Toyota, Subaru hot for small, affordable sports cars even as market for them shrinks

MONTICELLO and AMENIA, N.Y. — In 2020, Toyota sold three times as many RAV4 crossovers to U.S. customers in just one average week than the number of 86 sport coupes it sold all year. Subaru averaged one and half times more Foresters a week than it did the 86's twin, the BRZ, all year.

To look at it another way: The 86's 2,476 deliveries accounted for a scant 0.13 percent of the Toyota brand's total U.S. sales. The BRZ's 2,267 sales were just 0.37 percent of Subaru of America's sales. And annual sales in recent years of both are significantly below their peaks.

So with most American new-car shoppers snapping up crossovers of all sizes, SUVs and pickups, and billions of automaker R&D dollars being pumped into zero-emission vehicles, does it make sense to invest in a new generation of small, gasoline-powered, modestly priced sports cars that sell in tiny volumes?

Absolutely, according to officials at Toyota and Subaru.

"Quick show of hands," said Michael Redic, the BRZ's line manager at Subaru of America, during an August presentation to journalists in Amenia, a rural town about 20 minutes from the Lime Rock Park racetrack in Connecticut. "Who thought we would do another BRZ?"

He continued: "This vehicle has been very successful for [Subaru and Toyota] in capturing new customers and bringing excitement to the brand."

Successful enough to prompt Subaru and its part owner Toyota to renew their collaboration on the cars, which debuted in 2012. Since then, the GR 86 lineage, born as the Scion FR-S and later renamed the 86 after Toyota's youth-oriented brand was discontinued, has had 79,680 sales through the first nine months of this year. Subaru has sold nearly 43,000 BRZs since its inception.

By sharing costs, Toyota and Subaru "are able to do this profitably," said Stephanie Brinley, principal automotive analyst at IHS Markit. "Though low volume, for Toyota it helps round out a full product lineup by having an affordable sporty car. For Subaru, it offers another side to the utility vehicles they are now better known for in the U.S."

"No doubt there's a significant shift to SUVs," Mike Tripp, vice president of vehicle marketing and communications at Toyota Motor North America, said at a media event featuring the GR 86 at the Monticello Motor Club, about two hours northeast of New York City. "The reality is there is still a good-size market for individuals who love the joy of driving."

Toyota, he said, is "taking what's been inspired by our motorsports and track experience and bringing that into a vehicle that's not only fun to drive but also at an attainable price point ... although it's a shrinking market."

The BRZ and GR 86, assembled at Subaru's Gunma factory in Japan, are designed to be civil enough for daily driving and provide some thrills on track days in an affordable package. According to data presented by Subaru, roughly 18 percent of BRZ drivers own no other vehicle, while the 86's rate was 15 percent. The Volkswagen GTI and Nissan Z, the top two models in the data, had rates approaching 20 percent.

To produce the cars, Toyota led the exterior and interior design, while Subaru handled engineering and manufacturing. The two share a 2.4-liter boxer engine that generates 228 hp and 184 pound-feet of torque, an improvement over the outgoing 2.0-liter engine.

The 2+2 coupes don't boast much space beyond the front seats, but they do offer enough comfort, safety features and in-cabin technology to satisfy the segment's shoppers. The rear seats fold down to offer some additional cargo space. Though they have sporty aspirations, the suspension won't beat up drivers on their commute.

Also important to buyers will be the choice of a six-speed manual transmission or a six-speed automatic with paddle shifters. Toyota expects 30 percent of buyers to opt for the manual; Subaru says the manual take rate for the BRZ is in the mid-70s.

Both start at less than $30,000 — significantly less than the industry's average transaction price of $39,540 in TrueCar's September forecast.

At their presentations, Subaru and Toyota said their rivals are each other, plus the Mazda MX-5 Miata. Driving enthusiasts looking for affordable options might consider models such as the Toyota Supra, Subaru WRX, the Detroit 3's pony cars, Hyundai Veloster N, VW GTI and Nissan Z.

The new-generation models are set to begin arriving in dealerships late this fall. Toyota and Subaru expect most of the rear-wheel-drive cars' sales to be in warm-weather states.

