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

stever

Your comments make me wonder what other car makers are about.

steve_, "Brand Name Equity" #20, 19 Mar 2008 3:50 pm

I, er, stole your lingo to prime that discussion.

paisan

All this thread does is raise my blood pressure, and I don't need that.

It's clear to me that you guys don't have clue as to what Subaru is about. Carry on. I'm outta here.

Bob

I have done this already bob. The people in this thread really want an AWD Ford Tarus to replace the Legacy and try to take on the Camry and Accord. They do not have a clue that once Subaru gives up AWD and the boxer engine aka sporty handling cars, then they might as well be a Ford Tarus AWD or a Fusion, or Accord or Camry.

They also don't realize that Subaru tried this back in the late 80s and early 90s. They tried to compete with the then early Camrys and Accords, which were FWD and about the same size as the Legacy. Guess what? Subaru learned the hard way (and almost went broke) that they do not have the economies of scale to compete in the FWD asian car market in the US. They simply can't do it economically. They must rely on their niche (AWD, Boxer/Handling) and maybe carve out a new niche (Full Sized 300hp+ AWD car w/6MT transmission?) or perhaps Full Sized Wagon w/300hp+ AWD 6MT transmission? or Super competant off-road version of the Outback? Yup, those are all niche markets, but that's where Subaru can make $$$$ they will not make anything by offering another version of the Corolla, Accord, Civic, Camry, etc.

Ok I'm outta here.

-mike
Motorsports and Modifications Host

boaz47

already move away from their core DNA with the Tribeca?

paisan

huh?

AWD, Boxer Engine, Sporty driving (Lots of people complain that it's a stiffer ride than other competitiors)

I don't see any deviation there at all.

-mike
Motorsports and Modifications Host

dino001

They simply can't do it economically. They must rely on their niche (AWD, Boxer/Handling) and maybe carve out a new niche (Full Sized 300hp+ AWD car w/6MT transmission?) or perhaps Full Sized Wagon w/300hp+ AWD 6MT transmission

But that's the opposite what they're doing! They just murdered "cult" appeal on WRX for the elusive "mainstream" thing, they've cutting "non-seller" wagons from Legacy line, etc. It's either or, Mike. Either you do the niche and accept lower volumes in sake of more devoted following, or you do mainstream. Can't have it both - unless you have position of BMW or backing of big daddy who will absorb miscues.

And believe me - Taurus AWD is the last thing on my mind ... :sick:

paisan

I firmly believe they cut the Legacy wagon so that sales of the WRX Hatch would not suffer since their power and dimensions are very close.

They are going a bit more mainstream with their styling to have a wider appeal, without giving up the Handling and AWD which is their trademark. They are not STUPID though and a losing car is still a losing car and they will and should drop non-sellers. Let's not get ridiculous by saying that they need to make 1-offs to be a niche player.

-mike
Motorsports and Modifications Host

zman3

A few people have commented on the AWD abilities of my Subaru, but no one has ever hopped in my passenger seat and commented on the throaty efficient roar of the boxer engine. Maybe if it knocked like a diesel.

Maybe you need a vintage 1997-1999 OB and let them listen to the piston slap when the engine is cold.

paisan

That is what steve has actually.

-mike

stever

Yep, a '97 Outback Limited with 67k on it. It's not slapping though. Yet. :shades:

zman3

Man, what do you do, drive it to church on Sundays?

stever

It's a grocery getter and goes RT 50 miles to the ski hill about 30 times a winter. I work at home so ....

I did buy it from the proverbial, er, older woman, in '03 with ~34k on it.

The main ride is a '99 Quest with a more respectable 123,000 on it.

jeffmc

"They had lots of issues with their ECVT Justy in the early 90s, but I doubt they'll repeat the same mistakes. Plus, I bet they use Nissan's supplier, given a lot of hardware is already shared between the two makes."

I've read from a knowledgeable source that only some of the parts for Subaru's 5EATS are sourced from Jatco (nissan's supplier), and that the rest are designed by Fuji Heavy and it's assembled by FHI as well. Pretty sure I've also read FHI's designing the CVT themselves, and I thought part of their recent restructuring of their Japanese facilities was to allow manufacture of the CVT as well as the diesel engine(s?).

ateixeira

I was reading the Blog about Mini and the Cooper Clubman JCW edition, and it hit me.

