Subaru Motors Thrill with All-Wheel-Drive – Kofi Sagoe, CEO, Subaru Motors Nigeria Ltd

Incorporated in June 2008, Subaru Motors Nigeria Ltd (SMNL) effectively started business in Nigeria in April 2009 as representatives of the automobile manufacturing division of Japanese transportation conglomerate, Fuji Heavy Industries Co (FHI), owners of the Subaru brand. In February, 2010, the car dealers officially opened their multi-purpose head office on Bishop Oluwole Street, Victoria Island, Lagos. Added to these is the fast pace with which the dynamic automobile firm has gone full swing to appoint dealers and service centre partners in key cities of Nigeria. In this interview, the CEO of Subaru Motors Nigeria Limited, Mr Kofi Sagoe, speaks on issues bothering on Subaru’s history of exceptional performance and their preparedness to capture the brand’s share of the Nigerian auto market. He says that the symmetrical AllWheel-Drive functionality and the horizontally-opposed boxer engine, which denominate all Subaru cars, giving them ‘Best in Class’ balance and performance, will always stand as their competitive advantage. Excerpts:

The Subaru brand had representation in Nigeria at some point. Why did it leave the Nigerian market place?
Franchises are given to companies and corporate bodies that are willing to represent a particular brand in the market. At that time, I believe it was LBTC Motors Ltd that had the franchise. To the best of my knowledge, it was a Lebanese company. Though I do not have all the facts, it is most probable that it was the economic decline in the country at that time that caused them to close shop. This was during the Babangida era, in the late 80s to early 90s, the era of SAP (Structural Adjustment Programme). Those reforms caused a lot of businesses to close shop. Some foreign businesses actually left the country. But I can’t really say exactly what happened then.

How would you rate the auto market in Nigeria?  Do you think the car shops are giving their customers the best they should expect in a market like Nigeria?
The way the industry is right now, it can be described as highly competitive, especially with the influx of new entrants such as the Chinese brands in the market. As you know, competition brings a lot of benefit to the generality of the market and the populace as a whole. What it means is that nobody can really rest on his or her oars. You have to continue to innovate and to meet the expectation of customers. So, customer satisfaction is key. As it is, we are also a new entrant; although ours is a market re-entry. Obviously, we are also fighting for space in the market. So we have to emphasise the unique selling point of our product. I believe the competition is good. It means that people will not get laid back and feel that it’s a done deal that they are in a particular position in the market. They cannot assume that they will continue to occupy that position forever. There will continue to be adjustments in the market; it is the market dynamics that make people to settle at one point or the other at each given time.

How do you plan to penetrate the market and compete with the other car brands that have been there before you?
Like I said earlier, we emphasise on the unique selling point of our products, and this is what we communicate to the market. In 2009, we broke a campaign in May, June and July. Then, it was just some kind of announcement to tell people that the brand was back in the market. More recently, and in the current year, we have stepped up our marketing efforts. Our unique selling proposition is that our vehicles all come as All-Wheel-Drives. What that means is that the motive force that comes from the engine goes to all the four wheels of our cars, which is distinct from the Front Wheel Drive that is common. That is the modern technology now as most people have gone from Rear Wheel Drive to Front Wheel Drive. But in this particular case, the power goes to all four wheels of our cars. That is our distinct offering.

Tell us more about the All-Wheel-Drive concept.
The All-Wheel-Drive feature has always been the uniqueness of our brand. Our catalogues explain this. Some of them read: ‘symmetrical since 1972′ and this is unique to Subaru. So, whether they are sedans or SUVs, they come as All Wheel Drives, whereas a majority of the other cars that you see are just two wheel drives.

