They boast fuel efficiency, practicality, and all wheel drive while producing their cars in certified wildlife preserves. Their operating margin? 13.2 percent. They aren’t tarnished by endless recalls and bail outs, and although technically a Japanese brand, the people at Subaru make distinctly American cars. The company has posted month over month gains for 33 straight months, and this year it will sell 40,000 more cars than its original aggressive estimate of 460,000.
For most major carmakers, achieving this level of sustainable growth at such a margin is next to impossible. But for Subaru, they have remained small and have catered their products to a niche market of loyal outdoorsy customers for years. That might be changing as Subaru is tempted by the lure of the big stage. Without a doubt, the cars that used to appeal to just a small number of typically-outdoorsy customers now attract new customers looking for non-giant SUVs and crossovers. However, as more customers turn to Subaru, the cars Subaru has started to roll out look less like Subarus and more like Hondas and Toyotas.
While more is always appealing to less, growing for the sake of growing has made Subaru look a bit conformist to its original customer set, who believe it’s starting to selling out to become a big, bland company like all the others. This might be problematic not just for die-hard Subaru purists, but for investors in the company as well. While their niche outdoorsy customers no longer account for all of Subaru’s revenue, these fans have been the driving factor in Subaru’s margins. These customers have paid a premium in the past for products that fit their lifestyle, but they may not be willing to pay the same amount for a watered-down, vanilla version of a Subaru that’s trying to be everything to everyone.
Sources from this post: