Subaru's fortunes sinking - can they turn it around?

varmint

See, there's the problem. Although Subaru has carved out a nice little niche for themselves, that niche has been something of a bunker where they can survive. It has not been a niche where they can advance.

"The red ink is caused by the SIA plant being idle since the Rodeo passed away, plus investment in the Tribeca which has yet to fill the coffers." - Juice.

Agreed. I believe that is probably a big part of the problem. According to the links posted earlier, SIA lost $207 million in 2004 and $74 million in 2003. Adding the Tribeca could fix that.

But the same article also cited "a less profitable mix of sales, delays on an airplane project, and compensation to suppliers after Subaru revised plans for developing a car."

The "less profitable mix of sales" translates to - they aren't selling enough of the high-end models. Which is a concern we've seen expressed ever since Subaru announced their plan to move upscale. I'm reading about top-of-the-line Subarus leaving the lot discounted $3-4K. Those are the cars that are supposed to be providing the profit (and the Tribeca SIA is gambling on is one of them).

"Subaru is trying to market themselves as a performance/near luxury AWD brand." - Bob

I know everybody is hip to having Subaru stay the same with respect to their technology. (Whether you've figured it out or not, we're all on the same page, there.) However, keeping the same technology and applying to a new audience is not without risk. Anybody remember what happened to Oldsmobile when they decided to get sporty?

In order to move into the near luxury/performance arena, Subaru needs to drop their base models. A near luxury brand will not be considered near luxury if they sell Foresters, Imprezas, Outbacks, and Bajas. I don't think they can afford to do that.

Take a look at Acura. When the Integra/RSX was their volume seller, they were the red-headed stepchild of the luxury market. Even then, their product line was a good deal more upscale than Subaru's. Here we are six years later. They've added/upgraded the MDX, the TL, the RL, and a new entry level model (TSX) and they still don't have the brand equity of the other established marques. That kind of move takes many years. Subaru doesn't have years.

Lastly, I'm going to bust a gut if people keep comparing Subaru and Porsche. Porsche survives as a niche manufacturer because they profit anywhere between $10-50K per car sold! I'm sorry, but thinking that Subaru can do the same (when they can't sell a car for $30K) is just plain laughable.

ateixeira

"Compensation to suppliers" was probably a settlement paid to the TrailBlazer assembly plan when Subaru told GM they would not sell a clone.

That surprises me, though, because Saab got it instead. I mean, how many outlets do you need to sell one lousy SUV? :confuse:

I'm sure the unions at the plants just saw an opportunity to make easy money.

I don't necessarily believe the "less profitable mix of sales" statement. I just think that's not true - the press makes mistakes all the time.

If they had said "higher incentive costs" I'd buy it.

-juice

rsholland

This move upscale is not going to happen overnight. It just ain't going to happen. It will take 5 or more years before Subaru will be accepted in that segment.

But it also ain't going to happen if they don't start now—which they are doing. Slowly but surely it is happening. 2005 was the first year that all Imprezas came with alloy wheels, surely a small sign of moving upmarket. The '06 Imprezas are rumored to be coming with more content as standard, again a small step in that direction. The '06 Foresters have also been upgraded, same with the Legacys and Outbacks.

I'm willing to bet when the all-new Impreza and Forester replacements debut in two years, that they will be significantly upgraded from the current models—and I really think that they will have new names too. I'm also convinced that we will see more significant changes from Subaru in that timeframe, than we've seen from them in the last decade or so. Remember, they are investing heavily now in new product, of which we won't see for several years. That's where a lot of this "red ink" is coming from.

Bob

ateixeira

VW's mistake was they moved too fast. People get sticker shock when they see a Jetta for $26-28k, they expect to buy a Passat for that much. Phaeton? That just hurt the Audi A8.

Did you know that a Phaeton that stickers for $67 grand actually sells for $49 grand? Passat W8 ran about $40k, and that's about as far as you go with a new model no matter now good it is.

VW's move made no sense because they basically collided with Audi.

Subaru has no such ceiling. Some of us thought Saab might become the upscale Subaru, but since it looks like that won't happen there is room to grow.

