Impreza, Forester push up Subaru sales
Diana T. Kurylko
Automotive News
August 11, 2008 - 12:01 am ET
CHERRY HILL, N.J. Subaru is bucking the U.S. sales slump without pouring on large incentives or pumping up the advertising, and it's outperforming some of the biggest Japanese brands.
Subaru sales were up 5.4 percent in July and 4.5 percent for the first seven months of 2008. They are expected to follow that trend for the rest of the year, especially as the onset of cold weather increases demand for all-wheel drive, says Tim Colbeck, Subaru of America's vice president of sales.
Subaru is likely to hit its 200,000 unit benchmark in the United States again this year without a major boost in incentive spending, he says. Last year, Subaru's U.S. sales fell 6.7 percent to 187,208 units from 200,703 a year earlier.
So what besides a keen focus on its awd brand strategy and more focused advertising is driving Subaru's U.S. sales? Undeniably lucky timing of two key replacement products: the Impreza compact and Forester compact crossover, with decontented and lower-priced entry models for both vehicles.
When the Impreza was redesigned last year, Subaru changed the styling of the four-door dramatically, dropped the station wagon and added a five-door hatchback Impreza. Sales rose 19.3 percent in July compared with a year earlier and 13.1 percent through July. Subaru expects to set a sales record with the Impreza this year, topping last year's record of 46,333 cars.
Subaru's formula
How Subaru bumped up its U.S. sales this year
-- Focused marketing on the strong brand message of awd, performance
-- Lowered incentives to maintain residuals
-- Lowered prices on redesigned Impreza, Forester
Price cut
Subaru lowered the base price of the entry 2008 Impreza by about $500 to $17,640, including shipping. Subaru is offering a $179 monthly lease with $1,000 down on the Impreza, "which makes it a very affordable first car," Colbeck says.
"A lot of the growth we're seeing is in the five-door it's doing much better than the old wagon," he says.
A bigger and more traditional-looking Forester crossover replacement was launched in April.
"We should have a record year, selling at least in the mid-50,000s," Colbeck says. "We have no dealer or consumer cash on that car."
Subaru lowered the base model price by about $1,000 to $20,640, including shipping, by decontenting the vehicle. It removed standard heated seats, the roof rack and power mirrors, and buyers haven't seemed to care.
Sales of the Forester were up 51.1 percent in July and 26.0 percent for the first seven months. Because of high demand worldwide, Subaru of America hopes it can get enough product to keep U.S. sales flying, Colbeck says.
ENLARGE
Impreza WRX 5-door
Older models slow
Meanwhile, sales of Subaru's three older models the Legacy Outback wagon, Legacy sedan and Tribeca SUV are slower, reflecting the slump in the automotive market. Colbeck says Subaru cut its customer cash from $2,250 to $1,500 on the Outback, which was last redesigned for the 2005 model year but won't be changed for at least another model year.
Forester sales have cut into those of the Outback, but not substantially, Colbeck says. Outback sales this year are expected to drop at least 6 percent compared with 2007, he says.
The Tribeca, which has been redesigned, repackaged, loaded up with incentives and then stripped of them, is doing miserably with sales down 53.1 percent in July.
But Subaru won't put back the $2,000 customer cash it had on the Tribeca before the 2008 model redesign that softened the radical styling and gave it more power.
How long will streak run?
How long Subaru's U.S. sales streak will continue isn't clear. The company has targeted sales of 230,000 to 240,000 units by 2011 but won't add vehicles in any of the hot categories subcompacts, diesels and hybrids in the foreseeable future.
Subaru sells diesels in Europe. Japanese management has said a diesel may come to the United States, but Colbeck says U.S. homologation will take years.
Dealers are clamoring for a smaller car, but Tokyo has made no commitments. The problem with a smaller car is building an awd vehicle with performance "that we can all make money with," Colbeck says.
A hybrid is being developed with Toyota which now owns 17 percent of Subaru but there's no public timetable or clear indication of which model will get the powerplant. Subaru of America management isn't saying more. The promised rear-drive sports car being developed jointly with Toyota isn't coming until 2011.
