CHERRY HILL, N.J. -- It may be the worst of times for new-vehicle sales, but in a nondescript office building on a busy highway in suburban Philadelphia, executives at Subaru of America have pulled off a miracle.
While the rest of the industry cratered, the little Japanese brand has racked up big U.S. sales gains.
So how did Subaru beat the odds for two years running?
Credit a decision four years ago by U.S. bosses to dump a strategy, dictated by executives in Japan, to go upmarket.
Since 2006, Subaru has cut prices, shed its quirky styling and refocused the marketing strategy on the safety and practical virtues of its five vehicles. And it has let dealers weigh in on important product decisions.
Those and other moves helped make Subaru the best-performing brand in 2009 -- up 14 percent in a market down 24 percent. The brand has jumped from the 19th-largest U.S. seller in 2008 to the 11th, ahead of Volkswagen and within striking distance of Jeep.
"Subaru is getting the respect it deserves," says Gunnar Heuberger, owner of Heuberger Subaru in Colorado Springs, Colo., the largest U.S. Subaru dealership.
"It was one of the best-kept secrets for 20 years -- ever since they went to their platform of all-wheel-drive cars. Now that it is priced at or lower than a front-wheel-drive car, people understand that this is a hell of a deal." Subaru will finish the year with sales of about 215,000 vehicles, says COO Tom Doll. In a dreadful 2009, only two other brands, Kia and Hyundai, managed sales increases over 2008. And in 2008, only Subaru and Mini were up.
"We knew we had strong momentum last year with the new Forester," says Doll. "And we knew that could continue this year when we introduced the new Legacy and Outback."
Subaru's success is the real retail deal. Only 6 percent of sales this year have been to fleets, says Doll, well below Kia's 28 percent and Hyundai's nearly 20 percent.
Incentive spending is also low -- about $990 per vehicle, compared with $2,694 on average for the industry, say company executives, citing Autodata Corp. statistics.