By on March 9, 2017

2017 Subaru Outback - Image: Subaru

“Washington is not a place to live in. The rents are high, the food is bad, the dust is disgusting and the morals are deplorable. Go South, young man, go South and grow up with the country.” —Not Horace Greeley

Subaru generates 60 percent of its global sales in the United States. For a Japanese brand that still relies on imports for half of its volume in its largest market, Subaru knows that 60-percent reliance on America is way too high.

Subaru needs strength in other markets. Subaru needs to diversify its portfolio. Subaru needs another America.

Unfortunately for Subaru, history suggests the brand won’t quickly find strength in other markets. History suggests Subaru’s attempts to diversify its portfolio won’t succeed.

Fortunately for Subaru, however, there is more America.

“It’s true we want to increase sales in other countries, but in terms of the place with the best chance to increase sales, it has to be America’s Sun Belt,” Yasuyuki Yoshinaga, CEO at Subaru’s Fuji Heavy Industries parent company, told Bloomberg.

In other words, Subaru wants to add some New Orleans to its order of New Hampshire; Burlington with a side of Birmingham; Kennebunkport supplemented with a dose of Port St. Lucie.

When it comes to offshore alternatives, Subaru is shorthanded.

In Europe’s two biggest markets, Germany and the United Kingdom, Subaru’s market share currently stands at 0.2 percent and 0.1 percent, respectively, hardly the strong foundations on which significant growth can be formulated.

Subaru owns just 0.2 percent of the Chinese market and has no presence in India.

As a result, Subaru’s eyes are drawn back to the United States, where Subaru has garnered record annual sales in eight consecutive years, a streak which began during the depths of the recession. Subaru has more than doubled its U.S. volume since 2011 and essentially tripled its U.S. volume since 2009.

2017 Subaru Impreza 5-door - Image: Subaru

Subaru, therefore, fears no downturn in the U.S. market, widely expected to be a modest one if it turns out the industry peaked in 2017. Subaru has proven its ability in the past to overcome poor U.S. economic conditions. With improved availability, Subaru believes it could do so again. But the brand’s U.S. horizons must be expanded, as Yoshinaga told Bloomberg, “There’s no other way for us” besides U.S. concentration.

There are certainly states open for business if Subaru can find a way to convert its rugged, all-wheel-drive appeal in the northeast, northwest, and mountain states to a message that appeals to buyers who don’t encounter snow, ice, and slush.

Subaru will want to play up its reliability, safety, and resale reputations where AWD is a less meaningful feature. On Consumer Reports’ 2017 list of the best brands, Subaru ranked fifth overall and first among mainstream auto brands. At the Insurance Institute for Highway Safety, the Crosstrek and WRX are Top Safety Picks; the Impreza, Forester, Legacy, and Outback earn Top Safety Pick+ ratings. In ALG’s residual value awards, Subaru leads all mainstream brands, with the Impreza, Legacy, WRX, Crosstrek, Forester, and Outback all winning their respective categories.

If Subaru wants to sell more cars, however, the automaker must continue to battle a good problem: poor supply. Heading into February, Subaru had only 36 days of U.S. inventory — 60 days would be more appropriate. This low level of supply and high level of demand has allowed Subaru to keep incentives low and profit margins high. According to ALG, Subaru’s incentive spending in February averaged just $896 per vehicle in an industry that spent $3,443 per vehicle. That equals a modest 3-percent discount on Subaru vehicles when the industry offers 10-percent discounts. Bloomberg says Subaru’ 2016 Q4 profit margin, at 11.6 percent, was industry-leading.

Through the first two months of 2017, as U.S. auto sales fell 1.5 percent compared with the same period one year earlier, Subaru volume jumped 7.5 percent. Rapid Outback growth, significant Impreza improvements, and Forester and Crosstrek increases have all played a role.

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.

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92 Comments on “Subaru Is Way Too Reliant On U.S. Market, Needs A New Market, Chooses Sweet Land Of Liberty...”


  • avatar
    PrincipalDan

    I see a shocking number of Subarus with Texas plates crisscrossing New Mexico.

    I only say shocking because my perception of Subaru here in the west has always been a car for the snow capped mountains and making your way to the ski lodge.

