Subaru Could Be In Serious Trouble

Industry News / 14 Comments

This hasn't happened since the 1990s.

The current state of the auto industry is taking a toll on Subaru, one of Japan's smallest automakers. Giants like Honda and Toyota have been able to better navigate the global semiconductor chip shortage crisis thanks to more diversified and greater production capabilities. Subaru, however, has only one factory in the US, in Lafayette, Indiana but nearly 75 percent of its global models are built in Japan. The Subaru Ascent, Impreza, Legacy, and Outback are US-built. The rest comes from overseas, including the just-revealed Solterra. That's the ideal recipe for a supply problem.

Automotive News reports that Subaru is currently experiencing a two-year sales decline, something that hasn't happened since the 1990s. It hopes to see a sales recovery next year. Total sales for this year are not expected to hit 600,000 units though it's still a little too early to get a final tally.

2020-2022 Subaru Outback Front Angle View Subaru
2020-2022 Subaru Outback Rear Angle View Subaru
2020-2022 Subaru Outback Interior Overview Subaru

CEO Tomomi Nakamura admitted that he's taking a wait-and-see approach, especially post-Thanksgiving. To compare, Subaru sold nearly 612,000 vehicles in the US in 2020, a 12.6 percent decrease compared to 2019 when it set a record high. The last time Subaru had a sales decline in the US two years in a row was in 1995 and 1996. Since then, sales have dropped only three times but recovered the following year.

The good news is that this isn't the first time Subaru has experienced hardship and managed to overcome it. For example, sales decreased every year beginning in 1987 until 1995. Subaru's fortunes began to change in '95 thanks mainly to the introduction of one key model, the Outback.

2019-2022 Subaru Ascent Front Angle View Subaru
2019-2022 Subaru Ascent Rear Angle View Subaru
2019-2022 Subaru Ascent Dashboard Subaru

Now in its sixth generation, the Legacy-based Outback wagon/crossover continues to be its best-selling vehicle in the US, followed by the Forester. Unfortunately, the pandemic and the resulting chip crisis stunted Subaru's sales momentum. A lack of those crucial chips means it can't complete final vehicle assembly and deliveries, hence the sales drop.

A dealership source familiar with the matter told CarBuzz that around 70 percent of its incoming new inventory, not expected until early next year, is already pre-sold. Demand still remains very high but resolving chip supply issues remains crucial. As of this writing, Subaru hopes to sell about 650,000 vehicles in 2022 but Nakamura was forced to admit "there is still uncertainty surrounding the semiconductor situation."

Forward View Subaru
Rear Angle View Subaru
Interior Overview Subaru
Source Credits: Automotive News

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