From little acorns, big oaks grow. Yeah, yeah, it’s a tired old cliche but it aptly describes the rise of Subaru of America (SOA) which just celebrated its 50th birthday at its Cherry Hill, New Jersey (NJ) base.
In 1968, the company, whose parent was until recently known as Fuji Heavy Industries, sold just 332 cars. 1969: 2,407. By 1972: 24,056. Oil crisis year 1973: a big jump to 37,393 then a fall to 22,980 for belt tightening 1974. Back up to 41,587 for 1975 and a steady climb from there to a plateau of 183,242 in 1986 and then decline to 99,381 in 1994. But, since then, 187,402 by 2004, 513,693 in 2014, 615,132 in 2016 and 647,956 last year. The right products, made right (with local build in the US) and sold right (the nimble, relatively economical all wheel drive Subies are very popular in ‘snowbelt’ states for obvious reasons).
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As we noted in our review of 2017 US sales: “2017 was a very good year for Subaru in the US with sales up by over 5% to 648,000 units (a total in excess of VW Group in the US)”.
The overall US light vehicle market dipped 1.8% to 17,245,866 units last year, after some years of growth, while Subaru’s tally (we called it at a precise 647,956 units) was up 5.3%. Kicking off 2018, the brand ended January with 44,357 sales, up 1.1% in a market up 1.2% to 1,157,407.
Contrast that with here in the UK where Subaru 2017 sales plunged almost 26% to just 2,679 cars in an overall market off 5.65% to 2,540,617 units. January’s result was a little better with sales off almost 13% to just 155 cars; the independent UK importer surely must eye the factory-owned US shop’s achievements with envy.
SOA will move to new corporate headquarters in Camden, also in NJ, next May, bringing several offices under one new roof.
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By GlobalDataThe start
Like the UK operation, SOA originally was privately owned, founded on 15 February, 1968 by two American businessmen: Malcolm Bricklin (later to bring the notorious Yugo brand to the US) and Harvey Lamm. In 1965 Bricklin was selling franchises for motor scooters that included the Fuji Rabbit and the tiny Subaru 360. Bricklin then formed Subaru of America to sell Subaru franchises with Lamm who was the son of a furniture salesman in Philadelphia. From 1967 to 1990, Lamm served as chairman of the board, chief executive officer, president and chief operating officer of SOA.
The first Subaru ‘office’ was a small rental unit in Balboa Park, California which Lamm set up in 1967. The following year, SOA was officially established in Bala Cynwyd, Pennsylvania before moving to larger quarters in Pennsauken, New Jersey in 1970. The HQ moved to its current Cherry Hill location in October 1986.
In the early years, Bricklin and Lamm’s business model was to sell distributor franchises to investors across the country, resulting in 13 distributors nationwide. In subsequent years, SOA bought out most of the original distributors, with the exceptions of Subaru of New England (SNE) and Subaru Distribution Corp (SDC) which covers New York and parts of NJ.
On 31 August, 1990, Fuji Heavy Industries (FHI) acquired Subaru of America through a US$6 per share cash offer. FHI had already purchased just under half of SOA stock from prior investments.
The name Subaru comes from where?
Fuji Heavy Industries (renamed Subaru Corporation in April 2017) traces its roots to the Nakajima Aircraft Company. By 1950, Nakajima was known as Fuji Heavy Industries and FHI was incorporated on 15 July, 1953 when five Japanese companies, known as Fuji Kogyo, Fuji Jidosha Kogyo, Omiya Fuji Kogyo, Utsunomiya Sharyo and Tokyo Fuji Sangyo, joined together. The Subaru name means unite in Japanese. The company logo is the cluster of six stars recognised by the Japanese in the star constellation Pleiades (Subaru in Japanese).
US visa granted – 1968 to 1988
The first Subaru – the 360 saloon (a tiny rear-engine car) – reached the US in May 1968. Priced at $1,290, it was $300 cheaper than the similar looking Volkswagen Beetle but was 1,000lb lighter. This made it exempt from federal safety standards, and the car was required to meet only the less stringent standards of individual states. In contrast to the company’s modern reputation for safety, Consumer Reports (the US equivalent of the UK’s Which?) rated the 360 as unacceptable which quickly affected sales in a model year in which the first meaningful federal safety and emissions rules had come into effect.
A larger model was needed and, in 1970, Subaru developed the front engine, front drive FF-1. This proved handy for driving in snow and gave Subaru a new market position as the first Japanese manufacturer to feature front wheel drive (many of its rivals did not catch up until the early 1980s) as well as the first Subaru vehicle to have the horizontally-opposed boxer engine familiar to owners of some Alfa Romeo and Lancia models. The FF-1 was replaced by the larger, more powerful Leone series in 1973 which was marketed simply as either a DL or GL model regardless of body style, to focus on establishing the Subaru brand name. In 1975, the company introduced its first station wagon with all-wheel drive – the DL/GL. The company reckons this was a major automotive milestone, as the first mass production popular priced 4WD passenger car which “spawned a revolution in the mass adoption of 4WD and AWD cars and crossovers”.
The 1973 oil crisis helped the makers of small cars (Datsun, Toyota and Honda did particularly well in the US as a result) as did Subaru but the automaker next suffered from the consequent yen/dollar exchange rate changes which forced Fuji Heavy to raise prices with that resultant sales drop in 1974. With supply now exceeding demand, the company suffered severe losses.
