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#1 of 3134 Subaru's fortunes sinking - can they turn it around?
May 18, 2005 (7:04 pm)
Subaru is on the back side of a five year revitalization plan that so far has produced anything but. An article at Autoweek today gives a good summary:
Basically, back in 2002, Fuji Heavy Industries (FHI), the Japanese corporation that owns Subaru, set goals for sales and income increases it hoped to achieve at Subaru by March 31, 2007 (the fiscal end of a five-year period). it was also during this period that Subaru announced the goal of moving upmarket over the next few years to become more of a premium brand.
Instead, sales have stagnated and, worse yet, income has fallen sharply. Subaru accounts for 90% of FHI's global revenues (I had no idea it was that high). Subaru expects sales in North America to be about 201K this fiscal year, as opposed to its original goal of 250K. It is hoping that the launch of the new Tribeca will boost those numbers a little. But it cannot be a good sign that its most popular model, the Outback, was completely revised last fall, and yet sales have not increased but rather have remained flat. Other models (Forester and Impreza) are at the very end of their model cycles and will not be completely revised for more than a year.
As for income, SIA (the Subaru plant in Indiana) lost $74 million last year and is on target to lose more than twice that much this year. Meanwhile, GM waits in the wings, already owning 20% of the company and perhaps willing to take a more active role if it perceives the company is performing weakly.
Can Subaru turn it all around? I truly hope they are not selling rebadged Trailblazers in 2010.
#2 of 3134 don't panic
May 18, 2005 (7:55 pm)
Over the past 15 years, Subaru has doubled their number of vehicles sold in the U.S., and their product keeps getting better and better... and keeps getting better reviews. It takes time for positive press to affect the carbuying public and for Subaru to become more of a household name. You can bet many more people are considering Subaru than in the past, but it takes many years of quality production to reach that critical mass when it stops being an uphill struggle just to get average Joe/Josephine to think of Subaru as an option when shopping.
They need to be getting that good press at least through a 5-year purchase cycle. Doesn't do much good to see a great Subaru review today, but then see nothing for the next 3 or 4 years when it comes time to purchase a car. Heck, neither of my mid-sized hometown paper's two automotive reviewers have even received an '05 Outback or Legacy to review, and this is a Subaru stronghold.
Think of the Field of Dreams - build it (with style and quality) and they will come.
Also, to pick a nit, Outback wasn't "completely revised last fall"... it was about a year ago.
May 18, 2005 (8:38 pm)
It is true that Subaru's sales have increased a lot since 1990, which was the depth of their doldrums and around the time they almost went bankrupt. But since the major sales resurgence that began around 1995, not coincidentally with the debut of the Outback, sales have peaked and then plateaued.
1995 was 10 years ago - two car generations ago and longer than the average Joe or Josephine keeps a car before buying a new one. The press have always liked the Outback, and LOVED the WRX. Safety results have been strong, especially with Forester. Basically, Subaru has been doing most of the important things right, and yet this cycle of increasing brand recognition you refer to doesn't seem to be happening.
Heck, what you said is true - it was more like last SUMMER that Outback was redone. Not only that, GM's input has led to some of the best financing deals on Subarus in the last year that Subaru has ever offered. Both of which make it MORE significant that sales have not risen in that time.
#4 of 3134 Not worried
May 19, 2005 (4:13 am)
Subaru here in the USA just had their best April ever in terms of sales. The redesigned Legacy and Outback have been a clear success, and everything looks good for the new B-9 Tribeca, as there is a lot of interest in that model. The Forester and Impreza are getting major facelifts for '06 too.
#5 of 3134 Re: Not worried [rsholland]
May 19, 2005 (6:24 am)
the question is NOT sales but the margin. high-end legacys/outbacks are 3-4k off MSRP now within a year of introduction.
May 19, 2005 (7:21 am)
when you say that Legacy and Outback have been a clear success, I am not sure what it means. Sales did not rise when the new models were introduced. Do flat sales indicate a clear success? The new Outback is the first one ever where I recall dealers running ads in the paper within a month or two of launch with discount deals for "all in stock".
Forester is getting a prettier face and little else for '06, from what I understand. Impreza gets a new face too, but this is not a major model revision, which isn't due for another year for this model.
As for Tribeca, yes, everyone from Sube execs to fans is banking on it drawing good sales. I hope it does. It is entering one of the most flooded segments in the market - midsize SUV/crossovers. It is the first Sube ever to base above $30K. I have already read some derogatory comments in here about its new corporate nose. So it will definitely have its work cut out for it.
May 19, 2005 (7:29 am)
Yep, I, for one, do not like the new corporate nose on the Tribeca...the rest of it looks nice, but the front end ruined it....It didn't work for Edsel back in the 1950s, either! LOL! Also, we mentioned this in the VW thread, why is everyone trying to go "upmarket"?
I look at Subie as a nice, rugged, affordable car, not a "luxury" car...
#8 of 3134 My view
May 19, 2005 (7:47 am)
I have considered Subarus in the past, and, at least for the models I was looking at, it was always price that kept me away. I could get similarly equipped cars (without the AWD of course) for much less. For the price I would have to pay for a decent Sube, I could get an Acura or an Infinite. I still get that impression with the new generation.
As far as the Tribeca goes, I don't like the new nose. If all Subes go with that nose it would completely turn me off the brand.
May 19, 2005 (7:56 am)
Agree totally - I liked Subie better when they were in more direct competition with Honda/Toyota, but with AWD...rather than moving "upscale" ....like you said, for the price of a new Legacy, you could be looking at an Acura or a Volvo or something like that.... And the new Tribeca "edsel" front end makes the "bug eye" Imprezza look good....
May 19, 2005 (7:59 am)
I believe that is the plan, though. All Subes to have that nose by the end of the decade. They have already done some concept stuff for the new Impreza using that new nose. It looks a little better when it is smaller.
In the meantime, Impreza will have its third face in four years this fall. They are having a lot of trouble finding a look that suits them.
And yes, you have to want AWD for a Subaru purchase to make sense most of the time. Otherwise it seems expensive relative to the competition. That is one of the limiting factors for increasing Subaru sales, IMO. Back when they started the "AWD all the time" theme, it was a great niche and they were one of the few companies in it. Now everybody and their mother has AWD in all sorts of different models.