Aligning with Toyota CEO Akio Toyoda's passion for motorsports, the GR 86 is part of the expansion of the automaker's Gazoo Racing brand. The larger Supra coupe is the other model for sale in the U.S. tagged with the GR badge. The GR Yaris is not for sale in this market.

In similar fashion to the Toyota TRD performance and off-roading brand's expansion across the automaker's model line, expect to see future Toyotas get the GR treatment — if they make the cut.

"In order to earn the GR badge, it needs to be motorsports inspired, and then also meet the standard of our GR team in Japan," Tripp told Automotive News. "So when you look at expansion ... the question becomes what other sports cars could earn the GR badge. As we look at our vehicle lineup looking forward, that's what will make the determination."

Toyota expects to sell 800 to 1,000 GR 86s a month, largely to Gen Xers and millennials. The car will be marketed through digital campaigns.

Appealing to the import tuner crowd also is a key part of the GR 86 strategy.

"We have a wide range of GR accessories that we're introducing with this vehicle that are not just accessories for look but also performance-based, which we think goes very well with the vehicle," Tripp said. "Additionally, we'll work with SEMA on a measuring session so that other partners can look at what accessories they can bring to market. And then each dealer will not only have the opportunity to sell our accessories, but if they want to partner with someone that's not GR, they can do that.

"We think the range of accessories for this type of vehicle is significant," he added. "Our GR accessories ... come with all the benefit of our warranty and workmanship and craftsmanship. But also through fitting sessions, we'll let our partners also look at opportunities."

Doug Eroh, general manager of Longo Toyota in suburban Los Angeles, says catering to the type of customer who would buy a GR 86 is vital to his business.

"We want to serve this strong base of enthusiasts with their needs and also be able to show them a great experience as they return to us for service and often move up or add to their fleet with another vehicle," Eroh said. "Last year, just before the pandemic, we hosted a 'Supra Sunday' event on a Sunday morning, and we had over 400 Toyota and Scion owners with FRSs, 86s and Supras show up to an event that was solely promoted on social media.

"Guests who purchase lower volume, unique vehicles from us, ranging from Supras to TRD Pro Tacomas, have a higher propensity to personalize and customize them to their individual tastes," he said.

Last year, the dealership started Longo Specialties, an in-house specialties shop that does vehicle customizations, including wraps, graphics, lifts, special packages, accessories, leather, tint, paintless dent repair and wheel customization and repair. It encompasses a full-service graphics shop that designs and prints vehicle wraps, graphics, banners and signage.

Subaru is known for surefooted, all-wheel-drive people haulers these days, but it also has dedicated fan bases for fun-oriented cars such as the Impreza, Legacy and newly redesigned WRX.

While the WRX is more of a multipurpose, all-weather "bruiser," line manager Redic said, "the BRZ is fun. We want something that is low center of gravity, pure sports car, very lightweight and it's more about the joy of driving.

"We want, first, to make sure that this is a design that customers can feel proud of — that they get out of the vehicle and say, 'Man, this is a really good-looking car.' "

He described the BRZ's target customer as "young and spirited" with a median age of 34. About 81 percent are male, and half are married. Such customers are into active adventures, sports and social activities.

By comparison, Maritz data presented shows that the median age for the Toyota 86 this year is low 50s.

While the BRZ's U.S. sales have slowed in recent years as consumers gravitated toward light trucks, their monthly average surpassed the target of 450 from 2012 until midway through 2018.

Similar to the GR 86, the BRZ's marketing will be done through digital channels.

"We don't do a lot of television," Redic said. "We do a lot of grassroots [campaigning] online."

Texas dealer Genny Hardeman Hill, whose Continental Automotive Group owns Austin Subaru, says there are approximately 4,200 registrations in the compact sporty car segment in her region. And while BRZs make up a small proportion of sales, "They offer us an entry level into a segment that might have not experienced a Subaru otherwise. Often, this leads to future sales."

As the industry races toward an electrified future, will there still be room for a new generation of GR 86s and BRZs?

"It's possible the companies make different choices with a third generation as pressures on capital resources increase," IHS Markit's Brinley said.

"But if the two cars remain profitable, that pressure can be reduced. Having a product that is low volume but improves image and provides an emotional product for some buyers is a good thing. It's only a negative if the product is not profitable."