Running out of road
The list of things Subaru doesn’t do remains long. It doesn’t have a luxury brand like Honda’s Acura or Toyota’s Lexus. It still doesn’t make a giant SUV, or a truck, or a super-expensive “halo car” designed to drum up interest from teenagers and the Top Gear crowd. Its sedans aren’t particularly popular and the company doesn’t make much of an effort to sell cars in Europe, the Middle East, or South America, like Nissan or Ford does.
Kansas is the closest thing it has to an emerging market. Subaru still can’t meet demand. By the end of next year, Subaru’s factories in the U.S. and Japan won’t be able to produce more vehicles.
In mid-May, representatives from Subaru’s 600 or so U.S. dealerships streamed into Lafayette for the company’s annual meeting -- an event that is equal parts conference, pep rally, and party. Local food trucks served pulled-pork sandwiches, Italian ice, and homemade granola bars, while a stream of Subaru salesmen in polo shirts gunned new Outbacks over a boulder-strewn off-road-driving course.
“I’ve spoken today with a lot of these guys and every one of them has said if they had more cars, they could sell them,” Easterday said.
The driving course is part of about 600 largely undeveloped acres where the plant could, conceivably, expand. Of course, that requires money and no small dose of optimism. To date, Easterday has tried to make more cars with kaizen, the Japanese mantra of slow steady improvement made famous by Toyota in the 1980s. In early 2012, the company poured $75 million into the plant to boost capacity by 15 percent. Just a few months later, it committed to an additional $400 million in expansion costs, including a new paint shop, an assembly line, and a machine the size of a small apartment building to stamp metal sheets into doors and body panels.
Next year, the Indiana plant will stop producing Camrys for Toyota, which owns 16.5 percent of Subaru and, as such, is an implicit partner. All of those changes, however, will only push annual capacity to 400,000 cars. With some tweaking to its plants in Japan, Subaru expects to just barely break the 1 million-vehicle mark next year.
Krafcik at TrueCar says the company could easily sell at least another 300,000 cars a year, based on how many people are searching for Subaru online.
“Most automakers would have moved sooner,” he says. “To me, it looks like they’re OK with having this capacity constraint.”