MarketLine Blog

Subaru: Company is growing well in the US but declining heavily in Europe

Some strange things are happening at Subaru Corp. The company famous for its boxer engines and all wheel drive vehicles is making excellent progress in the US market, but is declining in Europe, revealing the big differences between the two automotive markets and their expectations of vehicles. For Subaru though it appears to have damaged the company’s confidence in the European market and now it’s range is reduced and cautious for fear of wasting time trying to convince an audience that is not receptive to its products anymore. But really there are plenty of good opportunities for Subaru in Europe. Overall though taking its remarkable US growth in to consideration Subaru is a small car company that is managing to compete with much bigger companies and win.

At a time in the auto market where consolidation and collaboration are making the industry and its products more homogenous, Subaru is unique in that it has managed to continue to do its own thing. Subaru has based its entire philosophy and product line around capability, durability and practicality. To this end, the vast majority of its products for the last two decades have used the same basic principle of a symmetrical four-wheel drive system and engines laid out in the boxer configuration.

In the US Subaru has been having some remarkable success. Since 2006 the company’s annual sales volumes have risen 222.8% and it is the fastest growing of all the mainstream companies in that region. Its vehicles are competing very favorably with those from the mass manufacturers; for instance Ford’s Fusion has the same starting price as a Subaru Legacy, which means that customers which want the elements that Subaru can provide with its classic platform, such as durability and all-wheel drive, can have them for the same price as a standard mass manufactured vehicle.

Overall, US pricing is very favorable for Subaru and the company is offering competitive finance schemes too such as 0% interest PCP deals, the types of schemes that only the biggest manufacturers would typically be able to offer. Coupled with this, list prices are very competitive too meaning Subaru has been able to win support in some more price sensitive markets which has really pushed up sales volumes.

Over the last decade Europe has become less of a priority in Europe and this has been both a good and bad strategy for the company. Reducing focus on Europe has allowed the company to really push in the US market and its success there is testament to the validity of this plan. The problem though is that Europe is still a key region for both automotive sales, and vehicle development and production meaning that companies not operating here can get left behind globally if they do not have a strong presence there.

Subaru is one of the few car companies yet to release a hybrid or electrified model. As the automotive world moves decidedly towards to this electrified future Subaru is very likely to struggle for a number of reasons. Subaru’s particular niche, of boxer engines and four wheel drive will become irrelevant overnight, because electrification will make the iconic engine redundant and four wheel drive electric power trains are relatively simple to implement meaning many EVs have this as standard.

Posted in Automotive.

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