Remember the BMW Isetta?

You don't start at the top.

Now, having said that I have mixed feelings, and really do not want to see Subaru try to become a luxury (or even near-luxury) player. I don't mind that they expand there to make profits to stay independent as long as they don't sell their soul to the devil and give up AWD and the boxer engines.

-juice

ateixeira

Think about it for a second, who specializes in what:

Chevy: FWD
Pontiac: FWD
Buick: FWD
Saturn: FWD
Saab: FWD
GMC: 4WD
Cadillac: RWD
Hummer: 4WD

Do you honestly think GM needs another division to sell FWD models?

GM cut ABS from some base models in order to compete with Hyundai. That's their job, not Subaru's.

-juice

rsholland

I like where they are: just above mainstream, but still under near luxury. I think Subaru could carve out a nice market right about where they are.

Bob

davem2001

It will take 5 or more years before Subaru will be accepted in that segment.
(upscale)
That is the part of the strategy that I don't like - I don't think they should be trying to go much (if any) further upmarket than they already are.

If they do, they are going to alienate a lot of their loyal base - not everyone driving a Forrester or a Legacy now is going to be able to afford a $40K Tribeca.

I just think it's a mistake for them to leave their niche of affordable AWD and try to go head to head with Audi, Volvo, Acura, etc....

kyfdx

I sort of like where they are... But, I think they would be well-served to get their prices back into solid mainstream territory.. Other than a premium for AWD ($1500?), I don't see any reason for them to cost more than a comparable Honda or Toyota...

regards,
kyfdx

rsholland

Dave, I think there's a spot (niche) just above Honda and Toyota, but below Acura and Volvo that Subaru could exploit.

Bob

davem2001

Exactly - I can justify a Legacy being $1500, $2000 more than an Accord or Camry but I think they're making a mistake getting up into Volvo or Audi territory

davem2001

Yeah, I agree - they can be slightly above Honda, Toyota... BUT it seems to me, they are trying to move up further than that. That is the part I think is a mistake.... it hasn't worked for VW either.....They just need to be careful not to move too far upmarket and lose their core customers.

kyfdx

Speaking of which..

A few weeks ago, we were taking a walk while waiting for a restaurant table, and I saw a car in a parking lot, that I didn't readily recognize... (which doesn't happen often).

I had a rear 3/4 view... sedan with a spoiler.. very nice looking.

Turns out.. Subaru Legacy GT Limited..

Still.. not as good looking from the front..

How much is that loaded up? I'm guessing $32K-$33K MSRP?

regards,
kyfdx

rsholland

Dave, keep in mind these markets are moving targets. As Subaru moves up, so does everyone else. Look at BMW with their new 3 series. It's move up a half a notch or so from the outgoing model. So the Legacy GT, which was nibbling at the old 3 Series, is now really a class below it. The same is happening with other brands.

I'm hoping that Subaru continues to focus on the hard-core basic engineering of their cars (engines & drivetrain), perhaps dabble a bit with some high-tech stuff (NAV and such), but leave the super high-tech stuff (turning headlights, I-Drive, etc.) to the really premium brands.

Bob

andre1969

if there's really that much room between Honda, Toyota, etc and Infiniti and Volvo these days, as they make some near-luxury cars that are pretty inexpensive these days. Isn't this the type of thinking that got us the Marquette, Viking, and Edsel? :surprise:

nippononly

if we scrutinized the surveys of customer loyalty, we would find that Subaru has some of the most loyal customers in the biz. Losing them is the risk Subaru takes by trying to jump upmarket too fast, or at all for that matter. And the 5-year time frame mentioned above is WAY too quick anyway, IMO. The product HAS TO support the move, which is the big problem VW is facing right now: pricey new Jettas that are the slowest car in their class and have only led the class in number of reliability problems for the last five years.

