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"By
Kelley Blue Book
June 9, 2019
The valuation analysts at Kelley Blue Book reported the estimated average transaction price for a light vehicle in the United States was $37,185 in May 2019. New-vehicle prices increased $1,320 (up 3.7 percent) from May 2018, while decreasing $208 (down 0.6 percent) from last month."

By this average transaction price yardstick, Subaru is average, it would be interesting to know what % of their sales come in below average. They have some models that can be pushed much higher in price, if all the doodads are tacked on, but how many do they sell, much less at MSRP?

Subaru doesn’t have the volume or the prestige to start an offshoot high price brand. Only Toyota with their trove of $$ ever pulled this off (and Lexus actually has only three sellers in any volume,and only one that tops 100K sales), Infiniti and Acura never really took off as intended and good luck to Genesis. Also remember the SVX about 30 years ago, a great car in auto history, but the market did not accept it and Subaru and its financial backers still remember that I’m sure.

They are between a rock and a hard place. The price has to be pushed up, but the essence of the brand is that it appeals to the contrarian value buyer, who could afford to spend more, but chooses not to. So they can’t push too hard on price. So they do their best to push the supposed benefits of relationship, such as safety tech, the company’s social integrity, quality of product and service. I guess either you like it or you don’t, there’s enough to choose from out there.
 

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Subaru doesn’t have the volume or the prestige to start an offshoot high price brand. Only Toyota with their trove of $$ ever pulled this off (and Lexus actually has only three sellers in any volume,and only one that tops 100K sales), Infiniti and Acura never really took off as intended and good luck to Genesis. Also remember the SVX about 30 years ago, a great car in auto history, but the market did not accept it and Subaru and its financial backers still remember that I’m sure.
Exactly why Toyota should open the checkbook and buy the other 80% of Subaru.

Keep Subaru as the value brand in the $25-30k range, cut back on the tech and focus on simply building a solid, reliable vehicle. Use Toyota and Lexus as the growth path with the bells and whistles as well as a nice array of hybrids..
 

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Just my guess, I think Toyota has already opened up the checkbook more than they have told us about in the car magazines, and going forward Subaru is quite reliant on Toyo backing. But I think this time rather than swallow up the brand, Toyota will let Subaru practice mannerly independence, as long as they can keep on making money. IOW their backs are against the wall.
But in the meantime they have engineering support from Toyota and we’ll see Subaru electric, hybrid, and self-driving with heavy Toyota tech inside, which just makes sense, why reinvent the wheel. But they will try to keep Subaru looking like an alternative brand because they got burned by letting Toyota become too boring, and Toyo is trying to correct that now too. But Subaru can’t be allowed to slide backwards, that’s where they had gotten stuck before 2010 and it was killing them.
 

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2019 2.5i Limited Forester (hers) (4th Subie), 2014 Impreza Premium (mine)(#5)
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Fanboys in the $30k range will accept a lot of warts and for some reason keep buying. Guess they heard Subaru is a great car in an inch of snow.

Buyers in the $40k range are less forgiving and are definitely going to cross shop, and to be honest, there are nicer vehicles in that price range.
What we're seeing here is that we're attracting buyers from the $50k - $60k range with our $40k vehicles. You're correct, there are nicer vehicles - but are they more capable? Of course not.

One thing I consistently am hearing is that people cross shopping us from Lexus and Acura are amazed at how nice the high end Outback, Forester, and Ascent actually are. How much room is in them. How capable they are. And what's appealing to a lot of people is that they can get everything we offer in a $39 - $40k vehicle, and SAVE $20k from getting another Lexus / Acura.

You point out the difference, whether you intended to do so or not. Subaru fanboys were / are the core of our business. They're the ones who kept us selling a quarter million cars every year for a long time, kept us in business. It's the conquest customer that's accounting for the OTHER half million cars we're now selling every year.

Someone comes in, says they want a capable $25k SUV - here's the Crosstrek. You want something $30k? Here's the high end Crosstrek, middle Forester, low end Outback. Your budget is $35k? High end Fozzie, mid range Outback, base Ascent. You're at $40k? High end Outback, mid range Ascent. $50k? Here's you an Ascent, and you save money, it's only $47k. And amusingly enough, we're starting to see people coming in that want sedans.
 

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Exactly why Toyota should open the checkbook and buy the other 80% of Subaru.
They can't.

Keep in mind the keiretsu network, along with the assorted zaibatsu. The respective banks of each company can't be allowed to join, which is what would have to happen.
 

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What we're seeing here is that we're attracting buyers from the $50k - $60k range with our $40k vehicles. You're correct, there are nicer vehicles - but are they more capable? Of course not.
What is your definition of "more capable"?

I have no doubt up scale buyers are looking at Subaru. A smart thing to do. As I posted earlier, the challenge for Subaru is making sure that $40k OB is flawless in the eyes of the Lexus buyer. A bad reputation is a hard thing to repair.
 