    • 0 avatar
      dukeisduke

      I live in the DFW area, and I see lots of Subarus. Plenty of Imprezas and Legacys, and of course Outbacks, Foresters, and Crosstreks. And some WRXs and STIs. It’s truly become a mainstream car around here.

      • 0 avatar
        Dave M.

        Same here in Houston, They’re all over. While we might get a “dusting” of snow every 5 years, my Outback sure is a tiger in the rain. I’ve light-trailed it out at Big Bend and elsewhere and it loves to play.

        Subarus don’t need snow to prove themselves. That’s just an added bonus.

      • 0 avatar
        b534202

        So you’re saying you don’t see many Tribecas and BRZs. Shocking.

    • 0 avatar
      TW5

      I have family in that distinguished demographic

    • 0 avatar
      Slocum

      It’s also a car for rough 4WD roads in the desert. Think of an Outback as a lighter, lower-cost, more-reliable, more-efficient alternative to a Jeep GC.

    • 0 avatar
      HahnZahn

      Just bought a new Impreza here in SoCal. We head out to the desert regularly, and the mountain areas get some occasional snow. Lots of rain lately means our roads are looking objectively pothole-ier over the last few months. But then during those long times between rains, all that gunk builds up on the road and turns slick on the first drizzle. AWD not absolutely necessary for any of those, but it helps, and there’s no real MPG penalty for it with Subarus.

      I think a lot of it has to do with Subaru’s safety ratings, too. Plus their EyeSight package is available on nearly every trim of every model, which is helpful during urban traffic.

    • 0 avatar
      Hank

      They are popular in Austin, and with West Texans who have 2nd homes in the mountains of NM. Once you get out of the urban centers, Texan interest falls to hear zero. Ironic, since it’s in the rural towns you’d think that it would be most useful.

  • avatar
    FreedMike

    Tim, are you sure this isn’t April 1st?

  • avatar

    It’s interesting how Subaru and Suzuki have taken opposite tacks. Suzuki has bet heavily on the developing world, using India as an export hub.

    Too bad for Subaru that Suzuki decided to partner with Toyota after their previous hookup with VW blew up.

  • avatar
    Click REPLY to reload page

    More dealerships can only mean more sales. Creating a well-deserved reputation for quality pays off in the long term.
    Regarding incentives, it would be better to invest another thousand in the car, instead of trimming pennies in production costs by using lower quality parts.
    Subaru doesn’t sell very many models, but what they do,they do quite successfully.

    • 0 avatar
      FreedMike

      Here’s the problem: Honda and Toyota also have (mostly) well deserved reputations for quality as well.

      I’m sorry, I don’t see how Subaru uses its’ core brand strengths anywhere but a) places with bad weather, b) places with lots of folks who are left of center politically (who they actually aim their marketing at), or c) places with lots of ski / hike / kayaking / “adventure sports” types (another key demographic they aim their marketing at).

      Plenty of those folks in a place like Colorado…not so many of them in, say, Louisiana. Plus, Subaru doesn’t sell a truck of any kind. Honda and Toyota do. AWD isn’t going to be much of a selling point south of the Mason-Dixon line. I don’t see how they develop much more of a footprint than they already have in the south with the products they currently sell. Now, if they want to develop a small truck…

    • 0 avatar
      Vulpine

      They need more, very different models beside their current lineup. The Crosstrek is not different.

  • avatar
    mike1dog

    One dealer in the whole state of Mississippi. I’ve seen fewer Subarus than Porsche 911s around here.

  • avatar
    Arthur Dailey

    Forget the brand loyalty, what is the true story regarding claimed reliability for Subaru?

    Have heard 2 different stories, those who regard Subarus as Volvos were regarded in the 70’s and those who regard them as VW’s have been regarded this century.

    Which is correct?

    • 0 avatar
      turbo_awd

      I think a bit of both is true – they are generally quite reliable (our ’05 Legacy GT has been pushed at least as hard as some of my VWs and has held up better in general), but not 100% bulletproof. However, when things do break, they’re generally not that hard to fix for the DIY mechanic (if that’s your choice) and/or not that expensive to get repaired. Parts seem to be priced more like domestics than European cars.

