For Subaru, different is good
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Subaru, the iconic Japanese brand known for its all-wheel-drive cars, is demonstrating why carmakers need to offer something a little different.
Six months into the year, the company's sales drop of just 1 percent ranked as the industry's best showing. The two other brands at the top of the sales chart in this "down" year were Kia, down 6.5 percent through June, and Hyundai, down 11.34 percent.
In addition, Subaru reported it had its best June sales month in its history, with sales up 3 percent with 18,620 units sold, compared with 18,007 a year earlier. The June sales results also were up 6 percent over May.
"Their year-to-date sales are down 1 percent, while the industry is down 35.1 percent. They are vastly outperforming anybody else," said Tom Libby, independent auto analyst in Detroit.
Subaru is getting some of that sales power from its small crossover, Forester, which was totally revamped during the last model year. In the first half of this year, sales were up 31.2 percent over the same period last year.
"It's a perfect product for the Subaru brand, and it's a substantial improvement over the previous model," Mr. Libby said. "It's also larger and more competitive than the Ford Escape, Honda CR-V and Toyota RAV4."
But Subaru has a number of factors helping it avoid the worst of the recession that has crushed competitors, including a lack of exposure to the hard hit pickup truck market, intense customer loyalty and other models that are selling well.
Subaru officials report the 2009 Subaru Legacy sedan and Impreza vehicles also set sales records for June. Legacy posted a 28 percent increase over the previous year, while Impreza sales were up 24 percent.
Overall, the brand's market share remains small with 2 percent of overall sales, representing an increase from 1.2 percent in 2007. Subaru officials say the company still has a way to go before the public is aware of enough of its products to consider them before other, better known brands.
"If at all possible in the future, we really want to grow our brand," said Michael McHale, director, corporate communications for Subaru of America. "We need to reach to more people."
But industry observers think Subaru's best bet is not to become a mainstream third alternative to segment leaders Toyota and Honda.
"If they tried to be more mass market, it would be very difficult for them in terms of matching up categories price-wise," said Jack Nerad, editorial director of Kelley Blue Book. "Since they have great virtues now, using those will work for them much better."
The company's cars are regarded by some people as being quirky and eccentric. Subaru is proud of that.
"We really want to protect that quirkiness a little. We want to let people know that it's not so quirky a car as to be silly. But it is a conscious choice to buy one. You don't sleepwalk your way into a Subaru," Mr. McHale said.
Being different has helped the company avoid becoming just another brand of car. "It's almost like a cult. I know several people who have Subarus, and they adore them. It's a niche brand within the Asian brand category," Mr. Libby said.
One of the brand's key features -- all-wheel drive -- is a strong factor in sales. Subaru cultivated a reputation for having all-wheel drive -- standard on all Subaru models -- long before most other brands. Consumers for whom that is a must often think of the brand first, Mr. Nerad said.
Subaru is one of the main car brands of choice in the snowbound Northeast and in rugged western states such as Montana. The streets of Missoula, a college town and the site of the introduction of the all-new 2010 Outback, are lined with Subarus everywhere.
It isn't unusual in places like that to find people who, instead of trading in their Subaru, will pass it down to a family member as a treasured heirloom, which makes it hard to find used models, industry analysts say.
That inspired the new series of company commercials with the tag line, "Love Makes A Subaru," with families driving home a new Outback and tossing the keys to the old one to a teenager.
If Subaru is to be successful and keep those loyal fans, "It has to keep its core brand values -- safety, reliability, durability and performance. Those are the cornerstones of who we are," Mr. McHale said.
Company officials say Subaru has the second-highest "recommend to a friend" rating in the industry, second only to the exotic Lamborghini sports car.
Deeply knowledgeable about their favorite cars, Subaru owners often can spout off technical facts -- some pretty complicated -- at a moment's prompting, industry analysts say.
Along with the loyal all-wheel-drive fans, Subaru also has the good fortune of having many customers who are a little more upscale and have more financial resources in the recessionary economy, Mr. Libby said.
That's a good thing because, historically, Subaru prices have tended to be higher than other products in their market segments, he added.
Company officials also said many customers pay cash, which has helped Subaru to be largely unscathed by the recession credit crunch.
In the end, "The company does its own thing and chugs along separate and apart from the norm," Mr. Nerad said.
First Published August 6, 2009 12:00 am