If no-one will buy $30K+ Legacys, or they sell very slowly, Subaru needs to take a step back and put the plan on pause for a little while. The Acura example is a good one - almost 20 years in the market, and they have only moved upmarket a little in all that time, and it has happened because of product that meets and beats the competition on most measures of an automobile, not just one or two aspects like speed and AWD. If Subaru wants to be a premium brand, then the dealers need MAJOR sprucing up nationwide, all the cars' interiors need another 10 or 20%, and the gruff nature of the boxer engines will have to be smoothed out. But I wish they would rethink their aspirations here. What happened to just making excellent midmarket AWD cars? Before they try to become the AWD Acura, maybe they should try expanding the lineup to make per-unit sales more profitable.

andre1969

if the types of people who buy Subarus will one day want a "step up" car, which is why we got the likes of Infiniti, Lexus, and Acura in the first place. Subaru's probably not big enough to try doing a step-up division, though. Mazda was planning on doing one called Amati or something like that, but the only fruit we saw of that was the Millenia, which was badged as a Mazda when they pulled the plug on their near-lux plans.

PF_Flyer

Judging by how busy this topic has been lately, I expect we'll have something to talk about that might keep us off the subject of food! :P

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toyo_z

"WD. If Subaru wants to be a premium brand, then the dealers need MAJOR sprucing up nationwide, all the cars' interiors need another 10 or 20%, and the gruff nature of the boxer engines will have to be smoothed out. But I wish they would rethink their aspirations here.

The dealerships will be a big, big hurdle. My experience is that many of them aren't "stand alone" dealers, but are instead piggybacked with other products much of the time. Subaru is more like an afterthought at those places. I just had my Legacy serviced at a MegaDealer in Florida, which was Lincoln/Mercury/Kia/Subaru, and it was not a happy experience.

And the two best free-standing Subaru dealers that i've been to (one in upstate NY, one in Michigan) had gravel/dirt parking-lots/driveways, and the buildings looked like they were made from WWII vintage corrugated steel. Seriously.

The service & staff were great, but the surroundings were definitely hard-core Subaru ("inexpensive, and built to stay that way...") I liked the rustic charm, i'm not sure how well it will play with a more urban/yuppified audience.... time will tell.

davem2001

Maybe this isn't too realistic, but.... if they really want to move upmarket, maybe they need a new distribution channel, their own Acura, Infiniti, or Lexus brand? That way, you could keep the Subie name for the Sube loyalists "Inexpensive and built to stay that way.." and use the "new" name for the $35K and up models like the Tribeca, etc...?

ateixeira

They're not really in Volvo territory. Go price a V50 T5 AWD, they cost a pretty penny. Well more than a Legacy GT LTD wagon with the same equipment. You can buy the latter for $28 grand or less.

The XC90 also costs more. Check out some Tribeca competition, this is MSRP with both DVD and NAV, plus heated leather seats, stability control, and 18" alloys rims or closest possible when available:

Tribeca $38k
Highlander $39k
Grand Cherokee $39k
Pathfinder $39k
Pacifica $40k
Murano $41k
Durango $41k
Sienna $42k
Rendezvous Ultra $42k

* I'd draw the luxury line here *

VW Touareg V6 $43k
MDX $44k
4Runner $44k
RX330 $45k
FX35 $47k
Aviator $52k
X5 3.0 $53k
Cayenne V6 $53k
SRX V6 $55k
LR3 $57k

Explorer, Pilot, Freestyle, and Mercedes ML don't offer DVD+Nav from the factory. But even if they did, only the Freestyle and Pilot would be cheaper than the Tribeca, so Subaru is still among the cheapest non-luxury brands.

So Subaru is not priced above its competitors, it's actually priced below them.

I think what's hard for all of us to accept is that $40 grand is the starting point for a well equipped near-luxury SUV.

-juice

stickguy

Well, in today's climate, the only chance I see of that is if they start supplying SAABs!

Hey, it is already a step-up, and dealers in place need something to sell.

Hmmm, think they could spruce up a Sube with a SAAB nose and get way with it?

davem2001

Hmmm, think they could spruce up a Sube with a SAAB nose and get way with it?

No way, that would be crazy, who would ever do that?!

(LOL at the Saab 9-2x)

IMO, if they went with a second channel, it should be all-new like Toyota did with Lexus (or Scion), Honda did with Acura, etc... I'd say forget Saab and come up with something else.

davem2001

Maybe my perceptions don't match reality, but it seems to me that the average Pilot or Highlander are closer to the low $30s, not high $30s.

ateixeira

Well, the 9-2x has something like $7000 dealer cash plus $1000 hot button bonus. Believe it or not the price for a GM employee is $17.4k for an Aero, and that's the turbo!

