q: What approach is Subaru taking toward its marketing strategies, and how has that been adapted to attract Mexican consumers?

A: We want our customers to have a superior driving experience. Our cars all have four-wheel drive with boxer engines, making our technology and driving experience superior to our competitors. Subaru has been focusing on safety for the past few years, and our fuel consumption has dramatically decreased, reaching a 15% reduction in the new Legacy. Aftersales services are also becoming extremely important for the brand, so we are making a lot of improvements in that area.

In the Japanese automobile market within Mexico, we are now the second cheapest brand in terms of maintenance and repair services. Other cars do 10,000km before each service, but we can reach up to 12,000km. When they hit the 100,000km mark, we are the second cheapest brand in the market in terms of service. Furthermore, we are also the second brand in the entire automotive industry to have a five-year warranty, which actually increases attendance at our service centers. Clients always want low costs and a fast service during maintenance operations, so we are improving those areas through our CRM across our entire portfolio. Another strategy we have implemented is to reach customers at the earliest age possible, which will help us to maximize repurchasing opportunities in the long term. Most of our advertising is done through social media, and our target audience has become much younger thanks to that.

Q: What will happen if your success in the US continues? Will Subaru fans in Mexico be able to get their hands on your new cars?

A: This is an issue because Subaru only has two plants, one in Japan and the other in the US, and it does not have any plans to grow production, at least not until 2020. The US plant manufactures a model for Toyota, which is now being phased out. It will then increase production of Subaru models, but not as fast as needed.

We are expecting to have a production shortage worldwide, but so far we have been protected in Mexico. If we continue performing better in this country, then it will be difficult to meet market demand. However, we are confident that we will at least be able to achieve our projected targets.