What models of Subaru do you have for the different segments of the Nigerian market and what market categories are you targeting?
There is the Impreza, which, in terms of size, is similar to Toyota Corolla and Honda Civic. Compared to the Hyundai brand, in terms of size, it is similar to Accent and Elantra. For The Kia brand, it is similar to the Cerato. We also have the Legacy, which straddles with Toyota Avensis and Camry. For the Honda, it is similar to the Accord. Compared to the Nissan brand, it is similar to the Altima and Maxima. For the Hyundai brand, it compares with the Elantra and Sonata. For the Subaru Forester, which is a 2.5 litre SUV, you can make direct comparisons with the Toyota RAV 4 and Honda CRV. In the same vein, our Tribeca, which is a 3.5 litre engine, goes head to head with Toyota Prado, Honda Pilot, Nissan Pathfinder, Hyundai Santa-Fe and Kia Soreto. These are the four core models we have. In-between, there are variants. For example, you could have specifications differing, like a 2 litre and a 2.5 litre and so on. It could also come as a manual or automatic.
Each one has its own market. We have what we call the small to medium-sized passenger car which is the Impreza. The Legacy is the medium to large passenger car, while the Forester is the big sized SUV.

In terms of price, does Subaru offer any competitive advantage?
Pricing is one issue that should not be discussed in isolation. We prefer to talk in terms of value. If you see a commodity in the supermarket, you look at the product and then you look at the price. The ability or the willingness to pay is the perceived value that can be derived. So we don’t go on the basis of talking about price and trying to say this is cheaper than the other. The pedigree of the brand is such that it is of solid quality. It is not a cheap vehicle. At the same time, it does not mean that it is overpriced. We have vehicles that are competitively priced and they give much better value than what most competitors are offering. The common denominator is the “All Wheel Drive”.

What advantages does the All-Wheel-Drive feature offer?
It’s the fact that the cars have better stability and better traction. What that translates to is that the car can navigate different terrains. For example, the Impreza is a medium sized car that has the capacity to operate like an SUV because it has up-road functions. So, we are not just talking about build qualities for these vehicles. When I say build qualities, I mean we are not looking at the usual parameters such as durability, reliability and things like that. When it comes to Subaru, it is known for its symmetrical all-wheel drive. This means there is balance in the car.
When we say it is an All-Wheel-Drive, it entails that you don’t have to engage any other gear. All you have to do is to engage the gear and there you go! It’s intelligent; it senses the terrain and gives the traction required. It is a very rugged car. That is one of the characteristics that Subaru cars have. They are long lasting and they preserve their value. That is why I said that we don’t talk about price. We talk about value. Though they are not cheap, they are also not over the top in terms of price. If you look at a four wheel drive vehicle and a two wheel drive vehicle, you will expect that there will be some price differences. But the differences are not so significant to make our cars unaffordable.

So far, how has your brand been faring in the Nigerian market?
Right from the start, our plan for the first one year was focused on creating awareness. We were not in the state where we were aggressively looking for sales. First of all, we wanted to do it right, because we have a total marketing approach to this business. We are very brand conscious, so we need to give brand initiative the pride of place in all that we do. Earlier, there was no branding at our Surulere-Lagos office, because it was like a temporary location. Until we moved to our branded purpose-built office at Victoria Island, Lagos, we did not say we had fully started operations. So you could call that period a pre-marketing era. We believe we have passed that stage now and are fully on ground. Though we still maintain the Surulere showroom, now that we have our multipurpose head office at Victoria Island, we have started to work with dealers, some of whom have started representing us in different parts of the country. Now, we have established the standards by which we are choosing those who will represent us.

What are you doing differently? What are your after sales services like?
Our Victoria Island head office has what we call the three “S”. It includes Sales which is featured in the showroom, Service which is depicted by the workshop and Spare parts which we have in the warehouse. Our approach is that we want to offer the customer peace of mind. We believe in the Subaru brand and also in the quality of build of these cars. What we offer is a twelve month free maintenance experience. It is a one year written maintenance contract, which includes spare parts and labour fees. If you are one of our patrons, the first time you will spend your money on maintenance will be in the sixteenth month of usage. This is our package. If we don’t have the after sales backup, we will not be able to offer that. We did not imagine we would cover the country just by our own workshops. So, we have also accredited some service centres. We have three in Abuja and three in Lagos. At the moment, we have some candidates in Port Harcourt and also in Akwa Ibom.

Subaru has played quite well at the global level. What countries will you say are Subaru’s strongest markets?
The brand is strongest in America, Canada, Australia and South Africa. It’s dominant in regions where the climate is very severe and where you have a lot of snow. There, they appreciate the value of having a Subaru model.

