Subaru Stands at a Crossroads

Detroit News

With sales surging, Subaru execs wonder if the niche company is getting too big – or perhaps the lineup should be expanded – and where does Subaru go from here?

Get the details on the debate, while U.S. customers wait months to get one.

Profits and sales are heading toward records after the company benefited more than most Japanese carmakers from the weakening of the yen and as new models such as the BRZ sports car have become so popular that U.S. consumers need to wait months to get one. The success is leading President Yasuyuki Yoshinaga to worry whether the niche maker of all-wheel-drive vehicles is getting too big.

“We’re standing at a major turning point for Subaru,” Yoshinaga said in an interview in Tokyo. “It shouldn’t just be about volumes. We should be making cars only Subaru can make that are a little more expensive and more profitable than the competition.”

Debates are raging internally whether to expand Subaru’s lineup of cars, make a push for cheaper vehicles for markets such as India or stick to the products the company sells well, Yoshinaga said. Executives at the company, which counts Toyota Motor Corp. as its biggest shareholder, will begin discussions this month through next year to determine the long-term direction of the Tokyo-based company, he said.

With Subaru on such a roll, discussions that could put a brake on expansion would risk the company missing out on record demand. Debates about preserving Subaru’s niche status also come as the weakening yen makes it more favorable for manufacturers to expand production in Japan.

Yoshinaga said producing as many as 1 million units would be an “appropriate level” for Subaru.

Still, the company isn’t halting expansion. Subaru is investing $400 million to expand output at its Lafayette, Ind., factory by 100,000 units by the end of 2016 as demand rises for its vehicles.

For now, the company’s enjoying its salad days. Profit almost tripled to a record 48.5 billion yen ($500 million) last quarter…




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