You remember 2009, though you’d likely prefer to forget it.
The auto industry all but collapsed as the global economy went into meltdown. After total U.S. new vehicle sales volume fell to a 25-year low in 2008, sales tumbled a further 21 percent in 2009, the worst year for auto sales since 1982.
And yet Subaru of America set a sales record in 2009.
2017 is no 2009. But after surging to record levels in 2016, the U.S. auto industry’s sales volume is once again shrinking, albeit modestly. But Subaru of America president Tom Doll told Automotive News, “We certainly think we’re going to have our ninth consecutive year of record sales.”
Subaru followed up 2009’s record output with annual sales records in each of the next seven years. Subaru’s volume in the U.S., by far the brand’s most important market, nearly tripled between 2009 and 2016.
2012 marked the first year with more than 300,000 sales. A year later, Subaru topped the 400K marker. Two years after that, Subaru sold more than 600,000 new vehicles for the first time.
Assume continuation of the brand’s 9-percent growth rate achieved through 2017’s first five months, plus growth not even half that strong in 2018, and the brand will top the 700,000-unit barrier.
This isn’t Double A ball. Subaru is mainstream.
The launch of a new Impreza is certainly helping right now. As consumers increasingly reject passenger cars, the new Impreza reported a 42-percent year-over-year improvement through the end of May. Next, count on the new Impreza-based Crosstrek to provide a sales boost. Speaking of the second-generation Crosstrek’s launch, Subaru’s Doll says, “I think that Crosstrek is going to be spectacular.”
That won’t end the new product surge. Subaru is freshening the Legacy and Outback — the latter is off-and-on Subaru’s top seller — for the 2018 model year.2018 also brings about the 2019 Subaru Ascent, Subaru’s long-awaited successor to the failed Tribeca. It remains to be seen whether the Ascent will bring new buyers into the fold or simply migrate current Subaru loyalists north from the Outback and Forester.
If there are problems for Subaru of America, demand clearly isn’t one of them. While often constrained in the past, capacity at the automaker’s Indiana assembly plant (where the Legacy, Outback, and Impreza are built) is unlikely to be an issue for the next half-decade, according to Doll. And even if it was, Subaru would much rather be moderately short on supply than be the holder of excessive inventory.
The shrinking market won’t pose too much of a difficulty for Subaru, either, especially if the automaker is willing to ramp up incentives, even mildly, for some of its older models.
No, it’s at the dealer level where service capacity is the automaker’s big issue.
“With all the vehicles that we’ve sold over the last five to seven years, the retailers need to invest their profits in expansion,” Doll says.
Subaru has a Fixed Operations Expansion program to aid in the process, but there’s no overnight remedy. Rapid growth generates a unique set of problems for a formerly small automaker. A dealer network responsible for 16,000 monthly sales a decade ago — and the consequent service responsibilities — sold more than 51,000 new vehicles per month in 2016.
And this year? Likely 55,000 vehicles per month. And next year? Likely more than 58,000 vehicles per month. And the year after that?