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Subaru's fortunes sinking - can they turn it around?
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Comments
Bob
I'd rather Subaru did not give up the niches where they have been successful. The WRX and Outback wagons have been relatively huge. But a good niche is hard to come by. For every good one, there are three crappy ones. (Baja, Aztek, Chevy SSR, X-90, etc.) As long as Subaru keep seeking the market scraps nobody else wants, they are not going to get far.
Truth be told, the more I think about it, the more I can parallel Acura's problems with Subaru. When Acura hit the market, they went straight for the meat of the market with the Legend. Acura followed the Legend with the Integra and NSX. Now, both were great cars in their own segments, but these are niche segments as far as luxury marques are concerned. With the exception of the recent TL designs and the MDX, most of Acura's products have taken niche approaches and have failed to bring the company on par with Lexus. Meanwhile Lexus, which has always targeted the meat of the market, has expanded far beyond Acura even though they started later.
Acura's management is suggesting they will turn the corner and start building what the market wants. Subaru would benefit greatly if they did the same.
I did not get it the first time either. I initially thought the same thing as you did.
Bob, I am genuinely confused. This is directly from the post at the link you provided. Which part am I misunderstanding?
With the reputation that the WRX has, I find it very hard to believe they would dump the name in favor of "Impreza GT".
And so many are sold as manuals, I find it hard to believe they would go auto-only (which I thought was speculated to be a CVT?).
Edit......oooohhhh! Wait, I get it now: the current WRX with lower power etc will be the '09 Impreza GT, and the '09 WRX will have these improvements! I truly AM thick!
Will the price go up at the same time - will the '09 WRX be $1K or more higher-priced than the '08?
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
As to pricing? I have no idea.
Reading between the lines here—again, just speculation on my part...
• As you may know, Canada for '09 will no longer have the Legacy GT or Outback XT. They still have the Legacy spec.B with a 6-speed, however. That being the case, and reading this latest rumor, has me thinking that we too will be losing the Legacy GT, and probably Outback XT as well. The reason being this new Impreza GT and new more powerful WRX could compete with the Legacy GT for customers. It sounds like the WRX is getting the same engine state of tune that the current Legacy GT has.
• If the Impreza GT comes auto-only, I bet the WRX comes manual-only. That's the way the WRX is sold in most markets now.
Bob
Hyundai got to be a global company by making cars for other companies. Subaru has refused to do so. Hyundai has pulled ahead.
Yes, Honda made money selling millions of Civic and Accord. They got to that point by building mainstream cars, not Elements and Ridgelines. If Honda could absorb a flop like the first Ody, what is Subaru doing taking chances with a silly vehicle like the Baja? You can say, "Subaru did that because it was based on the Outback," but I would have to ask what you think the first Ody was based on?
Yes, the Porsche Cayenne is based on the same platform as the VW. That was brilliant! The thing is a cash cow. Subaru refuses such moves and therefore has no cash. If Subaru wanted it, I'm sure GM would have given them a variant of the VUE platform to work with.
You can keep making excuses and chanting "can't, can't, cant'!" but there are other companies out there who have said, "we can," and they are doing better than Subaru.
Anyone who knows Subaru history knows they tried to take on T/H/N with offering FWD cars, it failed MISERABLY.
Here is another niche item I think that might fly...
Be the first car manufacturer to offer across the board, a dash-mounted slot for your personal GPS units! It could have a plastic cover that you pop off or a door that slides and then you can put in an adapter for whatever GPS unit you have (have to buy it from the parts dept, so a little extra cash for the dealers) and bamo, your Garmin or Magellin or what not now has a slot to mount in w/o having wires running all over the place. Jeep has a mount on the Wrangler, but it's only for Garmin. This would fit in nicely with their "outdoorsy" marketing of the Outback as well.
Thoughts?
-mike
Motorsports and Modifications Host
Great they beat me to it!
-mike
Motorsports and Modifications Host
You didn't say they weren't, but I just thought it was important to point that out.