If I worked for GM, heck, I'd probably buy one! It is *much* cheaper than a WRX right now and comes with 2 years' free service to boot.

And they're selling at a pace of 2000/year.

Any how, the swedes have spoken, they do not want rebadged Subarus. That's why I think the 9-6x will not happen, or at least it will be a Vue/Equinox platform-mate.

I'm against the idea of Saab becoming the premium Subaru because it would limit what Subaru could be. For instance, if you want a moonroof in a WRX wagon you can't get it, you have to buy the Saab. What if they limit HIDs and NAV availability to Saabs only? That's no good...

-juice

ateixeira

That was MSRP, and I'm talking loaded up.

Funny thing is you made a good point, I have yet to see a Tribeca for $38k either!

In fact, of all the ones Fitzgerald had in stock, the highest price was $33k, and 3 of them were under $30k.

Of course the market is BRUTAL for sellers, it is a total buyer's market right now. Locally, Browns Honda is selling Pilot LXs for $24.8k. The EX is more comparable to the Tribeca, but I think Subaru still had to start in the $20s just psychologically.

Let's see how this strategy works. VW only produced high-end automatic Jettas and that backfired on them badly. So maybe this is smart?

-juice

dino001

Did VW succeed with the Passat by doing something completely different than the Accord/Camry? Nissan do anything different with the Altima? Did Honda win over buyers with the 1999 Odyssey by doing something different? Nope

Actually, YES, YES, AND YES.

Altima: at the time of introduction, completely new styling, killer V6 engine (then most of them were pumping 200-220 hp, Altima came with 240-250). Do you even remeber old Altima?

Passat: distinctive styling, plush interior, great ergonomics, faster 4-cyl turbo than same from competitors (although slower V6), Tiptronic on auto and AWD offered.

Odyssey: interior design, good engine,m etc.

We all tend to forget that when those cars came, they were very new and competition had to follow quickly. One may argue that new designs were in the pipes, bu it was still Nissan who started horsepower war in family sedan and Passat who had superior interior design and greatest handling in the class, etc.

Today we take for granted those thing, but just please take a look at '99 Camry or even Accord, drive any of them and you'll know how much we changed in our expectations.

Do we pay for it? You bet, that's why Hyundai sold so many Elantras to those left behind by Japanese. Would manufacturing something in quality and price of Elantra be a hit? Sure. Can Subaru do it? No way - it would be totally against their corporate culture and market niche. Hyundai is successful because it is dirt cheap and uses proven technologies (licensed components) of late 80's early 90's. But you cannot have both: cutting edge AWD, super engines etc. It just doe not go together...

kyfdx

A loaded Highlander Limited V6 without Nav, is about $36K..

A loaded Pilot with Nav is about $35K..

And, both have transaction prices several thousand lower than that..

regards,
kyfdx

davem2001

just for kicks, I went to the Honda Pilot prices paid thread here on Edmunds and I'm seeing mostly under $30K.

rsholland

to keep things as equal as possible, all you have to do is check the pricing here at Edmunds or various models.

Bob

davem2001

Ok, that's better then - I think Sube would have a hard time selling Tribecas at $38K if Pilots are going for mid to high $20s to low $30s (transaction price).... Good to see you can get a Tribeca in that same range.

mayberryguy

The new fabrics on LEG/OBK, and Tribeca are all about durability. They may not be quite as plush as previous models but they will wear twice as well.

toyo_z

Well, for the record, i've got a 10 year old legacy with the "plush" fabric & it hasn't ripped or gotten a stain on it that couldn't be removed. And i'm not particularly careful with the car. Hopefully sube will reach a happy medium soon, b/c right now the fabrics on the legacy (and the base impreza) are pretty uncomfortable.

rsholland

??? Is it the fabrics, or the seat itself, meaning construction, bolstering, firmness, etc.? The fabrics just cover what's underneath. I would assume it's not the fabric that's causing the discomfort, but rather the construction and shape of the seat.

