Subaru ex-CEO: How Tom Doll transformed Subaru into a 'cult brand'

Welcome to another episode of the Car Dealership Guy Podcast.

On today’s episode, Tom Doll, former President and CEO of Subaru of America, sits down for a close look at Subaru’s journey to become one of the U.S.’s biggest automakers and how the brand cultivated its top-notch retail network.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. Joining Subaru.

Tom joined Subaru in March of 1982. At the time, the company was one of the few in the Philadelphia area that was performing well. Improving its professional image was crucial to its growth. Tom’s job was to document all of the operating procedures that the company had, which gave him a great opportunity to view the operations of the automaker from the top down. “One thing kind of led to another,” he recalls, noting that he soon transitioned to be an accounting director.

2. Early days.

Tom notes that Subaru nearly went bankrupt prior to the 1973 oil crisis. Fuel-efficient vehicles became high priority for consumers, models which Japanese automakers were particularly specialized in producing. This saved Subaru, while also boosting demand for Toyota, Nissan and Honda. By the time Tom arrived, the company was selling roughly 150,000 vehicles annually. “We were pure import at that time,” he explains. “But the market opportunity then was unbelievable.”

3. The path to success.

Subaru was initially a niche brand that wasn’t selling outside of its core market. With such limited access to consumers, the brand lacked the capital to expand its franchise. This is why Subaru’s growth was intentional, Tom explains. Over the course of several decades, the brand slowly but surely expanded production and scaled its sales network. “We peaked in 2019…My personal goal was to get to a 5% market share or somewhere between 800,000 and 850,000 vehicles before I retired,” comments, joking that this is now the responsibility of Subaru’s new generation of managers. Regardless, the company is in excellent shape today thanks to its strategy and the hard work of its leadership.

4. The “Love” campaign.

Subaru vehicles have always been well received in colder parts of the country due to their strong performance in frigid temperatures. Boosting brand recognition outside of those markets, however, proved to be a challenge. In 2006, Tom was appointed to be the company’s COO. In an attempt to understand the best way to set Subaru apart from competitors, the company conducted outreach to its customers. “They told us that they love their Subaru, they love its reliability, they loved the durability, they loved its fuel economy, they love the utility, they love everything about it.” This would be the genesis of Subaru’s “Love” campaign. “It’s very difficult to own an emotion,” Tom adds. “But we had nothing to lose.”

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5. Retailers vs dealers.

Tom explains that he views Subaru’s franchisees as retailers, not dealers. The difference between the two is that a retailer presents and explains the product in a professional manner, whereas dealers are only focused on the price. “Retailing, you’re taking something and you’re making it beautiful, you’re adding value to the process.” Both Subaru and retailers treat customers as the most important component of the sales process. “The retailers have to know what our strategy to go to the market is all about they have to embrace it, and not only that, it makes them feel good because they want…to make the customers happy.”

6. Subaru customers.

Subaru’s core market is comprised of wealthy consumers who are less price-sensitive than the average buyer. “The Subaru customer can afford to buy anything,” Tom comments, adding that this was done intentionally. However, since the company wasn’t able to go to market above certain price points, it prioritized keeping inventory turns high and helping retailers with marketing and advertising to ensure they could generate extra profit despite tighter-than-normal margins. Lead generation was also essential for dealers to succeed.

7. Retailer challenges.

In the early 2000s, Subaru introduced a facility upgrade program. However, it quickly realized that most of its dealers wouldn’t be able to afford the renovations since the company was only selling around 180,000 vehicles per year. Since it had around 600 storefronts, this means that each location was only selling roughly 300 cars. “Clearly not enough,” he adds. “There’s not enough earnings and cash flow for them to build this facility that we’re asking them to.” The limited sales also meant that Subaru dealers couldn’t afford to retain top talent or pick out good locations for new franchises. 

8. The Subaru Ad Fund.

To overcome this issue, Subaru designed a new marketing and advertising co-op called the Subaru Ad Fund, which assisted retailers of all sizes with drawing in new customers. Because of this new program, the automaker’s sales ballooned over the coming years, even during the 2008 financial crisis. “We needed to make sure that the retailers were making an adequate enough return on investment.”

9. Evolution of service.

Customer preferences are changing in response to economic headwinds and other factors. Tom notes that most Subaru models come with the basic features that buyers have come to expect. However, due to the telematics equipped in modern vehicles, the company is receiving massive amounts of data detailing how each driver is using their car and how well it is performing. “We can become more of service to that customer,” he explains. “We might know that the check engine light came on before the customer noticed it.” When that happens, Subaru reaches out to the retailer who can then get in contact with the owner and set up a service appointment. “These are the kinds of things that you can do, once the customer is trusting of you,” he adds.

10. Closing thoughts.

To continue thriving in the future, Tom urges retailers to focus on the customer experience. “We have to look at it from their perspective.” The good news is that more tools are merging which can help the industry gain a better understanding of consumers. Artificial intelligence, for example, is helping automakers gain insights, such as driving habits and service needs, through data collection. “The market will decide all this stuff,” Tom comments. For those looking to eventually own their own dealership, he advises against taking shortcuts as they continue to learn more about the car business. “You’re building something for the long term. It has to be sustainable,” he concludes. “Understand that it’s a marathon, it’s not a sprint. There’s gonna be some years where you're gonna question that, but overall you’re gonna be much more consistent, you’re gonna be much happier, you’re gonna build your brand actually faster.”

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