Why is Mini seen as such a huge success? And universally so?

They sell in tiny volumes. Probably 10% of the business that Subaru does.

Why the double standard? Why are 200k sales not enough for a niche brand (like Subaru or Mini)?

People here seem to want Subaru to be like Honda. If you want a Honda, go get a Honda. Or Toyota. Quite frankly at times it's hard to tell the difference.

Cars have become so generic. 90% of the cars of the market today are either I-4 or V6 models with transverse mounted FWD. Effective, yes, but a bit boring. There's no variety. No character. You can hardly tell a lot of cars apart.

There is HUGE pressure to conform. Subaru should build FWD. Subaru should have an economy I-4 engine. Share more parts with Toyota to cut costs.

I don't see anyone telling Mini to use BMW powertrains. In-line sizes or RWD, either. Yet why is Mini considered such a success story? :confuse:

From another point of view, I see Subaru as a niche company like Mini, only ten times as successful. :P

kyfdx

MINI didn't start selling cars in the US until 2002...

Even though they have their own "showrooms", every MINI dealer I've seen is attached to a BMW dealership.. My local MINI dealer is on the BMW dealership second floor. Sort of like Scion? In that respect, it's just another BMW model..

Until the Clubman (this past month), they only had one model, in two iterations.. Cooper and Cooper S..

Not sure how many nationwide dealerships, but the one here is the only one for 100 miles in any direction.. By contrast, I think we have 4 Subaru dealerships within 20 miles..

So.. one model... from maybe 100 dealerships... 20K seems pretty good..

A valid comparison? :surprise:

robr2

juice - as I noted, I have no issue with Subaru keeping their DNA but they have to build cars around that DNA that people are willing to buy and stop trying to sell them based on that DNA. That tactic has proved futile.

As for Mini - they are a success because the product sells and sells at full pop. They have customers willing to pay MSRP and happy dealers who make a great living whereas Subaru relies too much on incentives and cut throat competition among the dealers.

Besides, if volume were the measure of success, then GM was the greatest success story of 2007.

ateixeira

Many valid points, but I'll counter a few.

...until 2002

Yeah, but globally, they existed for a long time.

just another BMW model

The Cooper required its own, new, dedicated platform. The Tribeca did too. The Tribeca outsells the Cooper at a much higher price point. The Tribeca at least used the existing H6 and VDC AWD, so it may have represented a smaller investment than the Mini start-up effort (I'm sure a lot smaller).

See the double standard?

they only had one model, in two iterations

True, but the Tribeca outsold it by double. In one iteration!

20k sales for 100 dealers is 200 per dealer. Subaru has 600 dealers, 200k sales so that means 333 sales per dealer.

Another double standard.

rob wrote: "They have customers willing to pay MSRP"

Minis sell at MSRP because supply is so short. If they had planned on Tribeca levels of supply, they would get discounted.

Yeah, yeah, Mini stores are usually not stand-alone, blah blah blah.

Neither are Subaru stores. Fitz Gaithersburg is primarily a Toyota store. Rockville is a Dodge/Hyundai/Isuzu store. Don Beyer in VA is mostly Volvo. College Park is Honda/VW/Mazda. Annapolis is...well, you get the point. Not a single one near me is a stand-alone Subaru dealer, not even the building they're in.

Any how, getting back to my point, I don't think Subaru needs to sell more volume to be considered successful. In fact, I don't want them to. I prefer that they remain a niche make, selling a unique product, off the mainstream. Give us more choices, unique powertrain layouts.

The one (and probably only) consensus we could reach a while ago was that Subaru could not increase sales volumes enough to use up all the capacity at SIA. Toyota fixed that issue. So Subaru does not need more volume to survive.

zman3

Any how, getting back to my point, I don't think Subaru needs to sell more volume to be considered successful. In fact, I don't want them to. I prefer that they remain a niche make, selling a unique product, off the mainstream. Give us more choices, unique powertrain layouts.

Aren't they the ones spouting off about higher volumes though? I thought a lot of this was based on them missing their own sales goals.