Bob

toyo_z

I think its a combination of both; the fabric definitely isn't as soft to the touch; It can be downright itchy when wearing shorts. The subaru seats have always been firm, too, but I think they are getting firmer (or i'm getting mushier in my old age... I used to drive a porsche with recaros, so i THOUGHT i was pretty well toughened up back there... hehe)

dino001

Perhaps this will shed some light why they though they could "go upscale". I read a couple of years ago somewhere that the median income of their new car buyers was $70,000. This was before WRX came. Interesting, isn't it?

I think we have conflicting forces at work here and it would be better for SoA and FHI to resolve it quickly. You either sell volume or you sell upscale. Usually not both at the same time, unless you are a superpower, like say MB o BMW. I do not know how they came up with these sales targets, but the're not the first, nor last to misread potential demand.

I do agree that something is missing in the lineup - I always though it was H6 manual in Legacy, but could be wrong. Perhaps something "cheaper" could work, but calls for just lowering the price with same content or decontenting current vehicles are not realistic. Legacy is not Elantra, it is not even Accord. If somebody cares more about power windows and other interior gadgets, let the have their Camry. They won't go wrong with it. If on the other hand one want better handling and some bragging right on the technology, Legacy/Outback is perfect. They are a bit expensive on the sticker and the market quicly corrected it - dealers have to sell them at invoice.

Are they hurting (SoA, FHI)? I don't think so. Can they sink? You bet. Just look how quickly GM is drowning. They have deep pockets, but who knows - few missteps, more idiotic decisions, clueless design, scrapping most promissing projects, pushing wrong ones and who knows - from Big Three to Nippon Only?

varmint

"I don't necessarily believe the "less profitable mix of sales" statement. I just think that's not true - the press makes mistakes all the time.

If they had said "higher incentive costs" I'd buy it." - Juice

What's the difference? They don't make profits because the cars don't sell in high enough volumes. Or, they don't make profits because they have to use heavy incentives to sell them. Same end result... reduced profits.

nippononly

"from Big Three to Nippon Only?"

I like your thinking! ;-)

The least expensive H-6 costs too much at Subaru. So does the least expensive Tribeca IMO - that should have started under $30K like all the non-premium competitors named above do. Both the Highlander and Pilot 4x4 V-6s start at $27,5 sticker (and at that price the HL has a third row seat too, unlike the base Tribeca. Don't know about the Pilot). Not everyone wants NAV! Comparisons of stickers including NAV, often bundled as a package and always a couple of thousand extra even if not, can be slightly misleading.

As for the V50 AWD comparison, I believe it stickers around $27K with the turbo engine, but then I am hopelessly confused by Volvo's idiotic nomenclature (they have a 2.5, a 2.5T, and a T5, all in the same group of cars?). They have more equipment than a Subaru Legacy GT wagon around this price range too, although obviously less power, and a little less space. I would say Subaru has all but adopted Volvo-scale pricing in part of its range. Are those models as nice as Volvos?

edit...OK, I went and priced a V50 on their website, and now I am with juice on this one - the Subaru option has more power and costs less. I think Tribeca will make the 40K sales per year it projects, but I just wonder how many they might have sold if they had a base version stickering at $28K, which would have sold in the real world for around $25, 26K. I mean, Subaru should really OWN the territory covered by small and midsize crossovers, especially anything AWD.

varmint

That deserves a reposting...

"If no-one will buy $30K+ Legacys, or they sell very slowly, Subaru needs to take a step back and put the plan on pause for a little while. The Acura example is a good one - almost 20 years in the market, and they have only moved upmarket a little in all that time, and it has happened because of product that meets and beats the competition on most measures of an automobile, not just one or two aspects like speed and AWD. If Subaru wants to be a premium brand, then the dealers need MAJOR sprucing up nationwide, all the cars' interiors need another 10 or 20%, and the gruff nature of the boxer engines will have to be smoothed out. But I wish they would rethink their aspirations here. What happened to just making excellent midmarket AWD cars? Before they try to become the AWD Acura, maybe they should try expanding the lineup to make per-unit sales more profitable."

