Tom Doll, president of Subaru of America, wears rubber wristbands as a constant reminder of his 2013 sales goal. It's an American quirk not typical of Japanese management style, but it's a reflection of how Doll's cars, and his company, are succeeding with a tight focus on American tastes.
And that success is making the bands outdated. They say 365,000, the target set early this year, but Subaru is growing faster than projected. By midspring the target was upped to 385,000, and now it's 410,000 to 420,000.
The same thing has been happening every year since 2008, when Doll started handing out the bands to his lieutenants when he set the annual sales goal.
A year or so earlier, Subaru made two important decisions: Make interiors roomier and drop the price point below its Japanese competitors. That, coupled with unwavering dedication to a quirky, outdoorsy clientele that prizes function over high-tech glitz and plush interiors, kept Subaru growing even through the recession.
Subaru's success is the perfect combination of "the right cars, enough inventory and marketing," says Ernie Boch Jr., CEO of Subaru of New England, the largest of the remaining two privately owned Subaru distributors in the United States. "They have broadened their base. Even VW claims they are producing an Outback fighter, and other manufacturers are stealing Subaru management.
Volkswagen is considering a Jetta SportWagen crossover that would rival the Subaru Outback. Marketer Tim Mahoney moved from Subaru to VW before becoming Chevrolet's global chief marketing officer.
Then there's the brand's steadfast dedication to no-nonsense vehicles designed for loyal, upscale, active buyers who pride themselves on separating what counts from what's merely fashionable. Digital marketing is attracting a new young buyer base as well.
Jake Fisher, director of testing at Consumer Reports, said Subaru is where the German brands, particularly BMW, "were 10 years ago with no razzle-dazzle or gimmicks."
"The engineers are in charge at Subaru. It is function first and form later. If you look at the Forester, it has the best visibility because they put glass everywhere. They are not concerned about a swoopy rear window."
Subaru is most frequently compared to Volkswagen, Volvo, and especially to defunct Saab because of its buyer base. "Both buyers are perceived as being upscale and above the mainstream and a little bit iconoclastic," said Tom Libby, head of North American forecasting for R.L. Polk and Co.
The formula has turned Subaru from a minor niche player into a steadily rising, recession-defying brand. This year the brand is No. 12 in U.S. sales through July, up from No. 22 in 2006. It has passed Ram, Chrysler, Mazda and Buick -- and it's a scant 1,980 units behind Volkswagen.
Subaru's U.S. sales have become the cash cow of parent company Fuji Heavy Industries, representing 57 percent of global sales last year, up from 39 percent in 2007.
Subaru grew through the 2008-09 downturn. Then, surprisingly, it kept growing, up 27 percent in the first seven months of this year, to 240,591 U.S. sales. It is outpacing two other hard-charging brands: Hyundai slowed to 2 percent growth, and Kia fell by 3 percent during the first seven months of this year.
Subaru evolved by making vehicles roomier, including some higher-tech features; expanding sales in the Sun Belt and Southern California; and pricing its cars and crossovers lower, closer to Asian competitors and Volkswagen. Subaru has broadened its buyer base and attracted younger consumers with digital media. And it has improved its loyalty rate by continuing to appeal to its traditional outdoorsy, active consumer.
"We always attracted a loyal core of owner base, we have all-wheel drive and a very strong identity," said Doll. "The new styling has allowed us to expand our base and the number of people we can attract to the brand -- 60 percent of our buyers are new to Subaru."
Subaru's rapid growth has allowed it to be choosier about who represents the brand - it has replaced 35 percent of dealers with stronger performers. Nearly all were buy/sell transactions, Subaru said.
Subaru added 12 dealers in the Sun Belt and Southern California, where sales have grown faster than in Subaru's traditional cold-climate markets, while keeping its dealer numbers steady in other markets. About 25 percent of Subaru's 620 dealerships are in the Sun Belt and Southern California.
With Subaru's growth has come spot vehicle shortages of key models such as the Forester and Outback crossovers. It had a 27-day vehicle supply on Aug. 1, well below the industry average of 56 days. High demand has meant low incentives: $509 per vehicle last month, compared with $1,470 for Toyota and $2,419 for Nissan, according to edmunds.com. (See box, at left.)
Eager to keep fueling U.S. sales, Fuji Heavy will invest $400 million in Subaru's factory in Lafayette, Ind., its only U.S. plant. Annual capacity will grow by 100,000 units, to 300,000, by 2016.