    • 0 avatar
      slavuta

      There is no such thing as “Subaru Reliability”

      • 0 avatar
        bikegoesbaa

        Their resale value say different.

        • 0 avatar
          slavuta

          The only thing their resale value says that there are enough of those who wants to buy a car that will develop expensive engine leaks.

          • 0 avatar
            bikegoesbaa

            You contend that people knowingly pay top dollar for unreliable used econoboxes?

          • 0 avatar
            xtoyota

            How about 2014-16 oil consumption problems…major issue
            OR blow head gaskets on 2000-2006 OR cvt problems
            CR reports show only average reliabilty

        • 0 avatar
          sirwired

          The Wrangler has spectacular resale value, but it’s just about as unreliable as the rest of the Jeep product line (which is to say, terrible.)

          • 0 avatar
            Dave M.

            That said, a good friend of mine reminded me yesterday that she and her husband have had 4 Jeeps (CJs and GCs) and none of them ever had an abnormal need. Usually kept until 130-150k. I call them the Jeep whisperers.

        • 0 avatar
          slavuta

          People pay money for many un-worthy things because:

          – their perception tells them, it worthy
          – they don’t know better
          – they don’t care because they just like it anyway

          And yes, people knowingly pay for unreliable econoboxes. In many cases that is only cars they can buy with their credit scores. Otherwise who would buy a Dodge or Nissan?

          • 0 avatar
            3XC

            There are many, many 300,000 mile Nissans out there. Stating that Nissan builds unreliable vehicles is simply false. They do some dumb stuff, like having to remove the intake manifold just to change spark plugs in the MR20 engine, but they’re reliable.

    • 0 avatar
      dal20402

      They are very durable, but have some reliability issues that just come with the territory. If you own a Subaru for a long time you are going to deal with cooked CV joints and you are probably going to replace a few other suspension bits, and usually there are a couple other pain points for each given model.

      • 0 avatar
        dukeisduke

        Fortunately, decent aftermarket reman axles exist (like from Raxles down in Florida). If you own Toyotas like me, it’s either expensive new OEM axles, or Chinese-made aftermarket junk.

        Subarus have a reputation for oil leaks, too, don’t they?

      • 0 avatar
        slavuta

        There is website where mechanics explicitly explain what is the problem with subaru engines and how it perpetuated. Recent recall was for replacing engine blocks. Do you want a car like that?

        • 0 avatar
          edlaw0704

          Had 5 outbacks never had anything wrong other than replacing the cv boot on an 2008… design have changed on my 2013 further away from engine. Never oil leak or anything… but I get a new one before 50k.

    • 0 avatar
      syncro87

      I consider them to be something like Japanese Volkswagens. In other words, more reliable than a VW, but not as long term drive and forget as a Toyota or Honda.

      Subarus are, by design, a smidge higher maintenance than a typical Japanese car. You have more CV joints/boots to fail. You have two head gaskets to potentially fail instead of one. The exhaust system has more parts than most cars with inline engines. Subaru parts aren’t ridiculously expensive, but aren’t cheap, either.

      This is not to say that Subarus are unreliable. But they have more potential failure points due to all being AWD and from having a boxer engine.

      If they hadn’t refused to come up with a better head gasket design back in the nineties and aughts, their reputation would be a bit better. A lot of folks think of Subaru and think of blown gaskets. Well, maybe knocking pistons from skirts that were too short, as well.

      • 0 avatar
        slavuta

        Subaru said at least 3 times “we fixed head gasket issues” and each time it failed again, even though, bit later.

      • 0 avatar
        Vulpine

        @Arthur Daily:

        Subaru was renowned for reliability for a long time until somewhere around the middle ’00s. The older Subarus were seemingly built out of cast iron, almost impossible to kill through ordinary driving. But somewhere between ’02 and ’04 something changed and they began needing all kinds of extra work; a good part of it engine related. Subaru’s reputation took a big hit. Now, most here know I’m a fan of a certain competing brand (Jeep, to be specific) but I have to state that Subaru seems to be regaining its old reputation for reliability–at least in part. So both are correct, for different generations of models.