Amen... amen... amen.

On one specific note... Rumor has it Acura is going to become the AWD Acura. And I know I'll get flamed for saying it here, but SH-AWD has more performance potential than Subaru's AWD. Audi is already well-known for AWD, and both companies are already well ahead of Subaru in terms of brand cache.

varmint

I think Subaru owners may indeed want a step up car some day. But I don't think it should be the only thing Subaru sells. That's trading what little volume they have for an even smaller niche. They need to keep their base strong and therefore cannot leave it behind.

If they try to offer near luxury and base models under the same brand name and in the same dealerships, they'll never get premium prices for the more upscale models. But Subaru simply doesn't have the resources to open a separate network. GM sure isn't going to help them build it when they've got Saab, Buick, and Pontiac to worry about. And nobody else in the industry is going to help when GM owns 20%.

nippononly

the good thing about SH-AWD is its ability to shift power side to side without braking individual wheels. Not to mention that it is programmed to send 70% of the power to the rear when it launches, unless it detects slipping. Both aspects that lend greatly to sporty driving...

It might be good news for Subaru's "upmarket plan" if Acura does become the AWD Acura, because Acuras will be bound to move up in price in that case, and Subaru can probably sneak right in where Acura was before, which would be a step or two up for Sube.

And then, what of the fate of hundreds of thousands of loyal Sube customers, left in the dust as Subaru flees upmarket away from them?

varmint

I agree. I think that 90% of the units sold will be at the lower end of the package spectrum. And the Tribeca isn't priced too high relative to the competition. Like most Subaru's the actual market price will probably be a decent bargain. However, the Tribeca might be priced too high for the average Subaru buyer. The saving grace is that Subaru probably understands that now (after their problems with the Outback) and isn't counting on high volume from the vehicle.

varmint

The Passat made it's mark by adding style (both inside and out). There was no shortage of good ergonomics, decent handling, and powerful family sedans on the market. Even back in 1999.

With the Altima, Nissan learned that styling mattered. That was not new. Nothing about the Altima was. Every attribute where the Altima nailed it was already present in the market. All they brought to the party was a big engine.

The Ody was not the first minivan with a decent engine, handling, or interior.

The thing that each of these vehicles did well was copy the best attributes from the competition and combine them into one package. Then each one of them added one (or two) characteristics that set them apart from the crowd.

That is the plan I was advocating for Subaru. Learn from the masters... the mass market sellers. Then create cars that match those attributes, but also offers something uniquely Subaru. Picture a Passat styled car with the interior space of an Altima, the value of an Accord, the quality of a Camry, and a 260hp turbo AWD drivetrain. That's the goal.

However, the 260hp turbo AWD drivetrain isn't going to sell unless they match the mass-market attributes. It'll just be an over-powered, cramped, ugly-duckling vehicle that costs too much and nobody respects.

varmint

"It might be good news for Subaru's "upmarket plan" if Acura does become the AWD Acura, because Acuras will be bound to move up in price in that case, and Subaru can probably sneak right in where Acura was before, which would be a step or two up for Sube." - Nippon

True, but Acura is not looking to make AWD standard equipment on all models. Buyers can elect for the $36K TL with AWD or the $33K TL without. Those on a budget, yet demanding AWD, could drop down into TSX territory when Acura adds AWD to their entry-level model.

I expect SH-AWD will be standard on all of Acura's crossovers. The RDX and MDX will have it standard. While Subaru will likely beat them on price, that's never been an obstacle in the past. Subaru has been beaten Honda in price for years, but, whenever they enter the same segment, Honda wins the sales. Why? Because the mainstream respects the Honda name. They have more than just a small, loyal cult following.

And it's not like Acura is the only one. As mentioned above, Volvo is heavy into AWD. Infiniti not only offers the G35x and FX35, they offer them with option packages which allow the buyers to bring the prices down. Then there's the rumored Infiniti CX34 to compete with the RDX. Audi is bringing in a sub-A4 vehicle. BMW has been looking into a sub 3 series. And these are likely offer AWD. MB is rumored to be looking at something RDX sized along with Infiniti.

