A coup for Subaru

Posted by: David Welch on December 29, 2009

Well, it is the holiday season so I figured I would take a break from the woes at General Motors, Honda’s hybrid malaise and Toyota’s quality snafus to pen up some good news. Take a look at Subaru. In the U.S sales are up 14.4% through November and will easily top 215,000 cars for the year, notes Automotive News.

Yes, even in this wretched car market, a company is growing. Subaru did a few things to get the growth. First, the company has renewed its entire lineup other than the B9 Tribeca in the past two years. They also spent a lot to market the cars even as the economy was hitting the skids, says James N. Hall of 2953 Analytics Inc. When the competition pulled back, Subaru hit the accelerator, Hall said. By taking to the airwaves, Subaru got on a lot more shopping lists.

To close more deals, the company slashed prices on its cars. Until 2006, Subaru used to try to sell its cars at 5% to 10% more than rival Japanese models, Automotive News said. Now they undercut their chief competitors in head-to-head comparisons. That has helped the company move the metal. But it could be tough to get that pricing back. Most companies are trying to get better pricing to improve margins. That has helped Honda and Toyota reap big profits for years. GM and Ford are both trying to do the same thing now. Subaru is moving in the opposite direction. That could diminish their brand image if they drop prices too low.

The real test comes when the newer models start to age. Car companies typically spend more on advertising when they are launching new models. If Subaru pulls back on marketing but sales stay strong, then the pricing play will go down as a success. If Subaru can’t sustain the growth, then the company will have a dual problem with flat or falling sales and weaker pricing. But make no mistake. The company’s sales show that Subaru is headed in the right direction. The unique brand with a strong image for rugged, all-wheel drive cars looks like it is catching on.

Reader Comments

Cameron McNaughton

December 29, 2009 6:39 PM

What we have in Subaru is an automotive brand unafraid to be who it is, a little different, maybe even quirky. A brand that is clearly understood by the people who own and love them. Subaru marketing is being managed by people who understand the core values of their brand and recognize that it's not for everybody and shouldn’t be. Brands that are selling cars profitably for both manufacturer and dealer in the worst recession in generations.

There’s some good strategy going on at Subaru. The rest of the automotive world should pay attention. Perhaps the company selling the most cars is really not the winner.

McNaughton Automotive Perspectives
http://autoperspectives.com/blog/

Frank A NYC

December 30, 2009 12:14 PM

The future(?) owners of Saab could learn something here. Not everyone wants a Camry or Accord.

barclay

December 31, 2009 1:31 PM

Subaru has done a wonderful job at redefining there line. What other manufacturer has done this? Yes they make the same thing bigger, but do not add more safety ,connivance as Subaru. Also there is no hard sell anymore by there salesman.

Bob

January 18, 2010 11:42 AM

Subaru has 'Redefined' their line, again and again, and again. Somehow their sales have survived. The look of their cars, especially the front is a revolving door of design, first bland yet reliable, then modern and upright, now curvaceous and ill conceived. It feels like they are playing 'Pin the Tail on the Donkey'.

When will it end, what will they look like?

If SAAB survives and updates their clean, modern looks, Subaru may not have such an easy time.

Consumer Reports

January 21, 2010 6:29 PM

Great post! You're right, Subaru seems to be a stronger competitor in the auto industry. Consumer Reports just released the annual Auto Brand Perception Survey and found that Subaru had one of the most dramatic increases in perception among respondents in quite a few categories - safety, value and environmentally-friendly design. If you're interested in reading more (it's free), visit www.crautobrandsurvey.com.

JOHN C

January 24, 2010 12:58 PM

The shutdown of Saab is going to help Subaru...since their customer base is largely the same. Cold weather friendly, rugged vehicles, all-wheel drive.

Subaru is still very lacking in Southern California. That can be helped with a more fuel efficient model, a hybrid or diesel. But like Hyundai/Kia they are the only car companies growing, and it's best to attack now while Toyota, GM and Chrysler are on the defense.

Jay

February 11, 2010 1:17 AM

Good for them, but they're a long way from really competing with the Japanese!

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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