Is Subaru Recession Proof?

Posted by: David Kiley on August 5, 2009

2009-Subaru-Forester-sideview.jpg

We all know by now that the federal Cash for Clunkers program, along with the usual mid-summer discounting, helped to boost July sales. But one company’s sales results really stood out. No, not Ford, and it’s 2% gain. How about Subaru’s 34% gain!

Indeed, Subaru, the auto brand of Fuji Heavy Industries, is having an up year despite the Recession and terrible auto selling season.
Sales in the first seven months of the year were up 4.3%. Compare that with Toyota (down 34%), Honda (down 31%) and Nissan (down 32%.)

Subaru has launched a new Legacy/Outback to a very good reception. And has seen extremely strong sales of its Forester, the redesign of which launched last year. The Forester is one of the best evolutionary redesigns of an existing model I have seen from any carmaker in the last few years. Sales of that car are up 32%. Sales of Impreza, Subaru’s entry level vehicle, are up just 1.5%; a level which should be better, but the smallest and least expensive Subaru does not have much of a fuel economy story to tell because of its all-wheel-drive system. That hurts it when consumers are researching on the Net.

I don’t think I’m out on a limb to suggest that the B9 Tribeca SUV has been a bust. Sales of the Tribeca are down 44%, with only a shade over 4,000 units sold this year. And there are rumors that it won’t get a redesign. As the new Outback has gotten a bit larger, management has been hinting that the brand may be just fine with the Outback as the largest Subaru.

Cash for Clunkers was not a huge factor in Subaru’s nice month. Of almost 22,000 Subbies sold, just 3,000 were bought with help from the Clunkers program.

However, with a brand this well loved by its audience, it stands to reason there must be some other product niches to fill.

One car we know is coming is a sports car of some kind that Subaru is developing with Toyota, which owns a stake in Fuji Heavy Industries.

How that car looks and fits in with the rest of Subaru’s lineup will be interesting. The company has been loathe to partner with automakers that did not want to adopt its all-wheel-drive configuration and “Boxer” engine. When GM owned a stake in Fuji, for example, the automaker could not agree on Subaru’s scheme, and Subaru was not interested in changing its engineering signature for GM.

So, how did Subaru manage the biggest sales gain of the year in the industry among volume companies? Besides having done a good job on the redesign of the Forester and Outback, the company has brought prices down from where they were a year or so ago. Decently equipped Outbacks can be had in the low $20Ks.

Subaru owners, too, tend to be highly educated and upper income, so they may not be impacted by the Recession as much as blue collar jobs.

Too, Subaru has been pretty rock solid for some time on what it stands for. It is about all-wheel-drive and long term dependability. The WRX performance car, a screamer and popular with the tuner crowd, has added pizzazz to a lineup that, for many, is the Birkenstock of the auto industry. But Subarus are the backpacks and mountain bikes of the auto industry. And its buyers trust that identity.

The company is on track to do around 175,000-180,000 vehicles this year. That is off Subaru’s all-time high, but remarkable considering the market is 40% off its peak and one of the company’s four vehicles isn’t selling at all.

Subaru’s performance adds up to doing a lot of things right in a very tough market.

Reader Comments

Strategery

August 5, 2009 11:40 PM

It's all about reliability and affordability. There are Subarus from the 80's that look like they have been run through the wringer, but mechanically, they are still going strong.

BOWEN

August 6, 2009 11:07 AM

It's simple, lots of the sales are stolen from large SUVs.

The Subaru advantage is good efficiency and all-wheel drive. (and great reliability that can rival Toyota)

Roland

August 6, 2009 11:08 AM

Subaru has earned itself remarkable demographics among folks who value the no-excuses engineering of their design.
Safety, handling, control and reliability are fused with practical utility and unique style that appeals to certain types.
So many military aviators and other flying colleagues of mine have, and will only drive a Subaru. Among them, an unusual number are helicopter pilots; these men and women are known for mechanical pessimism and a nuanced feel for machinery.
My own Subaru has endured adventure from Maine to Florida, returns great MPG, and has been fantastically reliable. Jaded by other brand experiences, and skeptical before owning my first, I'm now a solid convert. I have not found any brand that can match it for sheer grins, dependability and utter capability. My resale is strong, but I'm not going to trade in; I'll add a 2010 to my driveway, though.
The safety and control afforded by these cars make it criminal for other brands to not to prioritize safety as much as FHI (Subaru's global parent company) has.
Nearly every recent model Boeing, and future Airbus airliner you board has a central wing structure built by those folks: not a failing auto company, but a trusted leader in aerospace with 92 years in the sky.
I know of several near me with over 300K, and a lot of rural postal carriers who abandoned their Jeeps for their toughest routes. On road or off, old or new, a Subie will impress...

Nazgul

August 6, 2009 11:14 AM

Not altogether surprising, since Subaru owners as a whole seem to love their cars. Resale values are generally high, and you have to wait a long time to find good used versions of their special cars (WRX STis). People do NOT want to part with their Scoobys!