On a bit of a side note. I dropped my OB off for service last night and saw the new Forester for the first time. I thought it looked quite nice but I was surprised to see it rated for 19/26 MPG where the Outback is 20/26. I just naively assumed it would be smaller, lighter, and better mileage than an Outback.

ateixeira

My opinions about their strategy and direction have been notably different than the goals they've set over the last decade or so.

I was the #1 enemy of the whole "premium" push.

I just didn't see how niche products like the Baja could ever sell in enough volume to replace the Rodeo.

Even though I think 230k sales/year is acheivable, I don't think it's essential.

Funny thing is, we're having one debate here, a totally different one in the 2008 WRX threads. Those guys think Subaru sold out and made the WRX too mainstream, that they should go back to the hard core original with things like a rear LSD, wider tires, and dismiss all the new safety gear and interior refinements.

I would send those guys here, but then it would just get nasty. :P

ateixeira

Was that the 2.5i or the XT? Auto or manual?

The Forester has the 4EAT handicap if you're talking about the XT.

Plus it's less aerodynamic.

Did you drive it? It drives very nicely. Less body roll than before. Peppy enough even with the 170hp engine. SportShift actually responds quickly to your commands for shifting gears, like it should.

robr2

Minis sell at MSRP because supply is so short. If they had planned on Tribeca levels of supply, they would get discounted.

Yes they would but volume wasn't their goal and hence they made the right decision. The market is happy, BMW is happy, Mini dealers are happy.

Don't forget the Mini is a worldwide success - I'm sure BMW is very happy with the results.

robr2

Funny thing is, we're having one debate here, a totally different one in the 2008 WRX threads. Those guys think Subaru sold out and made the WRX too mainstream, that they should go back to the hard core original with things like a rear LSD, wider tires, and dismiss all the new safety gear and interior refinements.

I would presume that those are hardcore Subaru/WRX owners?? I doubt new to the fold WRX buyers would be saying that.

ateixeira

I agree with your (very carefully stated BTW) answer.

All that is needed from FHI are realistic goals.

And yes, those are hard-core WRX owners of the gen I model. It illustrates the dilemna face by Subaru. People here don't think they went far enough, while existing buyers think they went too far.

Perhaps the struck a balance between the two?

kyfdx

Hey... compared to Saab, they are going gangbusters!!

ateixeira

I don't want them to be like Saab, though.

Saab gave up too much of its independence. They don't have nearly as much personality as they used to.

kyfdx

That's true... I wouldn't want that, either (or, a sharp stick in the eye).. But, I think Saab would be a more valid comparison to Subaru, as far as being a full-line company and similar number of dealerships..

I also don't think it would kill Subaru to put out a CamCord competitor.. even if it were FWD with an inline-four... They could even sell a Camry or Corolla clone.. The people that would buy it, don't know about Subaru's DNA with boxer engines and AWD, and couldn't care less..

All 50K of the Subaru nuts can keep buying Imprezas and Legacys.. and, still be happy...

It worked for Porsche with the Cayenne...

On another note... if you want to be a niche player.. why drop manual transmissions in the Legacy GT... or, drop the Legacy wagon, altogether?... They had the competition beat, there...

regards,
kyfdx
(not the host here)

stever

niche products like the Baja

It's really too bad the Baja didn't turn out more like a Ford Ranger with Avalanche cubbys. Or maybe it was just the cladding.

I didn't think much of the premium slant either but I'm more of a bang for buck buyer and I'd like to see more mpg.

zman3

I don't know my Foresters very well since I would never had considered one of the old designs. I'm pretty sure it said it was a 2.5X model, which I think means it was N/A, correct? It stickered for about $25K.

I did not drive it since I am not in the market, plus I did not really have the time. I just naively assumed that it would be less expensive and more fuel efficient than the Outback that was next to it. There may have been some trim level differences but they both seemed pretty comparable. It did look very nice it just wasn't what I had expected from a cost and mileage perspective.

ateixeira

Subaru to put out a CamCord competitor.. even if it were FWD with an inline-four... They could even sell a Camry or Corolla clone

Ooooow, dagger to the heart, kill me now please. I couldn't take that, honestly. In fact I've officially declared that I will resign as Community Leader for the Subaru Crew if they do that.