The bottom end of the luxury segment is getting more crowded. And it's filling with players who have already earned their brand cache. And I wasn't kidding when I wrote that offering AWD will soon be like offering a CD player.

sweet_subie

Clearly, Subaru has deomstrated through its 2005 models that it is successful in getting new customers not just loyal ones. Go read legacy & ob reviews on edmunds/msn that how many compared legacy with merc, audi, bmw etc but bought subaru for VALUE. it does have value that others don't provide.

Even with subaru's goal of going upscale, they are of GOOD VALUE. tribeca is a good example.

Also, Subaru does make unique vehicles. There is NO/little competition for

1. Base Legacy at 20k with AWD & Std equipment
2. OB XT that i just bought, i could not think of any other car coming close to this. UTILITY is the mantra here. nothing else offers.
3. WRX, there is no/little competition
4. Forester doesn;t have true competition either. Perfect for women.

Subaru does offer Value, Utility & it is a brand with SOUL unlike most other brands. I have been driving subarus since 1993 & will never consider buying any other brand.

I

rsholland

Subaru does offer Value, Utility & it is a brand with SOUL unlike most other brands. I have been driving subarus since 1993 & will never consider buying any other brand.

BINGO!

No FWD Subarus! No bland, boring, Elantra-like econoboxes! Subaru, continue to do what you do best—build unique AWD vehicles that have character, high value, and that are fun to drive. There are already too many mainstream cars out there. Stand your ground and fight for who you are and what you stand for!

Bob

rsholland

Build an AWD minivan off the Tribeca, in which 7 or 8 adults can sit comfortably. Build an AWD pickup off the Tribeca, all of which I mentioned a 100 or so posts back.

You want an inexpensive Subie? Build a small AWD Mini-Cooper like runabout, positioned under the Impreza, and/or bring over the 660cc AWD Subaru R1 as a city car.



Bob

kdshapiro

"Forester doesn;t have true competition either. Perfect for women. "

Subaru just got another customer.

That statement is ironic. I've been around these boards for a while and I am am a German car junkie. However, I just bought my first Subaru. A loaded 2005 Forester XT permium. I could easily have leased some expensive German brand, but wanted to own this next car. A test drive in a manual convinced me to buy the XT - although I opted for for the automatic.

While it doesn't have the bells and whistles of some of the competition here's what it does have:

1. Good grades with the alphabet soup of statistics purveyors: IIHS, NHSTA, CR and loads of favorable reviews.
2. Class leading AWD and lots of cargo room.
3. Nice sunroof.
4. Decent seating for four.
5. Good value and good reliability.
6. Almost last but not least, quick as the blink of an eye. While it won't take on every car, its' 5.3 seconds to 60 means it will take on the entry level luxo sports sedans without even breaking a sweat. Plus it has a smooth and refined drivetrain. The gas mileage is decent for what it offers.
7. My wife loves the car.

It doesn't have the road feel of a BMW and perhaps isn't quite as tossable, but the LSD and active AWD makes for a nice combo. Combine that with a $2K rebate and good negotiating skills and for $25K it's value is impossible to beat.

While one could say they are a niche vehicle due to AWD, there is a huge part of North America where drivers could benefit from AWD.

Subaru is definitely on an upswing and I think they can lure the mid-level buyers from the Japanese vehicles if they keep up what they are doing. (As a side-note: the dealer experience was beyond reproach and I used Edmunds Internet buying service to seed the quote process)

This is not a car I would have thought about even a few years ago.

rsholland

A lot of what we've been debating is either addressed or touched upon in this PDF. It's SOA's top executives addressing the dealer body in San Francisco.

http://jon.in.ct.home.att.net/SubaruDealersMeeting.pdf

Bob

jeffmc

Thanks so much for posting that PDF, Bob. Extremely insightful and, despite the fact that it's a rah-rah sales speech, it was actually inspiring to me. It seems Subaru is already addressing concerns we've discussed - I was particularly impressed with their plans for improving the sales and dealership experience. Hopefully the dealers buy in to it. I am convinced Subaru knows what they are doing moving into a premium-value market position (not luxury). Their emphasis on value makes me happy.