Any how, back to Subaru, I think the real problem for them here in the USA is they refuse to give SoA much say in terms of product. They build vehicles for Japan, and the US gets whatever Japan asked for, basically.
Bigger companies that have let their US arms customize the cars for the US market (if you read bigger, you'd be right) were simply far more successful in terms of volume.
Even when SoA does ask for a unique car, they get a shoe-string budget. You can build a Baja, but it has to be on the same tiny wheelbase as the Japanese Legacy, and oh by the way no mid-gate and no supercharger like the concept had. They simply refuse to invest where needed.
The Tribeca was their first honest effort at a product targeted at the US consumer, but even that ended up being too small. You focus on the styling, yet that changed and while sales improved they are still far from a player in the segment. It got more power, too.
It's too small.
People are flocking to the bigger crossovers - families want something to replace their minivan, and the Tribeca is too small to do that.
We often forget that Subaru sells more cars in Japan than it does in the USA. So the US is their #2 market, not #1.
If Subaru wants to grow a lot in the USA, they have to understand, that priority has to change.
Having said that, the 2009 Forester is a big (pun intended) step in the right direction for SoA. The wheelbase is now actually longer than the CR-V and Escape. They priced it right, too.
If marketing doesn't drop the ball... :sick:
PS I like small cars (though noone else does), plus even I have a growing family and have to accept the fact that size does matter in the US market.
You didn't say they weren't, but I just thought it was important to point that out."
Why? I mean, what difference does it make? Are you suggesting that only big, profitable companies can make headway in an established market? If so, how did Honda go from a small motorcycle company to where they are today? If size and money are key, why did Renault fail?
You spend money to build a niche product, or you spend money to build a mainstream product. Subaru has spent a fair amount of effort jumping from niche to niche. They could use those same resources to develop something more in line with mainstream tastes.
The disconnect between Japan and SoA may very be the problem. When you write, "They simply refuse to invest where needed," that is exactly my point. Only I think it applies to more than just a supercharger. (They did give the Baja a turbo powerplant, after all.) The US market is the big kahuna for automobile sales. Why would they not want a bigger piece of it? Yet, Subaru (for whatever reasons) seems to cripple themselves here.
On the subject of the Tribeca, I agree there are additional problems with the vehicle other than the styling. I didn't want to get into listing a bunch of things since that was not the point of the post. The Tribeca is not the same size as the current Highlander, Pilot, CX-9, and GM beasts. That is where the bulk of the market is headed. However, there are also successful smaller vehicles like the original Highlander, the Murano, and the Edge. Also, as I believe you yourself wrote a few pages back, Tribeca sales have picked up since they reskinned it. I chose the nose issue because it seems to be the single biggest factor and, as I wrote in the OP, it was obvious from the beginning.
Oh, and the new Forester looks great. It appears to be exactly what they should have done back in 2003. If I were in the market today, I'm guessing my choices would trickle down to the RAV4 and this new Forester.
What makes you say that? I much prefer smaller cars, for just one! Or did you mean in your family?
I have this little theory, unproven as yet, that the "bigger is better" mentality in the U.S. will begin to die off in droves as/if gas prices go substantially further up (as I think they will in the next five years). Those GM "beasts", while vehicles very much worthy of acclaim in their segment, weigh well over two tons, seat seven in an age of shrinking families, and get abysmal gas mileage.
Companies that are positioned ahead of time with great smaller cars, crossovers, and wagons will be in the sweet spot of the market when folks begin to downsize in large numbers. Subaru could be one of the ones in the sweet spot, but the fuel economy of their high-volume (non-turbo) models HAS to improve to take advantage of the shift.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
steve_, "Navigation GPS Systems" #1389, 22 Feb 2008 9:01 am
Here's a pic:
http://blogs.edmunds.com/Straightline/4354
This technology is in its infancy. I'm waiting for portable NAV units and in-dash 7"-8" NAV screens to integrate seemlessly.