It worked for Porsche with the Cayenne

They sold out. VW based V6 and V8? Where's the boxer engine? That's not a Porsche, it's a VW. Like the old 924. Does anyone collect those? Restore them? Look at all the reliability problems they've had. Cayenne residuals are the worst of any Porsche by a wide margin.

They made huge profits, but it comes at a price, for certain. Porsche sold maybe 20% of it's "image" stock for profit. My wife's in PR so I can say that.

OK, what to do, then? Here's an idea.

Toyota is rumored to build a Celica based on the WRX, right? Make it RWD, save on costs by removing the front half shafts, use a lighter and simpler front end. Keep the same engine, which will perform well with less weight to pull. Make it a stylish coupe. Maybe even put it in the Scion lineup.

Think about it - a coupe would not cannibalize Subaru's sedan/wagon sales. They would spread costs, heck it could even be built in Gumna next to the WRX. Use the same engine, again more economies of scale.

Call it a Scion to further hedge your bets. Sell in low volumes, and then just cancel it when it gets old. A short life cycle of maybe 4 years, at most.

ateixeira

Forester is less aerodynamic. And I'm not sure how they geared it. It is lighter than the Outback, though.

I bet out in the real world it would return mid 20s mpg. My 1998 averaged 25.1 mpg and the EPA was 21/27 back then, with today's new EPA standards it would be something like 18/24.

varmint

"I don't see anyone telling Mini to use BMW powertrains. In-line sizes or RWD, either. Yet why is Mini considered such a success story?"

Because Mini has something buyers respect. It's the same with Jeep, Hummer, and Porsche. These brands have image, heritage, styling, and they live in a niche that people get excited about.

My-AWD-is-more-symmetical-than-yours simply is not a niche many people admire. Obviously, some do. But there haven't been enough buyers to make the company grow.

It doesn't hurt that Mini, Hummer, and Porsche have very few direct competitors. Many Subarus compete in the mass market.

"So Subaru does not need more volume to survive."

Really? Subaru's niches are already being invaded by others brands. Mitsubishi is already after the WRX and I can easily see Mazda, VW, and other brands joining in. How long before somebody like Toyota builds their own Outback? As soon as a niche becomes profitable, the big boys take notice and start to compete. Ironically, the fact that Subaru can't make a profit may be the only thing that has saved them for the past 20 years.

BTW, I don't think anyone is suggesting that they should convert the WRX into a mainstream, econo-car. Sports models should be sporty. For my part, I believe they should build something in addition to those niche products.

ateixeira

Mini is 90% image, 10% fun-to-drive. Their marketing has been nothing short of brilliant, IMO.

They used Chrysler engines built in Brazil for the first ones. Now they're using Peugoet engines, IIRC. They're basically cramped little hatchbacks with ho-hum engines. Styling is cute and the marketing worked.

The Mini brand should be in every B-school curriculum in Marketing 101. Perhaps Subaru marketing should take that course.

There is more AWD competition, but more people buying AWD, too.

Toyota won't build an Outback competitor because, remember, they own 8.7% of Subaru. I just don't see Acura selling a TSX wagon with SH-AWD in the USA, as cool as that would be.

Basically, anything Subaru could do with FWD may as well be badged here at a Scion. Why not? You hedge your bets. Scion is way down right now. They went too mainstream. Their cars grew too much. Ironically the new models are not quirky enough.

Let Subaru inject life back in to Scion. The seperate brand name insulates Toyota from any major risks. Subaru can keep touting AWD. Toyota has more dealers to market whatever Subaru-based FWD models are built.

I see many ways to exploit the Toyota-Subaru partnership:

* Toyota can use Subaru's Li-ion battery experience
* build a Celica on the WRX platform with RWD
* small FWD Subarus could be Scions here
* Subaru gains economies of scale for WRX production (platform, engine)
* SIA factory already at full speed, in fact some overtime even

british_rover

They sold out. VW based V6 and V8? Where's the boxer engine? That's not a Porsche, it's a VW. Like the old 924. Does anyone collect those? Restore them? Look at all the reliability problems they've had. Cayenne residuals are the worst of any Porsche by a wide margin.

