TOKYO -- Subaru looks almost bulletproof in the U.S. But it has a glaring weak spot in China.
In the world's biggest market, Subaru is a microscopic player. Its sales there last year dropped 34 percent to just 31,000 vehicles. And the carmaker predicts a 3 percent slide in 2018.
At Subaru's headquarters in Japan, there's a growing sense of urgency to get serious about an important market where executives concede the brand is barely treading water.
"China is the world's largest market. So I am really thinking what to do there," Chairman Jun Kondo, who oversees the China Project Office, said Jan. 15. Among the considerations: whether to produce vehicles in China.
"We are considering how to survive there," Kondo said.
Kondo's comments came as Subaru forecast a 2 percent increase in global sales to 1.08 million vehicles in 2018. In the U.S., it expects to buck the expected shrinking overall market with 5 percent growth to a record 680,000 vehicles, lifted partly by the debut of the Ascent three-row crossover.
By contrast, it predicts sales in China to decline to 30,000 vehicles — nearly half their peak of 57,198 in 2011 and the minimum Subaru needs to be viable there, Kondo reckoned.
"It is not at all easy to sell 30,000 units there, to be honest," he said. "But that is necessary for us to maintain our sales network."
Subaru has been spinning its wheels in China for years, since the Beijing government blocked its request to establish a local production joint venture with domestic brand Chery Automobile Co. It remains the only major Japanese automaker without an assembly plant in China.
Failure to win approval from China was one reason Subaru doubled down on expanding in the U.S. But longer term, not having a substantial footprint in China could pose risks.
Without local production, Subaru's vehicles are saddled with a heavy import duty, but the company wants to resist discounting to maintain brand value.
"We don't need to ramp up sales forcefully just to keep a plant running," Subaru CEO Yasuyuki Yoshinaga said.
In the meantime, Subaru wants to keep a China toehold, no matter how meager.