Thank you, Subaru, for your focus on value... that truly sets you apart and will keep me a loyal customer who loves spreading the Subaru gospel. Folks who ride in my car are impressed with the standard features and quality. Glad to see future models will continue (and increase!) those impressions.

Sheesh! I sound brainwashed.

rsholland

Thanks Jeff. Here are some quotes from the PDF which I feel are relevant to this discussion:

_____________________________

Page 1:
Now we must ensure that we have a quality sales network … the right sales activity support … the right message for going to market … and the right pricing and value story.

Page 4:
The new Forester... with the naturally aspirated engine... has about 14% better fuel economy... compared to its direct competitor... in real world driving conditions. Even the turbo model is 9% better... in fuel economy... than its direct competition.

Page 5:
It is important... that we emphasize the consistent value of the Subaru brand.

Next...I'd like to say a few words about Subaru's brand strategy. Having symmetrical All Wheel Drive as the axis of the brand... we will continue to advocate the driving pleasure... and sense of confidence... found in every Subaru model... as evidenced... by its superiority in driving performance. We will make it our number one priority ... to offer products that feature "individuality" ... and "value to the customer". And this is a point of utmost importance. If we were using an ordinary vehicle architecture... it would be easy to have lower prices... but it would mean less distinctive products. They would be just like many others in the market. However... we do not. We have chosen to aim much higher... and we will never lower our standards... in the area of our unique Subaru technologies.

Page 6:
We will be a successful group... that is small in size... but strong in market presence. And most important... we will provide products and service... that will be appreciated... by the many customers who say... they LOVE Subaru.

Page 8:
Product is... and will always be... our foundation.

Page 9:
However, advertising... at the expense of our brand... must be avoided. Below cost … below invoice … distress-type advertising... damages our brand equity. It puts the focus on price not product. Let's invest in a message of competitive superiority … not one of bargain basement deals.

Page 11:
And let me tell you something... the competition has noticed. Just look at the growing number of competitive vehicles offering all-wheel drive… In fact... over the last five years the number of all-wheel-drive equipped nameplates tripled … 22 to 73. By the end of this year that number will climb to 83 … and 43 of those are cars. However... this rush to all-wheel drive isn't something we have to worry about. Premium manufacturers... like BMW, Porsche, Audi, Lexus and Acura... are just now discovering something we've known for years … that AWD provides better handling and control... no matter what the weather conditions. (And with them... it's an add-on.) And you know what... customers are going to find out that at the price points where we compete... our AWD system is the best on the market today…

And frankly... there's been some confusion over what the term "premium brand" really means for Subaru here in the U.S. Let me see if I can clear this up. We have always said that... for us... premium does not mean luxury. We are not... nor do we intend to be... a luxury brand. Luxury can be elitist... or meant for an exclusive class of people.

Page 12:
Premium... does not mean exclusionary... but rather... it means... appealing to a set of customers with a specific set of values... Now those values can be shared... by people of different income levels. What Subaru has to do... is distinguish itself... from mainstream brands and as a niche player -- that's how we'll stay competitive... and that's how we'll achieve our desired results.

Page 13:
Subaru buyers are right in this $75-100K group... Right where the spending of discretionary income for premium goods and services occurs. And I can break that down for you. According to our brand dynamics survey... approximately 31% of Subaru buyers have income in excess of $100,000... more than 60% have income over $75,000... 80%... 80%...greater... than $65,000. Think about THAT... we are already appealing to this new upper middle class. So our job... is to attract more of them to the brand.

Page 15:
I think... you'll all agree... that Fuji produces premium vehicles… not luxury vehicles.

Page 16:
Subaru products are engineered by people who love cars. Other car companies focus on visible features… all we do ... is make the best vehicles in the segments where we compete. Quite simply... we are advocates for drivers.

That's why over the last 5 years... we've been working so hard to reposition our brand. The middle market is just not the place for us to be… rather... we are positioning ourselves to be distanced from the mainstream... we are positioning ourselves... to be a category of one.

Page 21:
By accomplishing our sales target this year... we'll have set sales records in 10 of the last 11 years.

Bob