  • avatar
    DevilsRotary86

    “Subaru Is Way Too Reliant On U.S. Market, Needs A New Market, Chooses Sweet Land Of Liberty”

    Huh. When I read that headline, I honestly thought that it was a tongue in cheek reference to the Canadian market.

  • avatar

    Subaru does indeed make much better compacts than GM. Wait a minute, everyone makes better subcompacts than GM!!

    GM is rotting on the vain.

    Trust me, Subaru you are not as bad as GM!!!!

  • avatar
    Vulpine

    Subaru is going to have to offer a wider variety of vehicles other than CUVs and wagons. They really need to offer a true compact pickup truck with Subaru’s noted AWD system, and yes, in the south as well as other parts of the country.

    • 0 avatar
      gottacook

      Next year’s three-row vehicle to be made in Indiana will apparently be truck-like in proportions, judging from images that have been released. A pickup truck variant would be easy in that case.

      Subaru still markets the three-row Exiga in Japan, and I would have liked to see it in the U.S.

  • avatar
    eggsalad

    How about making FWD variants of its cars for $1000 less?

    I live in the desert southwest. I don’t go skiing, I have no interest in driving off-road. The Impreza hatch is a nice car, but I’d like it a lot more if it had FWD, a couple more MPG, and a lower price.

    Sure, for a lot of years, Subaru promoted AWD, and all of its vehicles came with AWD standard. It was a great marketing scheme for places that get bad weather.

    But since the BRZ came out, Subaru is no longer the “All AWD, all the time” company anyhow. The base Impreza AWD hatch is $19k. How about offering a FWD version for $18k? That would put it below competitors like the Mazda3 hatch and the Corolla iM.

    Seems fairly simple to me. If you want to sell cars in places where AWD is unnecessary, sell cars *without* AWD.

    • 0 avatar
      Sloomis

      +1 as they say. We looked at Outbacks in 2011 and the dealbreaker was we didn’t want or need the extra expense of AWD. If it had been FWD we would have bought one. And I even live in the midwest, and I ski, but there’s this thing called “snowplowing” that pretty much negates the need for AWD even in the worst of winters. I’m not spending extra money so I can feel marginally more secure the one or two times a year I actually get caught driving in a snowstorm. FWD, decent tires and caution works just fine in those situations.

      • 0 avatar
        Vulpine

        ” I’m not spending extra money so I can feel marginally more secure the one or two times a year I actually get caught driving in a snowstorm.”

        If you think AWD is only useful in a snowstorm, then you’re sadly mistaken. Sure, that’s its most publicized usefulness but it could be even more critical in a rainstorm when your car decides to start hydroplaning. With my Wrangler, if I got caught out in the rain, I’d kick in 4WD just as an added safety measure.

        • 0 avatar
          George B

          People could comfortably drive a Hellcat Challenger with barely street legal drag radials most days in Dallas. Most of the annual rainfall comes from a small number of heavy thunderstorms with weeks of dry pavement between storms.

          • 0 avatar
            Fred

            Well you do get those ice storms a few times a year. But with out snow tires let alone chains AWD probably isn’t going to help you much. Just give you a false sense of confidence.

          • 0 avatar
            Vulpine

            You mean those few thunderstorms that put the city under two feet or more of water for weeks on end the last two years?

        • 0 avatar
          Dave M.

          One thing that sold me on the Outback was how sure-footed it felt on wet or dry pavement.

    • 0 avatar
      Vulpine

      “How about making FWD variants of its cars for $1000 less?”

      They used to have them… back in the ’90s and before. People just weren’t buying them in sufficient numbers to keep marketing them here. They became better known for their AWD that actually worked when compared to some other brands.

      • 0 avatar
        Mandalorian

        They do better in their niche as AWD. No reason to sink resources into making FWD vehicle as well that won’t sell well and will have terrible resale value vs their AWD cousins.

    • 0 avatar
      burgersandbeer

      How about RWD and add some sound insulation? At least then they would still be unique. A FWD Subaru would be just like every other car in every segment it competes in, except with more NVH.

