Word on the Street: The Secret of Subaru's Success
October 27, 2009

It's no secret that Subaru has been one of the biggest automotive success stories of 2009.  During one of the worst economies on record, the brand has bucked the industry's downward trend of sales to steadily gain U.S. market share, climbing from just 1.1 percent of all vehicles sold in January 2008 all the way to 2 percent in September. 

But what's the secret to Subaru's success? Great products? Savvy marketing? Or perhaps just being in the right place at the right time? Car shoppers and enthusiasts on Edmunds' CarSpace Forums have been debating this topic at length over the last few months, and here's a peek at what they've had to say.

Timely Redesign

Most agree that Subaru has benefited greatly from the Forester's 2009 redesign, which earns nearly universal praise from our members.  One commends it as "a very user-friendly vehicle, easy to drive, no blind spots, perfect seat height," while another notes that "prior models were tight for taller folks, but they addressed that for 2009."  Sure enough, the compact SUV is both longer and wider than before, offering an additional four inches of legroom in the rear seat.  

Folks also agree that the new Forester is not quite as homely as the earlier version, either.  Someone who had been wondering "if Subaru even HAD a styling department" deems the Forester's new look "reasonably attractive" - a notable improvement. 

Another post sums things up nicely, proclaiming the Forester "pretty much nailed this time around," and adding, "It's sized right. It looks good. It's contented right. It's priced right."

Sounds like a winner, and it is. As of September, year-to-date sales of the Forester, according to Edmunds.com, were 60,441 -- up 35 percent from the same period in 2008.  That's mighty impressive considering industry sales were down 27 percent during this time.  Even more impressive is the fact that, according to Edmunds' True Cost of Incentives (TCI) data, Subaru kept average incentives per vehicle at $1,165 throughout this period, less than half that of the $2,857 industry average.

AWD Keeps Brand on Track

Still, a redesign alone can't fully explain this kind of sales performance. Edmunds.com  readers theorize that another major factor is the image that Subaru vehicles consistently project.  As one noted, "I like Subarus because they aren't pretentious. They have an image of practicality, ruggedness and a certain sobriety, but they aren't cheap-looking. I guess the design is best called 'purposeful.'" 

Another says that buyers "coming out of SUVs might be attracted to the AWD-only, 'rugged' message of Subaru, which along with the mostly 4-cylinder engines saves them some gas money while providing them something similar to the type of vehicle they are accustomed to." 

And, in fact, looking at Edmunds' trade-in data from the height of the Cash for Clunkers period in August reveals that Ford and Jeep were two of the top three makes traded-in for a Subaru.

And the third make from that list?  Subaru. Yes, it is widely agreed by contributors to the discussion that no one loves a Subaru quite as much as a current owner.

"I've heard more than one Subie salesperson say that current Subie owners are a very easy sell, as they usually love their cars," says one, while another states that "most Subaru owners I know are on at least their third one."

The common wisdom is that this positive brand identity has been achieved in large part by the fact that the company has stuck steadfastly to selling only all-wheel-drive vehicles in the U.S. over the last decade.  As one contributor summed it up, "It's gotta be AWD to be a Subie."

Some worry that the fuel economy penalty incurred by AWD drivetrains - roughly one mile per gallon compared an otherwise equivalent two-wheel-drive model - may end up hurting sales in the long run, assuming the price of gasoline continues to rise. "People in my office have told me that they would never consider an AWD vehicle because 'they get poor fuel economy,'" says one, who then suggests that "a FWD offering might help."

But most insist that AWD-only is integral to Subaru brand in the U.S. and that if "they start offering FWD or RWD even on just a few models that... brand identity starts getting watered down."  One post questions, "Is it worth losing your identity for a 10% gain in fuel economy?"  Another argues, "They need to maintain the exclusivity of AWD standard; otherwise... they'd wind up being in the same position as Mitsubishi or Suzuki -- good but overlooked over for having nothing to stand out."  And a third likens the potential effect of Subaru abandoning AWD-only to GM overtaking Saab in the 1990s, noting that Saab was "no longer the 'quirky car' once GM homogenized and pasteurized them."

Still, at least one in the group claims that fuel economy was "an obstacle to me getting another one." At the same time, others point to Subaru's boxer diesel engine (already offered in other markets) as well as possible upcoming hybrid platforms, such as the innovative two-motor system recently unveiled at the Tokyo Auto Show, as likely MPG saviors for the U.S. market.

Good Cars for Bad Times

In the end, the various speculations converge on a common thought: that the rugged, practical image Subaru has clearly achieved wound up attracting a somewhat unexpected audience - the well-to-do.

Says one, "Subaru owners can afford more expensive cars, so they're more recession-proof."  Another claims that "Subaru is a car for affluent people who don't want to show off."  And: "I know a family that just bought a new one, and they're sitting on maybe 200--300 million bucks."

This notion is borne out in Edmunds' financing data, which shows that Subaru buyers enjoy much lower interest rates on their car loans -- and thus much higher credit ratings -- than do buyers of competing brands:
 
This idea is especially relevant during hard times, when those with means are less likely to spend their dough on a new BMW or Land Rover - perhaps for fear of looking insensitive to those who are suffering, or more likely because they'd rather preserve their cash until the economy is back on solid ground.

But that begs the question, what happens when the economy finally turns around?  Might Subaru give up some of its hard-won turf?  If sales of the just-released 2010 Outback are any indicator, they shouldn't be too worried.

According to Edmunds data, buyers snapped up 63 percent more Outbacks, which was redesigned for the 2010 model year, this September compared to the 2009 model one year ago.

And those logging their reviews on Edmunds give it an overall rating of 9.1 out of 10, nearly a point higher than the outgoing version, offering such praise as "feels much roomier," and "very comfortable and fun to drive."

In other words, it appears that the company, like the AWD drivetrain that it is known for, handles great in any kind of weather.

And that's the word on the street. -- Mark Holthoff, Edmunds.com Manager of Customer Support

Photos by Subaru

1 - The redesigned 2010 Subaru Outback is off to a fast start.

2 - Subaru Forester is credited with much of the brand's success.

 

Posted by Michelle Krebs at 10:54 AM under Commentary , Technology | Comments (4) | digg this | Seed Newsvine

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