Automotive News - February 12, 2018 - v2 - 30

30 * FEBRUARY 12, 2018

SUBARU OF AMERICA

50 YEARS

Subaru and the Bochs: Always in concert
Distributor helped fuel
brand's growth in U.S.
Diana T. Kurylko

ith his disheveled long hair,
gray beard, rock band T-shirts
and sneakers, Ernie Boch Jr.
looks more like an aging rock
star than the billionaire businessman whose
company sold about 10 percent of all Subarus retailed in the U.S. last year.
Boch, who turns 60 this week, does in fact
play in a rock band. But he is also CEO of
Boch Enterprises, an independent distributor for 64 Subaru dealerships in the six New
England states - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island
and Vermont. Last year, Boch Enterprises
sold close to 65,000 vehicles of the brand's
U.S. total of 647,956.
The hypercompetitive Boch says he has visited Subaru distributors in several foreign
markets to "take ideas back as inspiration"
and then tries to outsell them.
He has benefited handsomely from the
brand's expanding popularity. He is the 30th
richest person in Massachusetts with a net
worth of $1.1 billion, according to AffluenceIQ in Winchester, Mass.
Indeed, Subaru's long run of success has
been very good to him. Boch lives large in
Norwood, Mass., having renovated an aging
mansion, doubling the size to 16,000 square
feet and buying adjoining properties so that
his home sits on six acres.

Opportunity knocked
But it's not just a matter of being with the
right brand at the right time. The distributorship has made a huge contribution to Subaru's great leap forward during the past decade - and long before that.
Boch took over the family business after the
death of his father, Ernie Boch Sr., in 2003. His
grandfather, Andy Boch, began things in
1938, opening a repair shop. The next year,
Andy Boch opened his first store, Boch Rambler. He added a Nash dealership in 1945, and
Ernie Sr. joined the business three years later.
Ernie Sr. took over in the 1960s and at one
point a Massachusetts banker named Dominic Sansone gave him a $10,000 loan to keep
the business going. Boch Sr. acquired additional franchises, and in 1970, Sansone asked
him to consult on New England's ailing Subaru distributorship, which Boch Jr. says

autonews@crain.com

"Subaru is still a
boutique-y type vehicle.
... I think that Subaru is
still just blossoming in
the United States."
Ernie Boch Jr.

"wasn't exploiting the opportunities."
The distributorship had been awarded to
Massachusetts businessman Harper Clifford
in 1969 by Harvey Lamm, one of the founders
of Subaru of America.
More than a dozen franchises had been
awarded - mostly to Saab dealers.
"Clifford had the distributorship, but he
was going out of business," Boch Jr. says.
Clifford took Boch Sr. on a tour of his dealerships, where Subarus were put in the back
of the stores and were ignored by the salespeople. Boch Jr. says his father's idea was to
have exclusive, stand-alone stores.
Boch Sr. bought out Clifford in 1971 and
turned the business around. For the next few
years, the distributorship sold about 10,000
vehicles annually.
"He had a knack of knowing what would be
popular," Boch Jr. says of his father.
He frequently made suggestions to Subaru
of America's parent, then known as Fuji
Heavy Industries. He pushed for the shift to
exclusively all-wheel-drive vehicles and "suggested the raised roof on the Outback," Boch
Jr. says.
"In the late '80s, we stopped bringing in frontwheel drive and took exclusively awd," he says.

Boch Sr. also lobbied Japan to make a Legacy sedan, a car that was similar to today's
crossovers. He told Automotive News in 1997
that most U.S. officials were "very, very skeptical," because they feared the car would
compete with the Outback wagon.
Fuji Heavy sent Boch Sr. a prototype Legacy. As an experiment, he agreed to take 300 of
them for the 1997 model year - and sold
them all.
Over the past half-century, most independent new-vehicle distributors in the U.S. have
been bought out by the manufacturer. But
Subaru never sought to buy out the Bochs.
"I think that the private entrepreneur [as
distributor] is an asset in today's market,"
Boch says. "Communication with the dealers
is of the utmost importance and we can turn
on a dime. The buck stops with me and processes are adopted, changed and controlled
to what we deem best. We are a nimble corporation."
Boch's isn't Subaru's only private distributor in the United States. Subaru Distributors
Corp., in upstate New York, distributes vehicles, parts and accessories to dealerships in
New York and New Jersey.

Fuji Heavy's heroes
Ernie Boch Jr. began working for his father
in the early 1980s and in 1986 began traveling
with him to Fuji Heavy headquarters in Japan
yearly - usually uninvited - to talk to company executives.
At the time, Boch Jr. regarded the vehicles
as quirky, but the brand was "invigorated"
with the debut of the Forester compact crossover in the late 1990s and later by the Outback midsize crossover, he says.
Boch says his "heroes" from that era were a
pair of Fuji Heavy CEOs, Isamu Kawai and
Ikuo Mori. Kawai, CEO from 1990 to 1996, approved building the Outback in the early
1990s and made the move to all-awd vehicles.
"Mr. Kawai saved Subaru," says Boch.
The only variation from the all-awd policy
has been the low-volume rear-wheel-drive
BRZ coupe that went on sale in the U.S. in
2012 and was designed in partnership with
Toyota. Boch says he loudly opposed the BRZ
because it wasn't awd.
"I was against it and I was proven wrong,"
Boch says. "I have told them that."
Mori, CEO from 2006 to 2011, made the decision to design and equip Subaru vehicles
primarily for the U.S.
Tom Doll, president of Subaru of America,

