Subaru's customers are, the company admits, a little oddball. How else do you explain the fact that Subaru of America was the only car company to increase unit sales last year? Subaru buyers tend to be overeducated; they buy less car than they can afford and hang on to it forever. "They pay cash, and then you never see them again," says Tim Mahoney, Subaru of America's chief marketing officer. At least not for an average 7.3 years, when they return like migrating carbirds to buy another one. Recession or not.
You know, of course, that Detroit is on its knees. But Stuttgart, Tokyo and Seoul aren't faring particularly well either. Toyota's U.S. sales were off 16% last year. Yet Subaru was positive to the tune of 491 cars. The company sold 187,699 vehicles last year, led by value-driven models like the Forester SUV and Outback wagon ($19,995 to $22,295) and the muscled-up Impreza WRX ($24,995), a small sedan. (See pictures of the remains of Detroit.)
That's an increase of just 0.3% over 2007. But in a disastrous year for the industry, it boosted Subaru's market share to 1.92%, from 1.2%. In the auto industry, that's a huge increase and a higher market share than Cadillac, for instance. Subaru did it without giving away the store too. For 2008, the company decided to roll back its list prices and back off the rebates. The sticker price of the 2009 Forester, for instance, was lowered to $19,995, from $21,295. "We had to bring down our incentive costs and stop selling based on the deal," says Tom Doll, executive vice president of the company, which is a division of Japan's Fuji Heavy Industries.
Loyalty can help you do that, and Subaru has leveraged its existing customers, who identify more with their cars than perhaps is healthy. "If you stop a Subaru owner at sporting event, ski slope, shopping center, they'll tell you, 'I love this car,' " says Mahoney. And being the opinionated-bumper-sticker type, they are more likely to recommend the brand than even Toyota or Honda owners.
Certainly, it's a perfect era for a car company that is green (it boasts zero-landfill production plants), safety-focused, and can deliver a fair amount of value and performance. In the snow belt regions of the Northeast and intermountain west, Subaru has long had a following because of its all-wheel-drive portfolio.
But Subaru has successfully expanded both its geography and demography, becoming a more national car company and getting a broader customer base.
To accomplish both, the company expanded its safety-first image to one that includes better performance and more fun. After all, who wants to motor around in the equivalent of all-wheel-drive bubble wrap? California, a vital auto market, discovered Subaru courtesy of models like the Impreza WRX. All-wheel drive is terrific in the Sierras, but in the Los Angeles Basin, it's more about performance, which the 265-hp, intercooled, turbocharged WRX could address. The muscle models scored well with younger drivers and allowed Subaru to get more exposure for its full line.
Having more than weathered the dreadfully bad 2008, Subaru officials aren't planning on lowering sales this year. At Detroit's North American International Auto Show, Subaru unveiled a concept car that will likely evolve into a midsize sedan version of its Legacy. And on a broader note, Doll says that more available credit and Barack Obama's stimulus package should get additional buyers into showrooms. Of course, if all else fails, there are always those folks who bought an Outback 7.3 years ago and are ready to return.