Subaru is killing it. Demand for Subarus is skyrocketing and the company is struggling to meet demand. The automaker’s plants are at full capacity and its dealerships are asking for more inventory. According to Bloomberg, Subaru’s profit margins are 9%, besting Toyota (8%) and BMW (7.2%). For a small automaker, that number is incredible. But Subaru hasn’t always been successful. It wasn’t until a few years ago that Subarus started taking off. What changed?
The company was in a slump after the success of the Outback (debuted in 1994) and the sudden boom of the crossover utility vehicle (CUV) market. Something had to be done to turn the company around an in 2006, it did. Instead of competing with numbers and features like other manufacturers, Subaru went after hearts and minds.
Subaru used its marketing to appeal to emotion with the tagline, “Love. It’s what makes Subaru, a Subaru.” The automaker’s ads began showing stories that tugged at heart strings like the above ad showing a dad passing down his old Forester to his daughter. The company also actively targets dog lovers, like sponsoring an ad in the Puppy Bowl instead of the Superbowl. It’s even funding crash testing for pets to help find out how to keep your furry companions safe. In this way, Subaru utilized storytelling to sell its cars and it worked.
Thinking about Subaru’s sudden success reminded me of another company: Apple. Both companies struggled for a time before launching into success. I’m talking about the mid-1980s Apple that struggled without Steve Jobs, before the iPod, and eventually the game changing iPhone. Both Subaru and Apple employed the same emotional appeal to sell is products but even before that, both companies shared a cult-like fan base.
For Subaru, its fans have long been drawn to the company’s rich rally history and quirky cars. Video games like Gran Turismo and Colin MacRae Rally cemented the WRX STi as one of the greatest rally cars of all time. It absolutely dominated World Rally Cross and still does to this day. Subaru is sponsoring a documentary-style web series called Launch Control, which follows the story and drivers of Subaru Rally Team USA. In terms of quirkiness, I think of the SVX, Baja, and the Brat. They put “seats” in a back of what was basically a compact El Camino. Brilliant. Ridiculously unsafe but hey, it was the ’70s.
For Apple, it was the computer you bought because it was different from everything else. While other computer companies were making anonymous looking computers, Apple offered its iMac in various fun colors and put an emphasis on design and the user interface. Both computers and cars are tools but people also see them as a reflection of themselves. We grow attached to inanimate objects and both Subaru and Apple know this, using emotional appeal to market its products.
Another similarity between the two companies share are high profit margins. With high profit margins, Apple now has a ridiculous amount of cash in the bank and can purchase companies like Beats for $3 billion. But with success, Apple has launched itself from being the underdog to the company to beat. Some even think Apple is the new Microsoft.
Like Apple, Subaru will have to deal with its success as well. It will have to decide whether to pursue the mass market or hold on to its ethos of being the scrappy underdog. Can Subaru maintain its success without selling out? I don’t know but I sure hope so.
One of the reasons why people buy Subaru is because its cars are not boring econoboxes or SUVs that every other manufacturer is churning out these days. The automaker doesn’t have an SUV, pickup truck, van, or a plug-in hybrid that’s been all the rage these days. Like In-N-Out, Subaru only does a few things but it does them well.
Subaru also doesn’t have a luxury brand like Acura to Honda and Lexus to Toyota. Without a luxury brand, buying a Subaru can be seen as honest and unpretentious. But with its success, this could change. As Apple moved upmarket, it began losing its charm. Today, there’s a certain “douche-factor” from owning a MacBook or Apple Watch, especially the $10,000 solid gold version.
I want Subaru to stay the underdog and to keep being weird. These qualities are what drew me to my BRZ in the first place. Consumers already have a myriad of choices for boring cars. We don’t need more Corollas or Priuses. What we want and need is a good story to turn our cars into more than just appliances and I think more car manufacturers need to realize this.