    • 0 avatar
      Counterpoint

      Subaru actually already sells a cheaper FWD Impreza in some Asian markets. But they don’t want to bring it to the US because it would confuse the brand image, and face brutal price competition from all of the other similar FWD compact cars already available here.

  • avatar
    slavuta

    I have no wonders Subaru sells low in Europe. Besides BRZ and WRX, others are just not to European taste in their road manners

  • avatar
    gottacook

    Perhaps Subaru of America really does intend to sell a non-AWD car in the south. Twenty years after the decision to go all-AWD in the U.S., which saved this market after the “What to Drive” debacle circa 1994, it could be that SoA finally feels secure enough to again offer FWD versions of all its cars, as in the pre-’97 days.

    Or it could be that SoA will try to sell more AWD cars in the South, on the basis that those states represent a great deal of coastline, and many people living along it are already experiencing periodic flooding a lot more frequently than usual. I’ve driven AWD Subarus for nearly 20 years (starting with a hand-me-down ’90 Legacy SE wagon), both auto and stick, and they certainly give me added security on wet roads (although the stick cars are more fun on dry roads).

  • avatar
    S2k Chris

    Subaru has another reason to not fear a US downturn; their customers are extremely affluent and thrifty. For a while (not sure if still true), Subarus were the brand most likely to be bought in cash instead of leased/financed. And lots of people who have lots of money consciously spend less than they can afford by buying a Subaru.

    Other thing to consider is that it’s way cheaper to better market cars you already make in areas of low sales than it is to develop new cars for different markets and buy the necessary infrastructure, etc.

    • 0 avatar
      dal20402

      My boss has an income that would allow her to buy pretty much any car on the planet, with the exception of maybe a Veyron.

      Her two cars? A 2015 Forester for daily driving duties and a rusty 2002 Forester with 220,000 miles for off-track beater use.

      • 0 avatar
        Scoutdude

        One of my old school Microsoft Millionaire friends has 2 Foresters that he undoubtedly paid cash for. He bought one for himself and since his wife liked it so much he bought a second one a month or so later. Pretty much identical top of the line models, the main difference is one is red and one is blue.

    • 0 avatar
      edlaw0704

      True! People drive top of the line outbacks foresters often can pay cash for cars cost twice as much… I know!

  • avatar
    Wagon Of Fury

    Offer a damn WRX Wagon with manual like you did in the early 00’s. Offer a decontented Forester XT with (wait for it) a manual.
    Offer something like a Legacy STI in sedan and wagon.

    The “new” STI whenever it comes out, better have more than 305 hp.

    If you’re going to the trouble to reengineer an engine, maybe it should have better specs than the EJ engines they replaced.

    Get rid of that terrible cable shifter in lower end models.

  • avatar
    Fred

    It maybe sacrilege but make a 2wd version and cut $1000 off the price. Price sells and we don’t need awd in the south.

    • 0 avatar
      SCE to AUX

      I agree with you completely, but many of Subaru’s “AWD safety” ads feature rain-slicked roads – no snow. So they’d have to walk back that message a little to push FWD.

      I live in the Pittsburgh area and I’d still prefer FWD, never having owned an AWD vehicle in 38 years of driving.

  • avatar
    slap

    Sell the Levorg in the US with a manual*.

    *I’ve driven a 2016 Impreza with the CVT. Horrible. It made my 2004 Sable SW seem like a muscle car.

  • avatar
    SCE to AUX

    Subaru could improve their MPG ratings, performance, and reliability by dumping the boxer engine and returning to the I4 or V6. Only then I would consider buying one.

  • avatar
    FAHRVERGNUGEN

    i dont see a lot of other LGT wagons around the northeast but on a recent trip to Hawaii i saw a royal blue one. exotic bird in paradise.

  • avatar
    Big Al from Oz

    It seems most manufacturers with a light commercial and truck division do better in foreign markets.

    What if Subaru produced light commercials and trucks. Look at Mazda. Mazda is not much different than Subaru. Mazda borrows a pickup and a LDT (Izuzu).

    Believe it or not Hyundai/Kia do produce light commercials and trucks, even for military applications.

    Subaru entered the export market in a small way. The popularity of Subaru took off once the AWD wagons came along. Subaru never tried to alter its course to far, just building cars.

