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How Subaru is making record profits and defying industry trends

2014 Subaru Forester: This compact SUV’s sales were up 61 per cent through the first third of 2014.


In an auto industry dominated by mega-sized car companies, where the top players sell around 10 million vehicles a year each and industry leaders insist that no manufacturer can survive selling fewer than seven million a year, teeny, tiny Subaru is powering, along posting record sales and record profits.

Not only that, Subaru is thriving without offering massive discounts in an overall marketplace sloshing around in a sea of rich sales sweeteners – the profit-sapping discounting that is terrific for car buyers and horrible for a car company's bottom line. How is this possible?

How is it possible for Subaru, the automotive arm of Fuji Heavy Industries, to even survive when in its last fiscal year, sales amounted to just 825,000? Toyota, the Volkswagen Group and General Motors all sold about 10 million units last year.

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Subaru's global sales are up 14 per cent year-on-year, and in the coming year, Subaru expects sales to increase to 916,000. By 2020, the company's most recent plan calls for sales to top 1.1 million.

Subaru Canada's story is even more intriguing. Sales are up nearly 20 per cent in 2014 in an overall market up barely 2.0 per cent. With the launch of an all-new Legacy mid-size car on hand, Subaru will undoubtedly post record sales in Canada for the full year.

Subaru's formula for success isn't magic and it's not really a secret. The company builds very good cars that perform exceptionally well in crash tests and hold their value over the long haul. The big volume models, the Forester compact SUV (sales up 61 per cent through the first third of 2014), the Outback SUV and the XV Crosstrek, all are priced well versus the competition, yet offer at the very least more advanced drive train and all-wheel drive technology.

Yes, yes, Subaru's car designs could be more eye-catching and the interiors still need work. Subaru's design story is at best middle of the pack. But Subaru nails all the hard bits. The engineering is simply excellent, which is what you'd expect from a company that treats it engineers likely royalty.

Subaru, then, is a lesson for all of us: put your head down and stick to doing what you do best. The results will follow.

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