By that I mean you would insert a portable NAV unit into the dash much like you insert a CD. Once inserted the large touch-screen NAV screen would then project the visuals from the portable NAV unit. When done you simply eject the portable NAV unit like you would eject a CD, take it with you and insert it into another car if you so desire. I think that's where this is all headed.
Bob
A Subaru branded phone. Call the car to remote start it, open the doors, adjust the seats for the next driver, send the oil maintenance info to the dealer.
I don't even like the idea of carrying a phone around though, much less a CD thingy.
-mike
Motorsports and Modifications Host
You are probably right but Subaru needs to improve their mileage to cash in on a favorable impression for smaller.
The Outback would my #1 choice but not only is the back seat small, but the mixed mileage doesn't make up for it.
They need some vehicles that pull low 30s around town, and some little ones that can do a fair bit better, even, than that.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Not at all. I won't speak for Nippon, but I think Subaru should stop settling for table scraps and start fighting for a seat at the table.
"Be the first car manufacturer to offer across the board, a dash-mounted slot for your personal GPS units!"
I like the idea, but not exactly the way you've proposed it. I'd think that the shape/size of GPS units would change so frequently the slot/mount would become obsolete rather quickly. This is probably why Jeep has a Garmin-specific design.
My pipe dream is a screen installed in the vehicle with no hardware behind it. You plug in your GPS to provide the processing and signal, but the screen and buttons allow for display and control. Probably a very complex interface to manage, though.
Nothing like re-stating someone else's position...
I could live with the mileage, understanding that I'm getting the AWD if that back-seat would hold 2 adults. It seems like they would be better off staying away from Baja's etc. and spend the development money on adding 4-6 inches to the wheelbase.
Or stop sitting on the sidelines with diesel and push hard to be the innovator in this country. I have read in a couple of places where Subaru is taking a wait and see attitude and letting someone else bring diesel to 50-state passenger vehicles before jumping in. That seems to be a very weak position for a struggling manufacturer who already has a reputation for unique products.
One more comment here: I also expect in time to see GPSs be fully integrated with cell phones. So really what I'm saying here is that you mount the cell-phone/GPS/thingy into the dash, as you would a CD, and it would show up on the large dash screen.
Yes, much like computers, your car and the cell-phone/GPS/thingy would have to have a universal operating system so that it can work in a variety of vehicles. Whether the unit gets installed into the dash CD-like, or whether there is a built-in docking station with a connection plug of some sort, that would be up for grabs. Once the automakers and NAV/cell phone makers realize that it's for everyone's benefit to do so, we’ll see this—probably sooner rather than later, as this technology is changing so fast. We’re already seeing cars with built-in multi-gig HDs, like Chrysler’s MyGIG, so this seems to be the next logical step.
This happened years ago when all auto engineers agreed upon SAE specs for nuts and bolt threading, etc. It’s happened with computers (mostly) in that you have only Windows and Mac operating systems. So I have every expectation that it will happen here too.
It may take a few years, but I do believe it will happen.
Bob
You mentioned Porsche in a context that implied small, niche companies could not be profitable. I was merely responding to that.
Any how, the sweet spot in the crossover segment is definitely a size up from the current Tribeca. The cargo floor is no bigger than an Outback. It's not differentiated enough from its own siblings, basically.
The Highlander, Murano, and Edge have indeed sold better, but each of them comes from bigger, more established makes. Frankly, I'm puzzled. The Highlander is too close in size to the RAV4. The Murano is just too small, even the new one, and again, too close to the Rogue. The Edge is overweight, and something that heavy should at least have 3 rows. Toyota, Nissan, and Ford have a huge established customer base and big ad budgets (see the super bowl ad for the Murano?) that Subaru just can't match.
Subaru has to make some waves to get noticed. They just haven't made the right ones.
Responding to nippononly: what I meant was few Americans appreciate small cars.
Sort of related - but I guess you saw this story. :shades:
Ford makes a bundle on Sync (Straightline)
All you need is a slot to stick the phone in (and the car will also recharge the batteries for you).
