Outback May Be the First Made-in-China

　　In 2009, the sales of Subaru totaled up to 35,300 units. In the first half of 2010, the sales of Subaru reached about 26,700 units. By July 2010 there are more than 100,000 Subaru vehicles in China.

　　Some insiders in Subaru said that the domestic production in China is just like a game. Outstanding sales data is the biggest stake for Subaru when searching for a partner to establish a joint venture. In fact, Subaru has already attracted a number of bidders. Now it is waiting for an automaker with best conditions.

　　The domestic production has become a competition between BAIC and SAIC.

　　According to some rumors, till now there have been five potential bidders including FAW, SAIC, BAIC, Chery and JAC. These five domestic automakers may gain the opportunity of establishing the joint venture of Subaru. Regarding brand, experience and other aspects, Chery and JAC may not have the hope to continue participating in this competition. Now FAW, SAIC and BAIC, which are more powerful, have become three main competitors in the arena of domestic production of Subaru.

　　However, recently some insiders from Subaru told the Beijing Reference that due to several reasons, as to the cooperation between FAW and Subaru the opportunity is very slim. Therefore Subaru is considering the cooperation with BAIC or SAIC. People believe that BAIC will spend a lot on the upcoming new cars of Saab. Now for BAIC the budget is quite tight. Moreover, many people did not think highly of the management and investment analysis capabilities of BAIC. In response, the Department of Public Relations of BAIC explained," In the first half of 2010, the sales of BAIC totaled up to 746,000 units. It is estimated that the operation income will reach 73.7 billion yuan and the profit will be five billion yuan, up 100% compared with the same period of 2009. Now BAIC is not lack of funds. “On the other hand, as to the experience of running joint venture, funds and management, SAIC may hold a better position. Therefore, it is more likely that SAIC will establish cooperative relationship with Subaru.

　　Insiders of Subaru said, “Actually we also know that BAIC is lack of joint-venture brands. SAIC is relatively much stronger. As an automaker, we are most concerned about our own interest. Therefore we are looking forward to finding a partner which can offer best conditions. ” BAIC is more eager to found a cooperative relationship with Subaru. If BAIC can offer better conditions, then it will be difficult to tell the final result.

　　Subaru once had an experience of failure. As to the domestic production, Subaru has to be very careful in every segment and take full considerations. So we may have to wait for a quite long time until Subaru decides which partner it will choose.

　　The first Made-in-China model may be Outback.

　　In addition to the partner of domestic production, the first model is also a key issue which Subaru has to consider. Earlier some sources told the Beijing Reference that the first Made-in-China model of Subaru will be a SUV other than Forester. According to the sales statistics of the first half, Forester is the most popular model, which accounts for nearly 50% of the total sales. Many people believe that Forester seems to become the first Made-in-China model of Subaru. However, Subaru did not think so. The sources revealed, “Now without domestic production, Forester still enjoys hot sales. So why not firstly produce other models in China? Therefore Subaru can enhance the competitiveness of a Made-in-China model in a specific segment.”

　　It is reported that at present Subaru sells three SUV models including Forester, Outback and Tribeca. Among all the three models, the sales of Tribeca are quite plain. However, the situation of Outback is very different. The sales in the first half of 2010 were slightly less than Forester and other models, accounting for 30% of overall sales. If the vehicle is produced in China, the price will be lowered. With the advantages of space and appearance, Outback will be quite competitive in the specific market.

　　In addition, the introduction of technologies such as boxer engine and all-wheel-drive system after domestic production will become a key issue. Some industry insiders said, “During the cooperation with China National Guizhou Aviation Industry (Group) Co., Ltd., Subaru provided funds and technologies. However, the result was not satisfactory. As to the cooperation programs in the future, we can not rule out the possibility that Subaru may retain its main core technologies. However, we have to wait to see whether the bidder can offer satisfactory conditions for Subaru.”

　　Subaru optimizes its distribution and sales system in order to get preparations for domestic production.

　　On the one hand, the headquarters of Subaru in Japan sent several people to China to negotiate with major automobile manufacturers about the issue of domestic production. On the other hand, the General Manager of Subaru (China) Suzuki Kazunari, who took office a year ago, is also very busy. Some sources said that Suzuki Kazunari has been busy enhancing the management of dealers, the training of clerks and so on. Prior to domestic production, the existing problems in the field of dealership should be resolved.

　　Indeed, although the sales of Subaru are quite outstanding in China, the office of consumers has been receiving a lot of complaints. Particularly, the complaints about parts supply and maintenance account for a large proportion. In the first half of 2010, Subaru announced that since June 1 it will lower the prices of auto parts. The average reduction of parts is around 20% and the maximum reduction can reach up to 40%. To some extent, such a measure solves the severe problems that the prices of auto parts are quite high and consumers have to wait for a long time. However, there are also some small problems. There are also some problems with the quality of service provided by dealers. Some industry insiders think that the problem partly results from regional monopolies.

　　In addition, Power Diversity, as one of the three major dealers of Subaru, may also participate in the program of domestic production. In response, an executive of Subaru (China) said: “The partner of domestic production should be an automaker. As to a dealer which is aiming at participating in the program, the proposal has not been accepted.” The executive further explained that three regional dealers made great contributions to the sales of Subaru in China. However, in terms of establishing a joint venture, Subaru is looking forward to cooperating with an automobile manufacturer. (Translator: Qinghua/Hanxin)

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