is another executive Boch admires.
"Doll made Subaru cool," he says. "It was always a great engineered car. But he helped to
get the coolness and safety across - he massaged the image."
Doll also persuaded Boch nearly a decade
ago to give up some of his new-vehicle allocation so Subaru could grow in the Sun Belt.
"Subaru knew - and I credit Tom Doll - if
they were to survive they had to turn the Sun
Belt on," Boch says. "We sacrificed a bit. I
agreed and the rest of the country woke up to
Subaru."
Boch's sales as a distributor have fallen as a
percentage of Subaru's total in the U.S., but he
says, "I am selling more cars than I ever have."
Boch says Doll also improved communication with dealers, giving out his cellphone
number several years ago at an NADA make
meeting and telling his retailers to call anytime. Boch says he talks to Doll frequently: "It
is a direct line, almost like a red phone, and
we throw around our ideas."

Listening to dealers
Boch concedes that not every Subaru was a
hit.
The Brat, a small pickup sold in the U.S.
from 1978 to 1987, didn't do well but was
highly popular with owners, he says.
The wedgy XT coupe that went on sale in
1985 wasn't popular either but "was a fashion
statement," he says.
The Tribeca crossover that debuted in 2005
was derided by dealers and reviewers. For
that one, Boch says, "Subaru did not get the
input from the dealer council that they did
with the Ascent," referring to the large crossover that goes on sale this year.
"We have been going to Japan for three
years giving our opinion on the Ascent and
they have been sensitive and taken some of
the ideas."
Dealers argued early on that the Ascent had
to be considerably bigger than Japan had
planned, he says.
Indeed, Boch has operated dealerships for
other Japanese brands, but he says none ever
permitted dealers so much access as Subaru.
Meanwhile, he says it's OK that Subaru isn't
a full-range manufacturer.
"Subaru is still a boutique-y type vehicle,"
Boch says. "It is a great alternative vehicle -
Subaru is better because of the engineering,
styling and support the factory gives to the
dealers. I think that Subaru is still just blossoming in the United States." a

Detroit store stuck it out, now reaps rewards

Jack Walsworth

jwalsworth@crain.com

ETROIT - Bill Garcia and Felipe
Mendiola have seen Subaru evolve
from an unknown commodity to a
popular brand over the last four decades as Midwestern retailers.
And operating Hodges Subaru in Metro
Detroit, in the shadow of the domestic auto
industry, where tens of thousands of families
have long-standing loyalties to Ford, Chevrolet and Dodge, has been a test at times for the
location's co-owners.
It wasn't uncommon for a passing motorist
to yell obscenities or anti-Japanese sentiment at either Garcia or the store.
"People would drive by and shout at us,"
Garcia recalled.
But those moments didn't deter him or
Mendiola.
The store began selling Subarus in 1972,
relatively soon after the brand entered the
U.S. It has been offering Subarus exclusively
since 1981 - a time when U.S.-Japan trade
friction generated sparks and Japan's automakers routinely were blamed for job losses

Hodges Subaru in 1981. It wasn't easy selling a Japanese
brand in Detroit, but Hodges' owners were undeterred.

in and around Detroit.
Hodges stuck it out and ultimately expanded.
Today, it markets itself as "Metro Detroit's
Subaru only dealer" in ads. Before acquiring
the Subaru franchise, Hodges sold DeSotos,
Triumphs, Renaults, Peugeots and Saabs, all
from a small dealership in Ferndale, just
north of Detroit.
In those early days, many Subaru stores
were in gas station-sized buildings. Hodges'

cramped showroom could fit
just two vehicles. But as volume
grew, the store ran out of sales
space and service capacity. The
company began using a nearby
satellite building to handle the
expanding service business.
In 2015, Hodges moved a mile
down the road to its current location in Ferndale, just north of
the intersection of Detroit's
Woodward Avenue and 8 Mile
Road, where it more than tripled its space.

Still solid

"The trick is making sure you provide consumers with new products," Mendiola said of
the growth of his store and Subaru overall. He
oversees sales at the store while Garcia does
the same for service.
Subaru made a clear effort to freshen products when the Great Recession decimated the
auto industry.
Garcia pointed to the 2009 Forester and 2010
Outback and Legacy as products that helped

the store power through the recession. Subaru
of America managed to grow its market share
during the era, from 1.2 percent in 2007 to 2.7
percent by the end of 2013.
"Even in the recession, we were still solid,"
Garcia said.

Generations
The work force at Hodges has doubled to 39
people in the last 10 years. Both sales and service are up since the move to the bigger
space. December was the retailer's best-ever
month, with sales of 88 new vehicles.
"There is not a doldrum day in service, parts
or sales," Mendiola said. "There are always
people here."
Garcia and Mendiola have been boots on
the ground during all the growth and changes
the automaker has gone through. The customer base continues to grow.
Mendiola is now selling to new generations
of owners, Garcia said.
"He is selling cars to the daughters and sons
of our customers, and also to their daughters
and sons," he said. "There's a great loyalty to
the brand." a

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