Look at the Acura RL. It's chief selling point in advertising when it was new was the real-time traffic updates. A year later everybody had that, and it was insignificant, but the model cycle still had 4 years to run (and RL sales have been in the toilet almost from the get-go). The same would be true if Subaru somehow integrated this GPS/NAV docking device into its dash.
Another funny parallel with the Acura RL is that its other innovation was having SH-AWD - just look where that got it in a market segment where the big players were RWD...
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Right now GPS is a cash cow for manufacturers, though. What does Subaru make, $1800 a pop? I'm not sure they want to give that up.
Scion is different because they play in a much lower price class, plus the whole idea of customizing is part of their DNA.
As with computers, or anything else, the cream will rise to the top, and they will be the one's that succeed. Sure, they will all become obsolete, as does everything in due time, but the concept will continue on with new and better versions.
Bob
That small screen Tom Tom looked outdated the day Scion launched it.
If they design something new, it should be on the very latest model, perhaps even not yet released.
In this case they should have opted for the Tom Tom One XL S. Big enough screen, text-to-speech, current/fresh model.
When you're driving, you have to glance quickly at the screen, and the larger the screen the easier it is to use.
...And don't forget, older drivers (me!) really appreciate larger screens, as our eyes ain't what they used to be.
Bob
You have misread my intent. My point was that Porsche went from being profitable to being OMG FILTHY RICH by moving out of their niche.
As far as I know, Subaru could be profitable within their niche. To quote the McKenzie brothers, "Ten bucks is ten bucks." There is a big divide between Porsche's niche, which generates $30K per unit, and Subaru's niche, which is good for $3K per unit. The question is, does Subaru want to become more profitable and expand beyond that niche? Obviously they do. Otherwise they would not be creating new vehicles.
The other problem is that Porsche's niche is not an easy one to assault. Competing with Porsche requires image, snob appeal, motorsports legends, and oh-by-the-way one heck of a car. Subaru's niche's can be stolen by Mitsubishi. If Mitsu can do it...
...not to mention, making bold pronouncements of selling 230K vehicles annually in a couple short years...
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Hmm maybe I didn't explain my idea properly. This would be a spot on the top of the dash where you have a "generic" mounting point. You would insert into this generic spot the proper bracket/adapter sold by Subaru as an accessory where your Tom Tom, Garmin, Magellin, etc would pop into. I also don't think this should replace a proper in-dash Nav, but it would be an option for folks who either can't afford or don't want an in-dash Nav. This would also allow for future models as there would be a new bracket/adapter that would snap into the "generic" mounting point.
On the GPS units becoming part of your phones? Highly doubt it, at least not beyond what we currently see on the small screens of phones. I do think that we will see better Bluetooth integration, where you could download your contacts and addys from your phone into your GPS or in-dash Navi.
-mike
Motorsports and Modifications Host
I am also a race car driver and driving enthusiast, so for me, finding a MT vehicle is important. This left a few options open to me:
Pontiac G8 GT or GXP- Nice car, well put together (hopefully), V8, but RWD
Audi A6 4.2- Higher end car, well put together, etc. Great ride, AWD, but AT Only and 61k MSRP
BMW 535xi- Outstanding car, lots of options etc. AWD + MT, but $61k MSRP
Audi A6 3.2- 255hp, AWD, AT Only and $53k MSRP
Sooo, IF the new Legacy is A6 sized, has a 3.6 H6 300hp or even better a 3.6H6 375hp WITH a 6MT, they will basically own the entire mid-large Sedan w/AWD + MT market. For folks who can't afford the 535ix but like to drive a classy car w/MT + AWD. This could be their new niche!
-mike
Motorsports and Modifications Host
And I agree that the gas milage is terrible but then again my car is awd and a turbo.
I ended up in a minivan, too.
Subaru has lost more than a few sales for this reason.
Here's a little motivation from the WSJ. None of the Japanese manufacturers may be able to count on their home market for big profits.