In 1978, the company debuted the BRAT (Bi-drive Recreational All-terrain Transporter) to meet the demand for small pickup trucks in the US (which local makers bar VW were not really addressing). President Ronald Reagan was a notable BRAT owner.
In 1981, the company was an inadvertent beneficiary of a MITI trade agreement between Japan and the US whereby the former agreed voluntarily to limit the number of cars sent to the US. With supply restricted, Subaru added features and raised the average price of its cars from $6,000 to $8,000. At this time SOA became highly profitable; however, it was an unsustainable position for the company.
1989 – US manufacturing
In 1989, Subaru, together with Isuzu, opened a factory in Lafayette, Indiana called Subaru-Isuzu Automotive or SIA. The plant initially produced the Subaru Legacy and Isuzu Rodeo. In 2001, FHI purchased the Isuzu holding for $1 and renamed the factory Subaru of Indiana Automotive. From 2007 until 2016, SIA also produced (by then, part owner) Toyota’s Camry under contract.
The plant is currently operating at its highest capacity and produced close to 350,000 vehicles in 2017, Legacy, Outback and Impreza, the latter having been added to the US build roster. The new three-row 2019 Ascent SUV, the automaker’s biggest vehicle to daste, will also be produced at the plant from early summer this year.
1989-1994
In the late 1980s and early 1990s, Subaru added sporty coupe models; the XT in 1986 and the SVX in 1992. The Legacy [Liberty in Australia], a clear move upscale for the brand (hence the nameplate change from Leone), was introduced in 1989.
However, the widening of the brand also caused Subaru to lose its focus on its core American buyers. By 1993, the company was showing record financial losses, high inventory (300 day supply), six consecutive years of declining sales, ineffective advertising, and a confusing brand image.
1995-2005
In 1995, in response to the growing trend for SUVs, SOA launched the Outback – claimed to be the “world’s first sport utility wagon”. Supported by a marketing campaign using Crocodile Dundee actor, Paul Hogan, this new model helped Subaru US sales recover.
General Motors took a 20% share in FHI from 1999-2005. In 2004, GM’s subsidiary Saab sold a version of Fuji’s Subaru Impreza – the 9-2x – built by FHI in Japan. In 2005, Toyota Motor (TMC) paid approximately US$300m to GM for 68m shares, an 8.7% stake in Fuji. In 2007, TMC paid $311m to raise its stake to 16.5%. This partnership led to FHI building Toyotas and the development of the BRZ/FRS/86 sports car which launched in 2012.
The introduction of the WRX to the US in 2001 revived attention on the brand. In 2002, looking to further expand its offerings, the company developed the Baja, an open bed pickup, based on the Legacy.
Subaru launched the Tribeca mid-size crossover in 2005, initially as the B9 Tribeca (it was named after the New York City neighbourhood). Produced at SIA, Tribeca was developed as a joint project with GM, with the partner model to be sold as a Saab, but that variant never was launched. Featuring what SOA now calls “polarising design”, the model was found quickly to be too small for the US (some were exported, including to the UK) and, while the 2008 models received a facelift and a larger 3.6 litre, flat six engine, the model never achieved its targeted sales and was dropped in 2014 with the announcement of a new, larger three-row model in the works.
By 2005, Subaru sales were stagnant and the company, now headed by current chief Thomas Doll, decided a change was needed.
2006-2017
In late 2006, a new creative agency, Minneapolis-based Carmichael Lynch was hired and a new set of advertisements followed. Instead of buying a Super Bowl [football] slot, the company sponsored Animal Planet’s Puppy Bowl [find it on YouTube].
From 2007, the company readjusted pricing to protect residual values, and Subaru vehicles grew in size to better reflect US tastes. New models Crosstrek and BRZ were added to the line. Focusing advertising on safety, reliability, versatility and performance, Subaru sales in the 10 years from 2007-2017 have risen consecutively from below 200,000 to over 600,000 vehicles per year, and the company’s continued sales growth is currently the longest in the industry. Subaru now outsells many established brands as the seventh best-selling brand in America. An all-new three-row SUV, the 2019 Ascent, was announced for late 2017.
Motorsport
The Subaru brand has long been associated with motorsport and in particular rally which highlights the symmetrical all wheel drive system, used in most production models. A STI (Subaru Tecnica International) team competed first in the World Rally Championship (WRC) in 1981. In 1990, Subaru ran a Legacy in WRC and from 1993 the smaller Impreza took over. Subaru won the WRC manufacturers’ championship three times; in 1995, 1996, and 1997, and the drivers’ championship three times; in 1995, 2001, and 2003.
In the US, with the introduction of WRX in 2001, the automaker created Subaru Rally Team USA to compete in US rally racing. The team is run by factory technical partner Vermont SportsCar and competes primarily in stage rally events and the Red Bull Global Rallycross Championship. The team also competes occasionally in the Canadian Rally Championship, the X Games, hill climb events, and the WRC.
From 2013, SOA also developed the record-setting Isle of Man TT cars, driven by Mark Higgins brother of David, which set 4-wheel speed records on the famous TT Bike circuit.
