Subaru Stands at a Crossroads

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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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