Subaru Shut Out Of China, Pledges Allegiance To The Flag

by Derek Kreindler

May 11th, 2012 7:06 AM

subaru shut out of china pledges allegiance to the flag

With a planned Chinese joint-venture between Chery and Subaru now really, honestly dead in the water, Subaru will look to the United States for sales growth, while importing cars to China for the next few years.

As part of its America-focused future, Subaru will expand its sales goal to 380,000 units per year in the United States by the end of the 2016 fiscal year. Subaru sold 264,198 cars in American in 2011. Production facilities in both Japan and the United States may also be expanded as part of the plan.

With the collapse of the Chery deal, Subaru will be forced to import vehicles to China, and have their cars subject to a 25 percent import duty. Subaru said that Chinese manufacturing would be difficult to establish until the end of their 5-year plan in 2016, but that stipulation likely means that the door hasn’t been completely shut on Chinese Subaru production at a future date.

#Chery #China #Japan #JapaneseCars #Subaru #SubaruChina

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Onyxtape on May 10, 2012

Other than the WRX/STIs, there's really no market in China for Subaru. There are 2 major categories of car buyers there - either lux or cheap. And Subaru is neither. Subaru appeals to the practical and/or adventurous. Want to haul stuff home for a project? Not in China, where you could hire labor on the cheap. And there's really no DIY culture amongst the middle class there - having to build your own Ikea is a foreign concept there - why doesn't it come preassembled and delivered, they'll ask. Pack up your bags and go on a road trip? Despite the construction of many miles of highways crisscrossing the country, Chinese prefer their prepackaged bus tours even within their own country. Subaru, with its current slate of products, does not belong in China. But then I'm sure some savvy marketer can overcome these things.

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- Wsn on May 10, 2012
  
  "There are 2 major categories of car buyers there – either lux or cheap. And Subaru is neither." You are completely wrong. Subarus have always been imported to China and thus making them lux. An imported Legacy costs 50% more than a Chinese domestic Camry, and would be very close to a Chinese domestic Bimmer 3. I think Subaru has made the right decision by keep importing to China. There is a huge market would buy a real Legacy over a Chinese only spec Bimmer 3.
  
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- JD-Tippit on May 10, 2012
  
  @wsn I don't understand where the market is. Auto websites are always telling us that China's car consumption is growing exponentially but I don't believe the average Chinese man has enough disposable income or security to buy even a mid-size japanese vehicle that is domestically produced. So tell me, where is all the money coming from to finance this? And don't say from the throw-away plasticky goods they sell the rest of the world because it can't be.
  
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- Onyxtape on May 10, 2012
  
  @wsn If they're priced the same as a domestic 3er, the average Chinese buyer in that price range would pick the 3er. The kind of Chinese consumers at that price point is all about brand cachet and nothing else - they certainly don't shop by features. If it's not the right brand, they could care less if the car is otherwise identical. There was recently a story (not here) about a Maserati owner who slapped on a Mercedes badge because the Chinese public aren't nearly as familiar with Maserati. Subaru is pretty unknown there except amongst enthusiasts.
  
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- Onyxtape on May 10, 2012
  
  @wsn If you've ever been to a Louis Vuitton or Gucci store in Hong Kong, it's literally and constantly flooded with buyers from mainland China who don't blink an eye when plunking down $4000 for a handbag, then moving onto the next store and doing the same. There's enough of an upper middle class there to support the consumption, and its ranks are still growing. China's middle class earns between $10k-$60k a year. Keep in mind that their savings rates are at around 25%-30%. Currently, their middle class numbers the same as the entire US population - 300 million. Even if fewer than 1% of them can afford the bling bling, that's still a whole lot of people. Also keep in mind that 80% of the country's wealth is owned by the top 10%, illustrating the obscene skew of economic inequality.
  
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- Wsn on May 10, 2012
  
  @wsn onyxtape： “If they’re priced the same as a domestic 3er, the average Chinese buyer in that price range would pick the 3er. The kind of Chinese consumers at that price point is all about brand cachet and nothing else – they certainly don’t shop by features.” There are certainly people like that, but your statement is an over generalization. It's like saying since the American government is bailing out GM, all Americans must really want to buy GM. Certainly, more Americans buy GM over Toyota, but that doesn't mean Toyota isn't enjoying good business here. The same goes with Chinese 3er vs. Japanese made Legacy. You do know that Chinese buyers have a strong tendency to avoid the "Made in China" label, don't you?
  
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"scarey" on May 10, 2012

"Ironically, China probably needs AWD vehicles in its vast countrysides and dirt-road villages, more so than the US, which is paved coast to coast." Come to Nebraska. Half of our roads are unpaved.

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- JD-Tippit on May 10, 2012
  
  You're from Oh My God Nebraska :-)
  
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Tekdemon on May 10, 2012

Since they were shut out for being a Toyota "subsidiary" can't they get around this just by asking Toyota to let them share a JV plant or something? Shouldn't be too difficult.

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Panayoti on May 10, 2012

Geesh I always thought importing meant buying something from abroad to sell in the home market and that exporting meant you sent your products to another country. So how does Subaru import to China??

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