Subaru's sales in China have dropped by nearly 50% in the past five years. The headquarters will provide a subsidy of 3,300 yuan for each car sold.

The Subaru store of Beijing Laiguangying Zhongji Automobile Sales Co., Ltd. is holding a discount promotion, with the lowest price of Forester reduced to 210,000 yuan.

Subaru's sales in China have dropped by nearly 50% in the past five years

"Subaru should first ensure product quality, and at the same time follow the development trend of the Chinese auto market, innovate its products and adapt to the Chinese market. It should also change its previous development strategy in China and attach importance to the Chinese market, so that it can gain a firm foothold."

Recently, a letter to all Subaru dealers in China issued by the Subaru Dealer Representative Committee of China has attracted social attention to Subaru.

The letter mentioned that Subaru brand sales and customer satisfaction continued to decline, with sales of only 30,000 vehicles in 2017, and the vast majority of dealers suffered losses.

According to the Economic Observer, Subaru's headquarters has decided to give more than 200 million yuan in subsidies to Subaru dealers in China, half of which will be used to subsidize last year's sales and half this year. The specific amount is 3,300 yuan for each car sold.

A Legal Weekly reporter recently visited the Subaru store of Beijing Laiguangying Zhongji Automobile Sales Co., Ltd., where a salesperson said they were not aware of the headquarters' decision. In addition, the Subaru official hotline also told the reporter that they were unaware.

In the opinion of Cao He, chairman of Zhongrong Venture Capital Fund Management (Beijing) Co., Ltd., regardless of whether Subaru headquarters subsidizes dealers, subsidies cannot completely save Subaru from its current crisis. How to adapt to fierce market competition and achieve "self-salvation" is the issue that Subaru should focus on.

Sales volume dropped by nearly 50% in 5 years

Unlike most foreign luxury brands that have joint ventures in China, Subaru adopts a dealer agency model in the Chinese market.

In 2011, Subaru was rumored to be having an affair with Chery. When everyone thought that Subaru would be localized, the deal was ultimately shelved due to approval issues.

On January 17, 2013, Pangda Group signed a contract with Subaru's parent company, Fuji Heavy Industries, Ltd. of Japan, to invest approximately 1.3 billion yen in Subaru Automobile (China) Co., Ltd., and the former Subaru Automobile (China) Co., Ltd., which was wholly owned by Fuji Heavy Industries, was changed to a Sino-foreign joint venture. Pangda Group's shareholding ratio in the Sino-foreign joint venture reached 40%. Prior to this, Pangda Group, as Subaru's largest agent in China, contributed 70% of Subaru's sales in China.

Subaru's model is like a "double-edged sword".

Since all Subaru models are imported, the high price of the whole vehicle and the high cost of repair and maintenance have become the two main problems complained by consumers in the past.

Cao He believes that the dealer group agency will lead to relatively high prices for Subaru's parts and maintenance costs. Compared with its competitors, Subaru, as an imported car, does not have an advantage in terms of vehicle prices.

Importing cars involves tariffs, which makes Subaru 30% to 40% more expensive than other joint venture brands of the same level. Take Outback as an example. In China, its price has always been above 270,000 yuan, while most of its competitors are below 250,000 yuan.

"As market competition becomes increasingly fierce and competing products continue to be launched, Subaru's living space has been continuously squeezed and its sales have also declined accordingly," said Cao He.

A reporter from Legal Weekly checked Subaru's sales data for the past five years and found that in 2013, Subaru's cumulative sales in the Chinese market reached 57,000 vehicles, while in 2014, 2015, 2016 and 2017, the sales were 54,000, 47,000, 45,000 and 31,000 respectively.

Price cuts have little impact on boosting sales

Subaru announced the adjusted vehicle retail guide prices immediately after the State Council Tariff Commission issued the "Notice on Reducing Import Tariffs on Complete Vehicles and Parts" on May 22. The prices of four models, including Forester, Outback, Legacy and XV, were reduced by RMB 13,000 to RMB 19,000.

At the same time, Zhongji Subaru, a subsidiary of Pangda Group, also launched a profit-sharing campaign for the adjusted prices. In the lobby of Zhongji Subaru store in Laiguangying, Beijing, a banner with the words "tax cuts and profit sharing, one-step completion" is particularly eye-catching. According to the store's sales staff, during the promotion period, the lowest price of Subaru Forester has been reduced to 210,000 yuan, and Outback has also been reduced to 262,000 yuan.

So, for Subaru, which has more affordable prices, can the reduction in import car tariffs save its sales from continuing to decline?

Su Hui, executive vice president of the Tangible Automobile Market Branch of the China Automobile Dealers Association, believes that the country's reduction in tariffs on imported cars is a good thing for Subaru, but lowering prices alone will not help Subaru revive sales.

Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Conference, also said: "At present, Subaru's product line is too single. In the context of lower tariffs on imported cars, not only Subaru, but all major automakers will make corresponding concessions on the prices of their models. Adjusting prices alone will not bring enough sales growth for Subaru."

In addition, industry experts unanimously believe that Subaru’s lack of brand strategy and product marketing is an important factor restricting Subaru’s progress.

"Subaru has invested very little in brand marketing and promotion, and it is difficult for consumers to learn about Subaru through brand promotion. Lexus is based in the Chinese market and has invested much more in advertising and brand marketing. This is also the reason why Subaru is becoming increasingly niche," said Cao He.

A reporter from Legal Weekly found that Subaru currently has only four models in the Chinese market, while Lexus, which is also an imported car, has nearly 10 models including IS, ES, GS, LS, NX, RX, LX, etc.

Repeatedly recalled due to quality issues

In addition, frequent quality problems have also hindered Subaru's development in recent years. In 2018 alone, Subaru conducted three recalls.

On March 20, 2018, due to the fire safety hazard of the vehicles, Subaru recalled the imported Legacy series vehicles from 2010 to 2012 produced between July 31, 2009 and June 7, 2012, involving a total of 3,396 vehicles in mainland China.

On April 27, 2018, due to car airbag problems, Subaru announced that it would expand the recall of some imported Legacy, Outback, and Impreza series vehicles from May 9, 2018, involving a total of 424 vehicles in mainland China.

On June 20, 2018, due to a problem with the vehicle's fuel pump, which may cause the vehicle to stall or the engine to fail to start, posing a safety hazard, Subaru announced again that it will recall some imported Legacy, Outback, and Impreza series vehicles starting from August 20, 2018, involving a total of 9,228 vehicles in mainland China.

In addition, as early as October 2017, Subaru was exposed for tampering with emission data and falsifying quality inspections. CEO Yasuyuki Yoshinaga resigned, making the situation worse for Subaru.

Cui Dongshu told Legal Weekly: "Subaru should first ensure product quality, and at the same time follow the development trend of the Chinese auto market, innovate its products and adapt to the Chinese market. It should also change its previous development strategy in China and attach importance to the Chinese market, so that it can gain a firm foothold."

Guan Xuejun, president of Auto Selection Network, also said that Subaru’s current problems are similar to those of Suzuki, and whether it can save itself has nothing to do with the market, but rather with the company’s brand strategy and marketing methods.

"The Chinese market is very inclusive. There is no sales volume that cannot be accommodated, only products that cannot be tolerated by the market," said Guan Xuejun. He analyzed that Suzuki's departure from the Chinese market was not because China did not accept the Suzuki brand, but because Suzuki insisted on fighting in a shrinking market and its products lacked innovation, "Subaru is the same."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.