In some surveys the Cayenne scores worse then the Range Rover in both residual value and reliability. :surprise:

Huge profits on that platform though since it is the basis of the Cayenne, Toureg and Q7.

kyfdx

They made huge profits, but it comes at a price, for certain. Porsche sold maybe 20% of it's "image" stock for profit. My wife's in PR so I can say that.


Porsche's image is as solid as it's ever been... They cleaned up, solidified their balance sheet, took control of the largest car company in Europe.. Win, Win, Win...

Now, three Porsche dweebs sitting in a bar will cry about it.. so what?

Substitute Subaru for Porsche, above... anywhere you like..

ateixeira

Porsche has enough stock that they can get away with it.

Now, do you think Subaru has enough stock to do the same?

I don't. They sell one single FWD car here, and it's gone. They can't afford that mistake.

Remember, their entire marketing campaign right now is "Symmetrical AWD". They use that label at every opportunity, despite the 5 or so different systems they have.

Can't sell Asymmeterical FWD suddenly, now, can they?

kyfdx

I think the point is that Subaru can do better... maybe their marketing can change... or, maybe it doesn't have to..

Even Audi sells FWD vehicles.. I'd say they are even more famous than Subaru for AWD.. You have to change with the market.. FWD econoboxes are hot right now... FWD family sedans have been hot for 20 years... Why not scrape up some of that gravy?

It isn't like Subaru has always sold AWD and AWD only..

As far as the boxer engine? I'd wager that less than 20% of Subaru owners, even know what that means...

Embrace change.. lol..

bristol2

FWIW, I liked their green-factory ads. Those just seemed to have one version and then disappeared.

Wouldn't that be a good message for Subaru? Push the green thing now that we're green-washing everything?

Oh wait...there's the mpg problem.

Can't Subaru bring economical diesels to the market here, bring back more manuals in more models and carve out a bigger niche?
As someone else said, they don't have to be Honda, but they do have to beat Saab and Scion.

ateixeira

One word: "Quattro".

Rolls right off the tongue. Never mind that Quattro is optional, and that it represents two very distinct AWD systems, one Torsen and one Haldex.

Compare that to "Symmetrical All Wheel Drive". They need a better name for it, something people will remember. VDC doesn't cut it, either. VTD is also lame.

Subaru's last successful ad campaign was Croc Dundee.

FWD econoboxes are Toyota's thing. Scion's, even. Not Subaru's.

Why sell out if you don't have to? Market those as Scions. I'm not saying don't build them at all, just hedge your bets a little, so you have nothing to lose.

robr2

One word: "Quattro".

And we're right back to marketing!!

Croc Dundee was close to 10 years ago - Subaru hasn't had a cohesive marketing program since then. The product isn't bad - a few tweaks and it would be more desirable. But they have to get people to want the product and that takes marketing.

That's what Mini did, that's what VW did in the 90's, it's what Cadillac is doing now - all fairly pedestrian products that succeeded all due to good marketing.

kyfdx

Why sell out if you don't have to?

Well... I think the title of this discussion assumes that they have to do something different...

dino001

That's what Mini did, that's what VW did in the 90's, it's what Cadillac is doing now - all fairly pedestrian products that succeeded all due to good marketing.

I'm with you on it. Their marketing and product planning depts. should be disbanded.

paisan

I also don't think it would kill Subaru to put out a CamCord competitor.. even if it were FWD with an inline-four... They could even sell a Camry or Corolla clone.. The people that would buy it, don't know about Subaru's DNA with boxer engines and AWD, and couldn't care less..

Cause with Subaru's smaller dealer network, smaller economies of sales, etc. They would simply fail at this and be run-over by the Camcord sales. Subaru tried this in the late 80s and early 90s and it didn't work. What makes you think it would work now?

-mike

kyfdx

Uh.. because their entries in the late '80s, early '90s were poor imitations of the real thing? (Camry and Accord)

If everything is good with Subaru, then I guess they don't need to do anything.. :surprise:

paisan

Huh? The Legacies in the 90s were just as good as the Camcords, in terms of size etc. How do you explain the economies of scale? The cost to produce an equal car to a Camcord would mean Subaru would have to sell it for significantly MORE money, this would only drive them deeper into debt. You just can't beat H/T at their own game, it's not possible from a practical or financial stand point.