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And amusingly enough, we're starting to see people coming in that want sedans.
Now this would be a very interesting trend - a move away from SUVs / CUVs? I haven't heard of this yet.

So per Subaru's website they stack the Impreza up against the Honda Civic, Mazda3, and Toyota Corolla, and the Legacy up against the Toyota Camry and Honda Accord. I would think there's a lot of price pressure in both of these markets. You're on the front lines, how does that work out, Carl?
 

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I have wondered also about the early demise of the sedan.

I wonder with aging population if they will want a "simple" sedan. A car "like" they had when younger and easy to drive and get in and out of. Tall 4x4 SUV's look cool. But for an aging population they may no longer envy having to climb a ladder to get into a taller SUV. They may instead long for an easy to get into and out of sedan. I can see that as a possibility.
 

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I have wondered also about the early demise of the sedan.

I wonder with aging population if they will want a "simple" sedan. A car "like" they had when younger and easy to drive and get in and out of. Tall 4x4 SUV's look cool. But for an aging population they may no longer envy having to climb a ladder to get into a taller SUV. They may instead long for an easy to get into and out of sedan. I can see that as a possibility.
I'm a part of the aging population. While tall SUV's aren't great for climbing into, most CUV's are a piece of cake. Open the door and slide in. Same with grocery shopping, a power hatch is much more practical then bending to access a trunk.
 

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I'm a part of the aging population. While tall SUV's aren't great for climbing into, most CUV's are a piece of cake. Open the door and slide in. Same with grocery shopping, a power hatch is much more practical then bending to access a trunk.
Which is why the Outback hits the sweet spot for OF’s like me.


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And amusingly enough, we're starting to see people coming in that want sedans.
Now this would be a very interesting trend - a move away from SUVs / CUVs?. I haven't heard of this yet.
It will all cycle back around eventually. The Chrysler K-car (Reliant/Aries) wasn't the first front wheel drive sedan but it sure sparked a period of sedan popularity and saved Chrysler along the way. Then came the minivan which was wildly popular for a while, Then things moved along to SUVs, then CUVs and crossovers and whatever else they called the different variances. Maybe sedans will make a brief comeback and then in another 10 years or so we will be back to the minivan. 😄
 

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It will all cycle back around eventually.
In the past, periodic bouts of high oil prices tended to always drive designs back towards a smaller, lighter weight, lower profile vehicle in order to achieve better fuel economy. And I suppose in this modern era where hybrids, plug-in hybrids, and EVs have started to command a significant market share, it's almost the same kind of pressure involved, although with a different motivator - while they have the operational economy the market wants, they don't have the driving range.

But at least in the US, there hasn't been that kind of fuel economy pressure since the second Gulf War in 2003, almost 17 years back.

That's why I'm interested in hearing Carl's viewpoint here on the "why?".
 

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Now this would be a very interesting trend - a move away from SUVs / CUVs? I haven't heard of this yet.

So per Subaru's website they stack the Impreza up against the Honda Civic, Mazda3, and Toyota Corolla, and the Legacy up against the Toyota Camry and Honda Accord. I would think there's a lot of price pressure in both of these markets. You're on the front lines, how does that work out, Carl?
It's pretty simple. The "domestic" automakers are doing away with their sedans, other than a VERY limited line-up.

"Foreign" automakers aren't - because they still need those vehicles for their OWN domestic markets, as well as their export markets to Europe and Asia. You're correct in who our sedan competition is, but where we're again coming out ahead is those people who want a Chevy Impala or Ford Fusion - and those are GONE. So all of those "domestic" customers aren't coming in with a favorite brand of "foreign" cars. They're willing to give us a chance, because we're basically equal with the others in their eyes.

It's not a move away from the SUV - most of our aging population likes the height advantage that the SUV gives them, letting them slide in without sitting down. It's that the "domestic" manufacturers have simply surrendered the sedan market to "foreign" manufacturers. That amount of market share is still pretty flat - I have repeat customers that simply prefer sedans over SUV's. (And also, older, single women. By that, I'm not talking the 40 - 60 year old demographic, I'm talking the 60 - 80 group, that are widowed, and the only thing they feel comfortable driving are sedans, because a big SUV is intimidating to them.)

And what happens in the sedan market is the same thing with the SUV market - I can't match the lowest priced vehicles that my competition has in the same category, until you start actually comparing apples to apples with THEIR AWD versions, and then we typically win.
 

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Here is an interesting tidbit as it relates to Subaru sales for calendar year 2019. Which model was the most popular in terms of sales volume for 2019? The Outback.....increased sales by 2,324 units for C.Y. 2018 to C.Y. 2019. Subaru is scheduled to begin its national advertising on the Outback beginning in February 2020. Top five models sold in 2019 by Subaru....Outback, Forester, Crosstrek, Ascent, Impreza. Subaru sold a record 700,117 units in C.Y. 2019, (3%) increase over C.Y. 2018, representing 4.1% of the new car market in the US.
 

