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Is Subaru Recession Proof?


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.


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