The main thing they need is a bigger sedan/wagon. I saw a stat that 6 out of ever 10 Subaru owners left the fold over the past 5 years because there was no upgrade path in terms of size from the Legacy. That's a lot of sales flushed! In 2010 the new Legacy should be A6 sized and will hopefully give folks that upgrade path and boost sales at the same time.

I know of at least 10-20 ex-subaru owners or prospective ones that just couldn't buy the legacy cause it was too cramped.

-mike

kyfdx

If they want to grow, they can't depend on current customers... That's what Saab has done.. see how far it got them..

Eventually, all your current customers will die... And, those guys driving WRXs? They aren't going to move into an Outback when they grow up.. :surprise:

We'll just have to disagree on the Legacy vs. Accord discussion... I don't like the Kool-Aid...

paisan

I agree, they need new buyers to survive, but they need to bring new buyers into the niche, rather than go full-on hed to head with the Accamry. Seriously what would make you by an I4 FWD Accamry Clone from Subaru?

The dealer network? Nope, it's smaller.
Reliability? Nope it's just about on par w/HT
AWD/Go Anywhere? Nope it doesn't ahve it?
Gadgets and Gizmos? Nope, the HT has everything if not more.
Milage? Probably not, it would be on par with the HT.
Price? Nope, they can't produce it for less than HT.

This is where Hyundai and Kia step into the mix, cause there is only a matter of time before that comes up:
Hyundai is a much larger company.
Price? Beats HT in price and gadgetry.
Warranty? Beats HT in terms of warranty.
Those are the reasons why people buy the Hyundai over the HT, and Subaru just wouldn't produce the sales numbers to bring the cost down where it would be considered a "Inexpensive Accamry"

-mike

paisan

Eventually, all your current customers will die... And, those guys driving WRXs? They aren't going to move into an Outback when they grow up..

Not so sure of this. I know lots of WRX folks that have moved into Tribeccas, Legacies, and Foresters as they had more kids. I've also seen them leave the brand when they wanted a larger sedan with the same characteristics (AWD, Handling) of thier RS or WRX.

-mike

kyfdx

We all know people who do things that are not the norm... That doesn't make a car market..

No one says that Subaru has to outsell Toyota and Honda to be profitable at selling family sedans.. But, if you want to grow, you need to offer something to the biggest market out there... FWD family sedans.. If Mazda, Mitsu, etc, can do it, then Subaru can do it.. I hear there is a really big car company that even owns a piece of Subaru... Maybe they could help? :surprise:

I think it's great to be an enthusiast.. But, I think you over-estimate the number of Subaru shoppers and owners who fit into that niche....

paisan

As I said, what reason would a buyer have to buy the FWD Family Sedan from Subaru? Just 1 reason will sufice

Also I never count the enthusiasts. Most of the folks I speak of are non-car people who either like Subaru or want to like Subaru due to their AWD systems. My mom is 60 and never drives it like an enthusiast, however she sold her 97 Legacy cause it was too small, she would come back in a heartbeat if they made a bigger one. Same with my uncle who drives and has driven Accords forever, he test drives a Legacy every time his lease is up on his Accord, but it's too small for him. This story can be repeated 100s and 100s and 1000s of times.

-mike

kyfdx

For the same reason that people buy Fords, Chevys, Hondas, Toyotas, Nissans, etc, etc..

They like the looks, performance, price.... maybe the dealership is close to where they live or work, so service is convenient.. Maybe they like the advertising.. maybe their best friend loves their Subaru (remember that ad campaign?).

Are you saying they can't sell a mainstream sedan? Why not? I've considered Legacys as an alternative to an Accord (in the late '90s). I'm sure lots of people would.. (or... to use your argument.. all my friends would do it.. ).

paisan

Ford, Chevy, Nissan- Have economies of scale on their side. So cost to produce would not be an issue.

As for dealerships, there are not a lot of Subaru dealerships, and certainly not a lot of stand alone ones, so dealers would be canibalizing their own sales of H/N/T cars by selling the subaru "FWD Family Car"

So yup, I'm saying they can't sell a mainstream FWD Sedan profitably. If they attempt it, they might as well start to pack up the dies and tools at SIA and ship em back to Japan...

-mike