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It's pretty simple. The "domestic" automakers are doing away with their sedans, other than a VERY limited line-up.

"Foreign" automakers aren't - because they still need those vehicles for their OWN domestic markets, as well as their export markets to Europe and Asia. You're correct in who our sedan competition is, but where we're again coming out ahead is those people who want a Chevy Impala or Ford Fusion - and those are GONE. So all of those "domestic" customers aren't coming in with a favorite brand of "foreign" cars. They're willing to give us a chance, because we're basically equal with the others in their eyes.

It's not a move away from the SUV - most of our aging population likes the height advantage that the SUV gives them, letting them slide in without sitting down. It's that the "domestic" manufacturers have simply surrendered the sedan market to "foreign" manufacturers. That amount of market share is still pretty flat - I have repeat customers that simply prefer sedans over SUV's. (And also, older, single women. By that, I'm not talking the 40 - 60 year old demographic, I'm talking the 60 - 80 group, that are widowed, and the only thing they feel comfortable driving are sedans, because a big SUV is intimidating to them.)

And what happens in the sedan market is the same thing with the SUV market - I can't match the lowest priced vehicles that my competition has in the same category, until you start actually comparing apples to apples with THEIR AWD versions, and then we typically win.
Agreed! Domestic car makers are dropping sedans because they simply cannot compete with better Japanese design. Almost all of the domestic economy cars I have ever driven are junk. This dates back to the late 70's until now. America owns the 3/4-ton and larger truck market. Japan owns the quality economy market, and all the stuff in between is up for grabs. I personally will never own a sedan again in my life. A trunk is worthless compared to a rear hatch.

OBs will gain attention again when we hit the next recession or oil crisis. They are a much more sensible and efficient alternative to SUVs. I just traded in my 2004 Xterra for a 2013 Outback with higher miles, and I can't say that I miss anything about the Xterra. Usable cargo is identical except for the largest items. Mileage is exponentially better. Ride and handling are better. The Fosgate system in the Xterra is better than the HK in the Subaru, but I'm working on a solution for that.
 

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Discussion Starter #36
Exactly why Toyota should open the checkbook and buy the other 80% of Subaru.

Keep Subaru as the value brand in the $25-30k range, cut back on the tech and focus on simply building a solid, reliable vehicle. Use Toyota and Lexus as the growth path with the bells and whistles as well as a nice array of hybrids..
Toyota already tried that with the Scion brand.....albeit at a lower market tier..... and look where that landed. Introducing a Toyota-branded subaru Line into the Toyota lineup would require the kill off of the subaru line as there would be too much overlap with Toyota the platforms And. Abuse market confusion. There was a full page article in the WSJ last week about the 2020 Outback..... several takeaways: subaru says the OB is a wagon and not no an SUV, they maintain the basic design because they don’t want the OB to look like every SUV (they have the Ascent for that), the $40k price point doesn’t compete with the SUV market with its much higher price points and the OB is in its own market tier. I doubt the average buyer is looking to purchase a fully loaded OB unless they’re induced by year-end deals.
my sense is three factors are in play: the upsizing of the forester, the introduction of the SUV class Ascent and the general market shift from sedans to SUVs As evidenced wit the rollback in legacy sales. Another influencer is the robust economy supports the general market to buy higher-priced SUVs. When the economy downshifts, the market will revert to more value-based buying behaviors.
 

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I like my outback wagon, it does everything I need

awesome highway commuter? check
easy to get in and out of? check
flat 6? check
good ground clearance? check
comfortable? check
overall easy to repair? check
reliable? check, so far so good

only down side is flat 6 and 5spd auto drink gas like mad.

Those were both major obvious body redesigns, as well as the introduction to Eyesight. Production then simply could not keep up with demand - we went from August of 2014 until March of 2016 with ZERO inventory on the ground. You wanted a new Outback, you came in and test drove the service loaner we had, then you ordered the car for delivery in 8 weeks.
I remember that...going to the dealer and seeing no cars outside of used inventory.. it was a sight to see...I thought the dealer was going under and had to ask them what was up...
 

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I like my outback wagon, it does everything I need

awesome highway commuter? check
easy to get in and out of? check
flat 6? check
good ground clearance? check
comfortable? check
overall easy to repair? check
reliable? check, so far so good

only down side is flat 6 and 5spd auto drink gas like mad.



I remember that...going to the dealer and seeing no cars outside of used inventory.. it was a sight to see...I thought the dealer was going under and had to ask them what was up...
I agree. The OB is unique in that it is essentially a lifted wagon which gives you many benefits in all sorts of use. There are not really any other cars in this segment at the price point.

Although the forester may have similar cargo capacity on paper as the OB, real world use is a whole different thing. I specifically sought an OB over a Forester due to the cargo capacity being more depth based. Whereas the Forester was more height based. It is amazing how many things we have been able to squeeze into the back of our OB and it barely fit with the hatch closed. This would not have worked in a Forester.
 
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