With a planned Chinese joint-venture between Chery and Subaru now really, honestly dead in the water, Subaru will look to the United States for sales growth, while importing cars to China for the next few years.
As part of its America-focused future, Subaru will expand its sales goal to 380,000 units per year in the United States by the end of the 2016 fiscal year. Subaru sold 264,198 cars in American in 2011. Production facilities in both Japan and the United States may also be expanded as part of the plan.
With the collapse of the Chery deal, Subaru will be forced to import vehicles to China, and have their cars subject to a 25 percent import duty. Subaru said that Chinese manufacturing would be difficult to establish until the end of their 5-year plan in 2016, but that stipulation likely means that the door hasn’t been completely shut on Chinese Subaru production at a future date.
Good. I like Subies, and welcome the company’s refocused attention on the U.S. market. I don’t think that Subaru has achieved their full potential in the U.S. to date.
+1 Subaru has been doing quite well growth-wise in the US. Even when other companies were starving for sales, Subie continued to grow.
FHI should try JV with GAC or FAW instead — they are Toyota’s two JV partners with the later especially well connected with Beijing.
Who in their right mind would want to partner with Chery?
Bertel Schmitt explained this issue in a TTAC story he wrote earlier today.
I hope this refocus means more product variation for the US, like it was less than 10 years ago.
Ironically, China probably needs AWD vehicles in its vast countrysides and dirt-road villages, more so than the US, which is paved coast to coast.
Those who have such needs can’t even afford a Chery.
I agree with your point, but a good bit of the US isn’t paved. Dirt and gravel roads abound 25 miles outside of Pittsburgh.
And large parts of The West is essentially the 3rd world.
Other than the WRX/STIs, there’s really no market in China for Subaru. There are 2 major categories of car buyers there – either lux or cheap. And Subaru is neither.
Subaru appeals to the practical and/or adventurous. Want to haul stuff home for a project? Not in China, where you could hire labor on the cheap. And there’s really no DIY culture amongst the middle class there – having to build your own Ikea is a foreign concept there – why doesn’t it come preassembled and delivered, they’ll ask. Pack up your bags and go on a road trip? Despite the construction of many miles of highways crisscrossing the country, Chinese prefer their prepackaged bus tours even within their own country.
Subaru, with its current slate of products, does not belong in China. But then I’m sure some savvy marketer can overcome these things.
“There are 2 major categories of car buyers there – either lux or cheap. And Subaru is neither.”
You are completely wrong. Subarus have always been imported to China and thus making them lux. An imported Legacy costs 50% more than a Chinese domestic Camry, and would be very close to a Chinese domestic Bimmer 3.
I think Subaru has made the right decision by keep importing to China. There is a huge market would buy a real Legacy over a Chinese only spec Bimmer 3.
I don’t understand where the market is. Auto websites are always telling us that China’s car consumption is growing exponentially but I don’t believe the average Chinese man has enough disposable income or security to buy even a mid-size japanese vehicle that is domestically produced.
So tell me, where is all the money coming from to finance this? And don’t say from the throw-away plasticky goods they sell the rest of the world because it can’t be.
If they’re priced the same as a domestic 3er, the average Chinese buyer in that price range would pick the 3er. The kind of Chinese consumers at that price point is all about brand cachet and nothing else – they certainly don’t shop by features. If it’s not the right brand, they could care less if the car is otherwise identical. There was recently a story (not here) about a Maserati owner who slapped on a Mercedes badge because the Chinese public aren’t nearly as familiar with Maserati. Subaru is pretty unknown there except amongst enthusiasts.
If you’ve ever been to a Louis Vuitton or Gucci store in Hong Kong, it’s literally and constantly flooded with buyers from mainland China who don’t blink an eye when plunking down $4000 for a handbag, then moving onto the next store and doing the same. There’s enough of an upper middle class there to support the consumption, and its ranks are still growing.
China’s middle class earns between $10k-$60k a year. Keep in mind that their savings rates are at around 25%-30%. Currently, their middle class numbers the same as the entire US population – 300 million. Even if fewer than 1% of them can afford the bling bling, that’s still a whole lot of people. Also keep in mind that 80% of the country’s wealth is owned by the top 10%, illustrating the obscene skew of economic inequality.
onyxtape： “If they’re priced the same as a domestic 3er, the average Chinese buyer in that price range would pick the 3er. The kind of Chinese consumers at that price point is all about brand cachet and nothing else – they certainly don’t shop by features.”
There are certainly people like that, but your statement is an over generalization. It’s like saying since the American government is bailing out GM, all Americans must really want to buy GM. Certainly, more Americans buy GM over Toyota, but that doesn’t mean Toyota isn’t enjoying good business here.
The same goes with Chinese 3er vs. Japanese made Legacy. You do know that Chinese buyers have a strong tendency to avoid the “Made in China” label, don’t you?
“Ironically, China probably needs AWD vehicles in its vast countrysides and dirt-road villages, more so than the US, which is paved coast to coast.”
Come to Nebraska. Half of our roads are unpaved.
You’re from Oh My God Nebraska :-)
Since they were shut out for being a Toyota “subsidiary” can’t they get around this just by asking Toyota to let them share a JV plant or something? Shouldn’t be too difficult.
Geesh I always thought importing meant buying something from abroad to sell in the home market and that exporting meant you sent your products to another country. So how does Subaru import to China??