Can you compare those markets to Nigeria?
Yes. But the comparison cannot be done strictly. While their terrain is harsh in the sense that they have snow, ours is also harsh in terms of the state of our roads which are mostly not tarred even in cosmopolitan cities like Lagos. Without any prejudice to the efforts of the governor, there are many roads that are still bad as it takes more than one term to fix everything. Because of its strength, the Subaru brand has won lots of awards especially in the World Rally Championships.

SMNL owns the Subaru franchise in Nigeria. Who are the people that make your team strong?
SMNL is manned by a team of Nigerian and Japanese professionals, with over 90 years of collective experience within and beyond the automobile industry.
We also have the Sorjitz Corporation; that is the trading house through which we route the business. So we have the manufacturer, the trading house and Subaru Motors Nigeria. In SMNL we basically have a five-man board of directors. Our Chairman is Mr. Yinka Fisher. We have Mr. Yoshihisa Hosaka and Mr. Sadiq Mohammed who are non executive directors, while Mr. Gbenga Akinyombo and I are the executive directors. We are presently working with different consultants, including tax consultants, auditors, and media consultants. It’s a pot pourri here. We have freelance designers from South Africa and some Nigerian companies who handle our marketing and multimedia communications. What we do now is that we contract the jobs out when there is need for them. So based on the need, we determine who is best for the job that has to be done.

How would you advise the buying public?
We believe a lot in customer satisfaction and we do go the extra mile to ensure that all of our patrons get the value we offer for our vehicles; not only in the products but also in the relationship management we put in place. One of the things we assure our customers and car buyers is that car purchase decisions should not only be based on the pricing. There are a lot of other considerations that should come in. Now, we are talking about the deregulation of the downstream sector in Nigeria. Deregulation will make it such that more emphasis will be placed on fuel consumption.  In more technical terms, what people should look at is the true cost of ownership. What we mean by that is, beyond the outlay of the car, you are looking at the maintenance, you are looking at fuel consumption and ultimately on the residual value. Looking at our brand, you will know that it holds its own in all these spheres.
For instance, the Tribeca and the Forrester which are popular in the American market have been known to have preserved their value over time. They occupy top place in those models of cars. The background that we have is that the manufacturer, Fuji Heavy Industries, used to be the primary supplier of war planes to the Japanese government during the Second World War. It was because of the peace treaty that they went into automobiles manufacturing because though they had the technology, they could not export military hardware from Japan any longer. So, that was what brought them into the automobile business. As you know, the technology for manufacturing aeroplanes is far higher than that of automobiles. So, what you get is a lot more technologically advanced system. For that reason, buyers should look at things like fuel efficiency.
One of the features in the 2010 model of our Legacy is what you call Continuous Valve Transmission (CVT). Though that is becoming common place amongst auto makers now, Subaru’s peculiar one is called Lineartronic, which removes the gear in the system so that what you have is like a belt driving the transmission. This essentially means that you don’t need as much power to change from one gear to another. If you don’t need as much power, then you consume less fuel. The technology is such that even if you exceed the average consumption, it’s still quite good. Because of the aerodynamic styling of the vehicles and the technology that has gone into it, these vehicles are much more fuel efficient. You will also find a lot of more advanced features inside the car than what you get in most competing brands.
To the buying public, my advice is that they look at the outlay and the cost of maintenance. If they have one with a higher outlay and lower cost of maintenance, they should get to strike a balance between the two and, ultimately, they should look at the longevity of these vehicles. If you go on our website, you will see some testimonials of people who have used some of these cars. We have testimonials from people who have used them for eighteen years and they are still on the road. If you see the models in Nigeria, you’ll see that they are the old ones. Some have been used since 1991, 1992 and 1997. The fact that these cars are still on the road despite the fact that there has been no representation for the brand in the country for almost 20 years, tells you a lot about the durability of the product.

Are you offering any promos in the near future?
Definitely, there will be opportunities for that. It is either a seasonal thing or something we may decide as a company. Though we did not go into promos last year, we are coming out much more visibly in 2010, because now that we have opened our head office, the facilities and the showroom, it signals that we have started full operations. Recently, Subaru co-sponsored the 2010 edition of the Most Beautiful Girl in Nigeria pageant. The winner of the pageant thus becomes a proud owner of a brand new Subaru Impreza.