Paisan, I see what you're saying, now. I think SOA would go nutty trying to create holders/adapters for every unit out there. The unit would need to be mounted very securely or they risk lawsuits from owners who have their GPS tumble off the dash during hard cornering. That said, Subaru could probably cover the major brands without too much difficulty.
Ummm, OK.
Ford: has stated they don't expect any profit this year, and probably none next, also that sales will continue to fall.
GM: RECORD losses in the most recent quarter, has ceased to make sales and profit forecasts because it has been so far wrong in recent years.
Toyota: stated its sales would be up no more than 1-2% this year in a market that is flat or slightly down overall. Given the rocketing year-over-year sales increases Toyota has had over the last decade, that is a remarkably restrained statement for them to issue, even given the down economy.
Note that Subaru's latest 230K goal represents more than a 15% increase from the fairly steady sales stream of the last five years, and more than a 20% increase over sales in 2007.
I think they will be very lucky to make 200K sales this year, just barely returning to the sales level of 2006 and not bettering it at all. At that point they will be only two years from the point at which they hope to make said 230K annual sales.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
What if the auto makers came up with a standard connection port and left it up to the nav makers to make the adaptor?
IMHO, it doesn't matter as lcd screens become more prevelant in autos and NAV becomes more standard on cell phones. The drawback on cell phones and NAV is that the screens are too small. But having to carry around multiple devices and hiding some when not in use is a pain.
I see the day when phones will communicate with built in screens in vehicles via bluetooth or cable and you'll be able to access all the features on your phone.
Of course they won't be just phones - they'll have music, GPS, phone, messaging, et al.
25 NX 450h+ / 24 Sienna Plat AWD / 23 Civic Type-R / 21 Boxster GTS 4.0 / 03 Montero Ltd
My local dealer says it has 7 "coming soon". Not one LL Bean model, though, which is what I'm considering.
I have my full $1600 worth of Subaru Bucks, just in time! Hurry up and make me a light blue LL Bean, please. :shades:
That was me, here in Seattle. Eastward, ho...right Juice?
25 NX 450h+ / 24 Sienna Plat AWD / 23 Civic Type-R / 21 Boxster GTS 4.0 / 03 Montero Ltd
Bob
25 NX 450h+ / 24 Sienna Plat AWD / 23 Civic Type-R / 21 Boxster GTS 4.0 / 03 Montero Ltd
Boston too. The port is a couple of miles from my office.
Synopsis: Subaru's niche strategy is what is keeping them down.
I know it's been discussed ad nauseum, but lots of discussion regarding the engine technology - it's too expensive and nobody can tell the difference - and more suprising is the cut in R&D.
Discuss.
http://forums.nasioc.com/forums/showpost.php?p=21489361&postcount=21
SOA Blog is to NASIOC what Pattie used to be to Edmunds. He works for SOA.
Bob
"Struggling to replace the line-up" is just that: the Impreza update, for instance, didn't update that model in the powertrain department. Interiors got marginally better, looks got substantially better, rear suspension got an upgrade. The model revision felt like it was somewhere between minor and major, and that was after 6 years of the old model.
SOA Blog is happy with Subaru's niche but he is speaking to the converted there isn't he? His audience however is very small because most people don't appreciate the niches Soob has carved out. That may be the definition of a niche, sure, but with low profit margins and involuntary cutbacks in R&D spending, your niche may not be serving you well.
"Firstly, while we do of course wish to improve our margins, I know that many manufacturers would be glad of such a margin" is just plain defensive talk: clearly none would be glad of such a margin except maybe Mitsubishi, the one lower than Subaru on the list.
I am surprised that Subaru/Toyota collaboration on a future car model is still in the talk phase. I had the impression they were already at work creating this new sport coupe that was mentioned a while back.
And I know that the dyed-in-the-wool Soob crew expect Forester to be the holy grail of profitable sales this year, but what the article says is certainly true: there are so many very good models competing in this segment, including RAV and CRV. Battles in the small crossover segment are hard-fought.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)