Subaru faces marketing dilemma for Toyota JV sports car

BEIJING -- The new sports car that Subaru is making with Toyota will be a high-profile addition to the Subaru lineup. But the brewing dilemma is how Subaru will keep its car clear from the shadows cast by a Toyota-badged sister model.

Subaru, which chalks just 7 percent of Toyota’s global sales volume, also is wary of having its niche image as an all-wheel-drive specialist diluted by the rear-wheel-drive sports car.

Careful marketing will be the key to success when the car debuts in late 2011, said Mat Nagato, chief of overseas sales at Subaru parent Fuji Heavy Industries.

“A potential question could be cannibalization,” Nagato said Sunday, April 20, at the Beijing auto show. “We may lose our longstanding territory, or we may lose the great niche brand image. The potential risk is there. We have to be very smart on marketing strategy.”

The joint-venture project was announced this month along with plans for Subaru to receive small vehicles from Toyota Motor Corp. and its minicar partner Daihatsu. Toyota also raised its stake in Fuji Heavy to 16.5 percent, from 8.7 percent.

Toyota and Subaru are in the elementary stages of planning the sports model. It will be a front-engine, rear-wheel-drive car powered by Subaru’s horizontally opposed boxer engine. But volume, pricing, design and engine size are still being decided, Nagato said.

Going head-to-head against Toyota with essentially the same car will be a tough battle. And Subaru is just beginning to consider how to differentiate its model from Toyota’s.

Nagato said it is unlikely the companies will divide global markets into Subaru-only and Toyota-only domains. That will make the task all the more difficult for Subaru.

The smaller partner at least will be able to plug its car for carrying an original Subaru powerplant. The boxer engine will give it a lower center of gravity and better handling, Nagato said.

“Definitely, we are going to sell that value,” he said.

Globally, Subaru is looking to boost sales 18.8 percent to 683,000 units in the fiscal year ending March 31, 2011, compared with 575,000 in the year ending March 31, 2007.

China will figure high into the expansion. Sales here are expected to climb to 14,000 units this year, from 9,200 in 2007, Nagato said. To get there, Subaru is shooting for 90 dealers nationwide by year end, up from 73 today.

You can reach Hans Greimel at hgreimel@crain.com

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