    Australia appears to have a more significant share of Subarus like the US.

  • avatar

    They seem to be having growth down there allready. I have been traveling to FL regularly for work for 10 years. Back in 07 I don’t think I saw a Subaru down there that didn’t have New England plates (snow birds). I now see them pretty regularly in the northern half of the state (still not so much in SE FL) and they seem to have a fair number of dealers down there now too.

    • 0 avatar
      Big Al from Oz

      Florida does have Wawa now. That’s a step forward. Especilly the Columbian coffee with French vanilla creamer. An acceptable drip coffee.

      South Florida also has quite a few less pickups.

  • avatar
    Corollaman

    what’s the point of looking to sell more cars,if you don’t have more cars to sell?

    • 0 avatar
      gottacook

      At their current rate of growth of market share, perhaps Subaru is considering a second U.S. plant? Or further expansion of the Indiana plant, now that the former Camry production line there is now making Imprezas?

  • avatar
    fincar1

    The tv spots I see for Subaru here in western Washington are all safety, safety, safety. I guess they figure that their considerable customer base here already knows about 4wd.

  • avatar
    gtemnykh

    Subarus have really blown up here in Central IN (The factory is just 45min north on I65, so I suppose not too surprising). You don’t see an awful lot of the older ones like I would back home in granola-country Central NY, although part of that is certainly the attrition of headgaskets and such taking their toll on older cars not cost-effective to fix. Hard to believe that 2nd gen Outbacks are now 17+ years old!

    The newer Outbacks are vastly more comfortable, quieter, nicer riding, and better trimmed than their processors. A street price of about $27k gets you a Outback 2.5i Premium with some of the best interior quality for the price, heated seats trimmed in a surprisingly pleasant cloth (vs the scratchy crap most are using). Pony up to $30k and you’ve got leather, two heated rows of seats, etc. They definitely cut a tighter margin than many other manufacturers.

    If Subaru made an AWD minivan I think my wife and I would be first in line. She loved how the Outback drove, how it looks, etc but we agree that a minivan is probably the way to go.

  • avatar
    icarus_

    My 2016 WRX is the best car I have ever owned. First Subaru. I can now see why people love them so much. I would be happy with some interior refinement, but the big thing about them to me is:
    -They feel priced right. It’s always odd to look at Subarus lineup by pretty much everything is within a 15k range.
    -They feel great to drive, that AWD system like it or don’t like it, but it feels like few other cars (even full-time AWD) that I have driven. A very planted secure feel.
    -It’s mostly driven from marketing, but also backed up by product… they feel humble. It’s not trying to be something it’s not. That is appealing in a car.

    I think they can keep up good US sales growth by continuing to up the interior game (2018 Impreza is a great start), update the freakin STI motor!, Make a sport Legacy (manual and more power would be a nice budget S4) and get into the more rugged SUV game with their new 7 seater. They are on the path to some of these already.

  • avatar
    pwrwrench

    Might sell more Subarus if they could make an engine that did not have head gasket failures at 40 to 100K miles. Also excess oil consumption. In addition to dealers stonewalling customers with the above problems along with noisy serpentine belts/tensioners. Even GM was able to fix that.
    Yeah, I know, it was the “old” engines that had those problems. Except that announcement has been made several times in the last 15 or so years and there is still trouble.

  • avatar
    CincyDavid

    I think of Subaru as the successor to SAAB…quirky cars that they sell for relatively big bucks to people who are politically left-of-center.

  • avatar
    CincyDavid

    I tried to edit my previous comment because I hit SEND prematurely…wouldn’t let me.

    At any rate, my sister and her spouse used to have 2 Jeep Libertys, and as they have fallen apart, they’ve been replaced with stripped down Subaru “tall wagons”. They seem happy so far, but that’s the only direct exposure I’ve ever had to Subaru products.

    I’m not convinced of the value of 4wd/AWD, even in hilly SW Ohio…the only time it kicks in with our Sportage and CRV is if I spin the tires leaving a stop sign, on the painted stripe in the road…then the rear wheels MIGHT engage with a clunk, and only momentarily.


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