Richard

August 6, 2009 11:17 AM

Reliability is what stands out for me. Every subaru I have ever owned has been rock solid, however they definitely have a fuel efficiency problem in that even their smallest car gets terrible mileage. If they were to introduce a diesel engine I definitely would return to Subaru, but right now I simply cannot justify the low fuel economy.

Dr. Teeth

August 6, 2009 12:37 PM

My 2000 Outback is orders of magnitude more reliable than my 2004 VW GTI which stranded me on the freeway four times before I'd even reached 65,000 miles on it. The VW requires over $1,000 per year in repairs (not service, repairs), and never sees a dirt road. My Suburu, on the other hand, didn't need anything until 130,000 miles, and they were hard miles with mountain bikes on top, four guys inside, and fire road climbs and descents galore. Never again will I buy a VW, it's Suburu for life for me!

hyde

August 6, 2009 1:49 PM

Gotta love them Subie's!!

patty

August 6, 2009 3:20 PM

We love our Subarus!
The vehicles are safe, reliable and handle great.
We are an all subaru family and proud of it. We have owned several Imprezas, a Forester and an Outback. They will only ever be replaced by another Subie and only for reasons of wanting a newer make and model.
I would highly recommend any of their vehicle (not crazy about the Tribecca), go for a test drive and take a measuring tape to get dimensions of the back. You will be surprised. Although I had never been too fond of the foresters looks, I had been wanting another Outback, Salesman convinced me to drive the Forester and I was hooked. It handles like a sports car because it has the same chassis as the Impreza which is known for its WRX, STI packages.

cdn subbie owner

August 6, 2009 3:34 PM

I have a 2007 Impreza SE (base model plus heated seats, 6 disc cd player, sunroof, climate control) bought in Canada that has 150,000 kms or just short of 100,000 miles. I drive it in some of the worst winter conditions possible and it has proven to be indestructible. I've only had to do basic service on it in the 2 years I've had it and it's a pleasure to drive.

Subaru gets it right by keeping it simple and well priced. I find it interesting how consumers go to brands that they know are winners (if a bit understated) when the economy goes south and stay away from flashy but poorly built product because of the long term downside.

turns out value still does matter in todays world.

Ping Pong

August 6, 2009 3:38 PM

I love Subaru's. They are great reliable vehicles, and they always do great jobs with most of their designs (yes there have been a few misses. But overall they do good.) Add that with reliability, and it's a good combination.

I can't wait to see the Subaru/ Toyota sports car they have been developing.

Does anyone know the stage of the Subaru/ Toyota development? I heard awhile ago that it's been put on hold for the time being due to the economy. Is this true, or is it still in development?

Jennie

August 7, 2009 9:10 AM

I learned how to drive on a 80's model Subaru station wagon with no power steering. Car was so reliable. I currently own 2 Subarus. My 94 legacy, which keeps on going...it has 230,000 miles and my 08 Impreza which I am in love with. I recently had my Impreza serviced at the dealership and I found myself drooling over the new Legacy design and shocked at what you get for the price. It was pretty much a luxury car for under 25k. Subarus do so well because they are reliable and and a great value for the money you spend.

Russ

August 7, 2009 8:51 PM

It is the engineers, I've read, who rule the roost at Subaru in Japan. When you drive them, their integrity is apparent everywhere. The steering feels right. The brakes inspire confidence. The suspension does the rare job of providing comfort and sharp handling. Subarus feel coherent and all-of-a-piece, as if everything is properly lined up, in balance, in the right place, and machined accurately. Unless you're burdened with excess cash and have a desperate need to be seen in something very expensive, Subaru cars are a pretty smart choice.

ps

August 8, 2009 7:19 PM

This is the car GM should look at. Talk about dedicated owners. Never in the JD Power top 5 for INITIAL quality but you see a lot of them on the road. And a whole lot of Old ones too. Especially in the Northeast. Think 4WD drive, stick shift and you go anywhere. And not just 4WD. FWD with a 5 speed FWD frequently pass the wannabe SUV's that are off the road due to cretin owners in their comfy tin trucks. Plus great gas mileage. Good job Fuji Heavy Industries!

Cameron McNaughton

August 10, 2009 11:40 AM

David, just read the comments on your blog to understand why Subaru has done so well in the recession. The brand is clearly positioned and has a group of loyalists who sing the vehicle's praises to anyone who will listen.

Subaru "gets it" that they are not for everybody and that's just fine with them, consequently they have a loyal following.

I blogged about the role of the Subaru and Mini brands and their success:

http://treefarminc.com/TreeFarm_Partners/Blog/Entries/2009/4/20_Subaru_%26_Mini.html

LYNETTE

August 17, 2009 4:49 PM

Richard the new Legacy gets 23/30 you should check it out. It has a CVT transmission Thats how we got the millage.

Michael Berenis

August 31, 2009 3:30 AM

The reason Subaru is kicking ass is because they make the best vehicles on the face of the planet. Why do they? Because they can take punishment unlike any other and just keep going. I've had my Subaru in the nastiest environments known to man, and it just keeps going. I love my 2002 Subaru Impreza WRX. It's also fun to modify it.. 70+ mods and counting! -Sincerely, Tampa Sports Car Examiner

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