Bloomberg: Subaru "has to Decide What Kind of Company It Wants to Be"

Mark Stevenson
by Mark Stevenson
bloomberg subaru has to decide what kind of company it wants to be

Subaru has a problem, though it’s a problem many other automakers would love to have. The small Japanese automaker is growing at a rapid rate and it’s fully expected to run out of capacity to fulfill demand sooner rather than later. Most automakers would simply expand and flood the market with more units to feed the sales rush, but for Subaru it might mean becoming the opposite of the market position and perception they’ve taken years to cultivate.

As Bloomberg‘s Kyle Stock puts it, “Being small, though, is the reason Subaru has become such a big deal. With manufacturing capacity maxed out, it now has to decide what kind of company it wants to be.”

The article, published today, paints Subaru between a rock and a hard place with two options: stay small and negate future growth or expand and possibly alienate all those customers who bought into the brand under the promise “Love. It’s what makes a Subaru, a Subaru.”

Subaru’s recent growth isn’t driven purely by marketing, but also because the small manufacturer was positioned in the right place at the right time with the Outback and Forester, both of which sit squarely in the currently hot crossover segment. In fact, even the lowest selling crossover in Subaru’s lineup, the Impreza-based XV Crosstrek, outsold their top selling passenger car, the Impreza, by over 14,000 units in 2014.

That makes what Subaru doesn’t do right now of particular interest. From Bloomberg:

It doesn’t have a luxury brand like Honda’s Acura or Toyota’s Lexus. It still doesn’t make a giant SUV, or a truck, or a super-expensive “halo car” designed to drum up interest from teenagers and the Top Gear crowd. Its sedans aren’t particularly popular and the company doesn’t make much of an effort to sell cars in Europe, the Middle East, or South America, like Nissan or Ford does. Kansas is the closest thing it has to an emerging market. Subaru still can’t meet demand. By the end of next year, Subaru’s factories in the U.S. and Japan won’t be able to produce more vehicles.

Currently, Subaru is enjoying a sky high 9 percent profit. However, if it does choose to expand and the crossover boom goes bust, it could leave Subaru vulnerable as it will need to discount their way into driveways to keep operations afloat. With incentives comes lower resale values, in turn driving consumers to competitors – the same customers that appreciate Subaru’s smallness.

What will Subaru do? We’ll see. But, mass market is not what has made Subaru a successful Subaru to date.

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2 of 102 comments
  • Danio3834 Danio3834 on Jun 09, 2015

    Expand capacity. With their growth rates, they've set themselves up with a good foothold in the U.S. With SAAR forecasts remaining positive, they should be able to justify an expansion to their existing facility in the U.S., or if they really want to be competitive and expand market share, build a new plant in Mexico.

  • CB1000R CB1000R on Jun 09, 2015

    Well, they've decided to become the company to not sell me a new Outback, since they deleted the MT in the U.S.

  • ToolGuy 404 error on the product link. Which probably isn't terrific marketing on TTAC's part.
  • ToolGuy Second picture: Do you like pegboard storage? (I don't.)
  • ToolGuy "WHAT???"(old 'I was in the artillery' joke)
  • ToolGuy Oh and this.
  • ToolGuy "The boroughs of Bexley, Bromley, Hillingdon, and Harrow have likewise announced plans to take legal action to force a possible judicial review..."But: "In Hartford, Hereford, and Hampshire... Hurricanes hardly happen."