Subaru Profits Slip Despite Steady Sales; Self-Betterment and Currency to Blame

Matt Posky
by Matt Posky
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subaru profits slip despite steady sales self betterment and currency to blame

After several years of record growth, a combination of increasing costs and exchange losses forced Subaru’s operating profit to fall by 27 percent in its recently ended fiscal year. No longer Fuji Heavy Industries, and now focusing primarily on automotive product, Subaru Corporation announced its operating income had dipped to $3.69 billion in April. Net income also took a hit, falling by 35 percent to $2.54 billion.

Considering the company finally surpassed the one million annual sales mark for the first time in its history, it is surprising to see the brand faced with anything other than glowing praise. However, improved sales and continued revenue growth doesn’t tell the entire story. Subaru’s European sales declined by 2.6 percent — matching the trend in China and Japan. North America, which accounts for the majority of the brand’s sales, maintained its interest but the overall market has slowed.

“U.S. demand has peaked out,” Subaru CEO Yasuyuki Yoshinaga explained. “The market environment has increasingly become tougher. We will carefully the situation and will take the necessary steps to maintain our sales, including incentives.”

North America was still good to Subaru over the last 12 months, though. Regional sales expanded 14 percent to 721,000 annual vehicles. U.S. sales went from 582,700 to 667,600, while Canadian sales grew to 53,100 from 47,600 the previous year.

So why didn’t Subaru make more money? The yen’s appreciation against the dollar had a lot to do with it. Foreign exchange losses accounted for 143.8 billion yen ($1.29 billion), which is notably massive.

Production costs also played a part — $1.52 billion in all, according to Automotive News. Takata’s defective airbag recall hit Subaru harder than most automakers. The brand has also upped its ante in research and development programs and is spending capital to improve production capacity in both Japan and North America.

Subaru will adjust its current assembly schedule to account for the slowing demand. Still, it expects its global sales volume to continue rising to 1.2 million units over the next fiscal year, with an operating income on par with the current figures — assuming exchange rates stabilize.

[Image: Subaru]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • Slavuta Slavuta on May 09, 2017

    Another day I was sitting at Lexus dealer and we talked about perceptions. Then I said about "Subaru perception". The guy said - "you nailed it!"

  • 1998S90 1998S90 on May 09, 2017

    After reading the headline, I was desperately hoping that warranty costs on the CVT increased so dramatically that Subaru would reintroduce a cog-driven transmission. Wishful thinking...

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    • Sportyaccordy Sportyaccordy on May 10, 2017

      @gtem Depends how long you plan to keep it too. It still surprises me that folks keep cars for 7, 8, 10 years. I'd pull what's left of my hair out from boredom.

  • 28-Cars-Later "But Assemblyman Phil Ting, the San Franciscan Democrat who wrote the electric school bus legislation, says this is all about the health and wellbeing of Golden State residents. In addition to the normal air pollution stemming from exhaust gasses, he believes children are being exposed to additional carcinogens by just being on a diesel bus."Phil is into real estate, he doesn't know jack sh!t about science or medicine and if media were real it would politely remind him his opinions are not qualified... if it were real. Another question if media were real is why is a very experienced real estate advisor and former tax assessor writing legislation on school busses? If you read the rest of his bio after 2014, his expertise seems to be applied but he gets into more and more things he's not qualified to speak to or legislate on - this isn't to say he isn't capable of doing more but just two years ago Communism™ kept reminding me Dr. Fauxi knew more about medicine than I did and I should die or something. So Uncle Phil just gets a pass with his unqualified opinions?Ting began his career as a real estate  financial adviser at  Arthur Andersen and  CBRE. He also previously served as the executive director of the  Asian Law Caucus, as the president of the Bay Area Assessors Association, and on the board of  Equality California. [url=][1][/url][h3][/h3]In 2005, Ting was appointed San Francisco Assessor-Recorder in 2005 by Mayor  Gavin Newsom, becoming San Francisco’s highest-ranking  Chinese-American official at the time. He was then elected to the post in November 2005, garnering 58 percent of the vote.Ting was re-elected Assessor-Recorder in 2006 and 2010During his first term in the Assembly, Ting authored a law that helped set into motion the transformation of Piers 30-32 into what would become  Chase Center the home of the  Golden State Warriors
  • RHD This looks like a lead balloon. You could buy a fantastic classic car for a hundred grand, or a Mercedes depreciationmobile. There isn't much reason to consider this over many other excellent vehicles that cost less. It's probably fast, but nothing else about it is in the least bit outstanding, except for the balance owed on the financing.
  • Jeff A bread van worthy of praise by Tassos.
  • Jeff The car itself is in really good shape and it is worth the money. It has lots of life left in it and can easily go over 200k.
  • IBx1 Awww my first comment got deletedTake your “millennial anti theft device” trope and wake up to the fact that we’re the only ones keeping manuals around.