Thomas Doll came to Subaru in 1982 to establish the internal audit department and made his way up through the company on the financial side. He saw the Japanese carmaker through the peaks and valleys and saw the company’s evolution into an emerging powerhouse in the North American market.
In the mid-2000s, Doll was appointed president and COO of Subaru North America. At that time, the company was struggling to stand out from its larger competitors. But under Doll’s leadership, the company began an upward climb that made it one of America’s fastest growing brands. Thus when Tomoni Nakamura was looking to find his replacement as CEO of Subaru North America in 2018, Doll was a natural pick.
Doll is leading the company into its next phase of growth as it shoots for 5% market share in America—a significant achievement considering when he started as President in 2006 they were at less than 1% market share. Chief Executive spoke with Doll about his corporate responsibility initiatives, his goals for growth and more. Below are excerpts from this conversation.
What kind of emphasis does Subaru North America put on its CSR initiatives?
The way we kind of describe it internally here, we call it CR, corporate responsibility, and have taken the S out primarily because we believe it is our responsibility, on a deep level, to be able to support our employees first. They obviously come first, but then we want to be able to support our retailers and the communities in which we and our retailers do business. This whole thing started probably back in 2008 when we felt that our customer, being as strong as they are, really didn’t need to have an incentive [to buy], necessarily, at the end of the year, like everybody else was doing.
So what we did is we diverted a portion of the incentive into what we would call charitable works. We identified five partners that we would donate money to. The National Park Foundation, I think you were talking to Will Shafroth. They became one back in like 2013, I believe. They became a national partner for us but more importantly, we changed the program to allow retailers to contribute to their local communities. And they could take a portion of the money that we had and allocate it towards local charities. So we have four national charities, National Park Foundation being one of them, and then retailers, depending on their size, can select one or two local charities that they can donate monies to.
The whole idea was to tie us and the retailers into our local communities and so forth. And this is in addition to what we do with our foundation. It’s really kind of rewarding to see the impact that we’re having in the local communities in which we do business. You know, we’re a car company, and by the way, we are small game compared to some of the other behemoth car companies who are out there, but we still throw millions of dollars around sometimes like it’s a quarter. But when you go into these local charities and you throw…you’re raising, $15,000, $20,000, $25,000 for them and you see the impact that it has on them and their fundraising activities and what they can do with that money…it makes the hair on the back of your neck stand up.
And so that’s kind of what we’re trying to get our retailers to understand that we’re part of something bigger, right? In the age that we live in now, it’s become even more important to be able to kind of give back. And that’s why it’s part of our responsibility. We think it is part of our responsibility. Once our company got to a certain level of success, it became our responsibility to kind of give some of that back. That’s kind of what we’re all about.
How do these initiatives impact the bottom line?
I guess the way I look at it is since we started this, we’ve had 11 years of sales records and 12 years of sales increases. We’ve probably been growing at about a 14% compound in annual growth rate over this period of time since we started this in 2007/2008. So it’s been really rewarding to see the sales. Remember, we grew from selling about 180,000 vehicles a year to this year we’re going to sell 700,000 vehicles. Hopefully we sell a little bit more than that but that’s our target. And so every year, it kind of gains more momentum, you know what I mean? More people become aware of what it is we’re doing and it just puts Subaru in a different line.
So maybe you’re in the market to buy a car or a small SUV or a large SUV, such as the Ascent, which is on the larger side, or the Outback and Forester which are more mid sizes, or the Crosstrek which is in the small CUV category or a sedan with our Impreza or our Legacy lines or even in our performance lines with WRX and STI and BRZ. We’re hopeful that somebody will consider us. They may not buy us but at least we’re being considered. And that’s been nice over the years because as we’ve grown, in order to be able to grow, we need to get considered in order for them to even think about buying Subaru. Remember, we’re still small, right? This year, we’re hoping to get like 4% market share. Last year we were about a 3.8% market share. Back around 2006/2007, we were essentially about a 1% market share. So we’ve grown and other people have seen what we’ve done and are paying notice to what it is we’re doing.
There are a lot of questions in the auto industry right now, especially thanks to this trade war and the increasing electrification of cars. What are Subaru’s biggest challenges?
Well, there’s no question that there’s a lot of balls up in the air. With trade, you don’t know what potentially could happen there. I’m an optimist though. I think things always will resolve themselves in the best way possible. In terms of electrification, when the rules were put into place a number of years ago, everybody thought gas prices would be significantly higher than where they are today. Who knew back in 2012 that the United States was going to go in this shale oil thing, where we’re essentially an exporter of oil and we’re essentially energy self-sufficient? Nobody predicted that.
What’s happening, to be frank with you, customers aren’t adopting the electrical vehicles as fast as we all thought. And so it’s kind of delayed and we’re kind of coming to a point on it because under the regulations, beginning in 2022, 2023, 2024, really through 2025, and in particular in California and some of the states, a certain percentage of our vehicle sales has to be electric vehicles with zero tailpipe emissions in order to be able to comply with the regulations. Not just us but other manufacturers are concerned about as we get to those key points, and we are still a couple of years out so something could happen, right, where the market tips but so far it hasn’t really tipped in any great numbers. The market is still 3% or 4% of electric or hybrid-type vehicles, right? And I think people thought by this point it would be much greater numbers. But everybody has products that are coming that are going to appeal. To be frank with you, the market hasn’t adapted. It’s because it’s costly, right? The technology is costly.
Until you get to a certain level of economies of scale, it’s going to remain costly. So the key is how to cross the chasm, if you will, bridge the gap until enough customers are willing to adopt it. And other things too. I think the infrastructure is not there. The charging infrastructure, the time it takes to charge. If you’re driving across country, it’s easy in a car now, right? You pull into the gas station, and you gas up, and you go in five or seven minutes. But who wants to wait around a few hours for an 80% charge reading to be on your way. These things still have to kind of work themselves out and work themselves through but, yeah, there’s a lot of challenges in the car business right now for sure.
As we approach a new decade, what are some of your long-term goals?
Our goal is to try to get to a 5% market share. So we think the existing products that we have along with new products that are coming up, as we get beyond the early ’20s…once we get into the early 2020s and the mid-2020s, can get us to that level of sales. Beyond that, we’d certainly would love to be able to grow further but that’s going take some other things to happen. But we definitely think we can get to a 5% market share, which in a 17-million market would put us somewhere around 800,000 to 830,000 vehicles, somewhere in that range, is where we think our sweet spot is for our company and our brand.