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Subaru continues to drive to a different beat

Reputation for unique, quality cars contrasts with weak branding, design strategy

by Bob Sliwa

There is no brand in Japan with as much unused potential as Subaru. It is kind of like Apple Inc. was in the late 1990s before it came roaring back to prominence with the return of Steve Jobs.

You will not find a more talented and dedicated, if a bit anachronistic, group of automotive engineers. The problem is they make unique products but have failed to build a brand that connects them to a wide range of customers. It is a textbook case of a company that still believes, “if we make good products people will buy them.” That era ended with the last century.

Of course, a company must produce top-level products, even more so than previously because of rivals approaching or exceeding Japanese quality levels. Observing Subaru for a few years, the first area where it has failed to follow in Apple’s footsteps is in branding. It’s not that its brand and design strategy are misguided — but it just never seems to have found one necessary.

Each car seems to be built, however extremely well, as a stand-alone product. Last year’s handsome Impreza could be passed off as any number of other marquees by just changing the badge.

So why can’t Subaru implement strategies to make it what it could be — a more profitable small-scale car company.

In a word, it’s the weight of Subaru’s rigid corporate culture. As with many Japanese companies, Subaru has not made the moves needed to shift from the usual obsession with market share to creating value in products that increase profit margins.

It’s not like attempts haven’t been made. In 2002, the board approved the appointment of Kyoji Takenaka as president. The 52-year-old, with a considerable international track record and an understanding of the value of branding and design, was handpicked for promotion over 27 senior executives. He brought in outside talent that helped in the formulation of a design strategy. They came up with a design vocabulary that included Subaru’s history as an aircraft manufacturer. This look debuted with the R2 Kei car. The look was criticized from many corners, particularly dealers.

Unlike BMW, which when faced with a torrent of bad press about its radical new design direction stuck to its guns and made it a success, Subaru caved in and went back to its flavor-of-the-month styling.

In the end, Takenaka alone was unable to implement what was needed for this consumer-market-oriented manufacturer with a limited range of products — to build the brand with a coherent global design strategy.

A modern car company needs a core of leaders with a shared overall vision to translate technical originality into corporate identity. Subaru has its roots in the prewar Nakajima Aircraft Company, or Fuji Heavy Industries, as it has been known since being formed in the forced corporate restructuring after the war.

It has produced one of Japan’s automotive icons, the Subaru 360, and has consistently followed its own path. Over the years, Subaru has been partially owned by Nissan and General Motors, and recently Toyota acquired a 16.5 percent stake, giving it considerable influence on the company’s direction.

Toyota has ended its Kei car production, though it will sell Toyota group Keis in an OEM deal. This is good if it is then allowed to develop a small car that it can sell profitably worldwide. Toyota influence has the potential to be very positive if it chooses to breath life into the brand as opposed to using it as a parts bin and assembly plant.

What keeps Subaru different in a world of increasing technological standardization are its horizontally opposed “boxer” engines and across-the-board use of four-wheel-drive (4WD) and dynamic safety systems.

Domestically, Subaru has a loyal but dwindling hard-core male fan base centered around the performance created by its technology. Higher spec versions of its most popular model, the Legacy, have historically sold well, good for the bottom line as those models have larger profit margins.

Fans value power and advanced 4WD as embodied in Subaru’s World Rally Championship participation, which won them three constructors’ championships in the 1990s. It commonly uses turbochargers to increase power, which also creates a distinctive driving feel; there aren’t many station wagons that are pocket rockets like the Legacy.

Also, the Imprezza WRX (rally version for popular consumption) is highly regarded in car enthusiasts’ circles for its amazing bang for the buck.

Subaru’s fatal weakness is that it has few women buyers, except for the Kei models. Its image has always been completely different in the United States, its other big market. It’s an alternative choice product, something you pick to make a statement about yourself. In some college towns on either coast, you can throw a rock over either shoulder and hit a Subaru. But driving across the corn-belt states, you may never see one.

Often U.S. customers could buy more expensive imports but opt for the quirky Subaru. It got a lot of positive press for being one of the first car companies to aim advertising at the gay and lesbian community.

In England, Subaru has reached No. 1 and 2 positions in the JD Power customer-satisfaction rankings and has a reputation for quality.

By now, Subaru should be a company whose unique technology and cultish customer base was milked for all it was worth and expanded into the general population. The GMs and Toyotas of this world can’t do this with their massive lineups — Subaru can. Failure to act on this front is a massive loss for shareholders.

There are reasons for hope. Takenaka’s successor Ikuo Mori is making the right noises and has hired a new head of design from outside the company. What makes Subaru’s inability to take the brand to the next level is not a matter of finances, just the inability to think differently.

Bob Sliwa is an automotive design and branding expert who has written for many domestic and foreign publications.

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