By on May 12, 2017

2017 Subaru Outback - Image: Subaru

Although Subaru is selling more new vehicles than ever before, particularly in North America, the automaker’s run of record profits came to end in the fiscal year ending March 31, 2017. Subaru made money, no doubt, but Subaru’s operating profit was down 27 percent compared with the prior year.

Subaru’s revenue grew 3 percent while global volume rose 11 percent to more than 1 million vehicles, according to Automotive News. That’s the kind of information that matters to investors.

As for consumers, it’s the information from Subaru CEO Yasuyuki Yoshinaga that matters most. Saying the U.S. market has peaked, Yasuyuki Yoshinaga claims, “The market environment has increasingly become tougher.” In a tougher market, Subaru’s largest market, an automaker must either give way or make way.

Subaru’s decision? “We will carefully examine the situation and will take the necessary steps to maintain our sales, including incentives,” Yoshinaga says.

You heard right. Subaru, notorious for limited supply and limited scope for deal-making, might just offer you a bit of a discount on your next Outback or Forester.

Maybe.

In fact, Subaru incentives in the U.S. are already on the rise, though they remain at an industry low. In the fiscal year just ended, Subaru was discounting vehicles in the U.S. by an average of $1,450, up from $900 in 2015/2016.

According to ALG, Subaru spent just $864 per vehicle in incentives in April 2017, up a whopping 45 percent compared with April 2016. But that’s 78 percent less than Nissan was spending last month, 82 percent less than GM spent per vehicle, and less than half of what even stingy Honda spent to get new vehicles out the door.

In other words, there’s room for Subaru to spend much, much more. Doing so will obviously eat into profits especially as Subaru continues to make the kinds of investment that limited profit over the last year: increased R&D and major production expansions.

2017 Subaru Impreza - Image: Subaru

But a greater willingness to lure buyers with marketable discounts will allow Subaru to continue to gain market share in its most important market while entering a new segment with the Ascent.

For the time being, everything about Subaru’s U.S. sales picture appears rather rosy. Sales more than doubled between 2011 and the brand’s record-setting 2016, and Subaru is on track in 2017 to sell more than 660,000 vehicles.

Thanks to the launch of a new Impreza, Subaru’s growth includes a passenger car sales uptick of 9 percent, year-over-year, to go along with a 7-percent rise in utility vehicle volume. The brand’s overall growth — sales are up 8 percent in the U.S. this year — comes as the industry slowly loses momentum. Subaru’s car improvements, meanwhile, occur despite a 12-percent reduction in overall industry car sales in 2017’s first four months.

Sales momentum means Subaru can afford to provide discounts if need be, which means you can more easily afford a Subaru if need be.

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 @timcaincars.

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28 Comments on “Subaru Incentives? Maybe You’ll Soon Get A Deal On An Outback Or Forester...”


  • avatar
    Mark MacInnis

    IF they are giving away money on the topline, expect Manufacturing costs to be cut commensurately. Read: decontenting, hammering suppliers for cost-reductions, cheapening the form, function, durability and tactile feel of every component.

    Subaru is the next Mitsubishi.

    Sad.

  • avatar
    FreedMike

    Still ain’t buying one.

    (Well, maybe a WRX…)

  • avatar
    NormSV650

    Reporting qulaity declines has no effect on sales?

    http://autoweek.com/article/car-news/subaru-recalls-48500-2016-and-2017-legacy-and-outback-models-urges-owners-cease

    • 0 avatar
      VirgilK

      How did you get declining quality on a 48,000 vehicle recall when Honda and Toyota have had recall numbers in the millions in the last five years?

      • 0 avatar
        quaquaqua

        Don’t engage with Norm. He’s in La La Land every time he comments.

        Anyway, I don’t get this story. Subaru absolutely deals on some of its models. The 2.5i Premium, probably the most popular trim, is going for $3000 off according to TrueCar in the Chicago area.

  • avatar
    Speed3

    Subaru’s sales growth is pretty impressive. They don’t even sell that many sedans and their sole crossover, the Forester is the 6th best selling crossover in its class.

    Personally, I would fork out the extra cash for a Volvo V90 over an Outback, but things are going pretty well for Subaru. The Ascent looks like its going to be a winner too.

  • avatar
    deanst

    I was surprised to see $5000 discounts on the old Impreza, but I guess that is typical for a model that is being replaced.

  • avatar
    tedward

    This is a good thing. Subaru doesn’t have other markets to lean on, they need to keep expanding here if they are going to grow as a brand. Incentive spending is absolutely part of that.

    Why I care? Because subaru has massive investment to do on the drivetrain and build quality (not the same as reliability) fronts. They’ve seen sales success lately, but personally, I can’t consider their cars in the face of what gm, ford and vw are outputting. This means r&d investments, and it looks like the us market is the growth engine that can pay for that.

  • avatar
    Higheriq

    And maybe Subaru will again make the Outback with a manual transmission. [not very likely]

  • avatar
    slavuta

    I have better idea – can’t decide… 2016 CX5 manual FWD, or 2017 Renegade manual 4WD. And time runs out on ’16 CX5

  • avatar
    Fred

    I looked at Subarus cars and there was some room to negotiate price. Besides they were competive with the competition. Maybe hot selling SUVs are different but that’s the advantage of being a contrarian.

  • avatar
    yankinwaoz

    How do incentives help Subaru in the long run? All that does it clear the sales channel of cars already made.

    Doesn’t Subaru recognize revenue when the dealer take delivery? Isn’t it the dealer who is now holding the bag, so to speak, when they have cars in the inventory?

    I suspect that real reason for the decline in profits is the exchange rate. That is the same thing that is hammering Toyota and Nissan. Giving away company money with incentives won’t help that. Instead, Subaru should protect themselves and invest in US side assembly, especially if the North America is their largest market.

    • 0 avatar
      Detroit-Iron

      I would say maintaining volume in the US probably helps them to give the impression to low-info consumers that they are a mainline brand when they are really a niche. Even Honda is dwarfed globally by Toyota and Mitsubishi, but here in the US Mitsu is practically dying and people probably think Honda and Toyota are more or less the same size.

      • 0 avatar
        Dave M.

        They outgrew niche status once they got roots in the south and midwestern states and surpassed Mazda in sales.

        Besides making a decent, proven vehicle, they sure know how to advertise. They cornered the progressives and contrarians, and became the de facto default for the former Saab and Volvo types.

  • avatar
    zip89123

    If Subaru made the V6 available on all models of the Outback sales & profits would skyrocket.

    • 0 avatar
      Detroit-Iron

      Pedantic and serious comment: It’s an H6, and it’s not that good.

      • 0 avatar
        Power6

        The H4 is absolutely smothered by the heavy Outback and the CVT. The H6 aint special but is passable performance.

        Subaru lost a sale to us, the H6 is only sold in limited or touring, we would have bought the limited with no options but the dealers don’t stock them without the eyesight package.

  • avatar
    loguesmith

    Two years ago, the wife wanted to ditch the SUV for a “wagon”. Only choices then were the XC70 and the Outback. Outback was $10K less, and she’s perfectly content with the 3.6R we ended up buying.

    That said, she’s driven the 4-cyl Outback and thinks it’s a slug.

  • avatar
    chiefmonkey

    Subaru really pulled the wool over people’s eyes with this AWD stuff: The advantages aren’t that significant. I am glad they are finally getting stylish, but I still think for the most part that they are tinny, mediocre cars which rank near the bottom in virtually every respect.

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