Mazda & Subaru React to Growing Sales in the US

You don’t have to be a gear head to know that the automotive industry is on the upswing.  Sales are finally showing consistent improvement year after year, and automakers across the board are ready to shed their bear fur and put on their bull horns.

2012 was a great year for the automotive industry, especially in the US where sales reached a 5-year high by the end of December; the year-end total sales were up 13% compared to 2011. Now, in 2013 and moving forward, smaller automakers such as Subaru and Mazda are looking to leverage this regrowth and cement these profits for years to come. As you continue reading, you’ll learn the obstacles these two smaller Japanese brands are currently facing, and the strategies they’ll employ to overcome them.

Subaru Aims to Break Sales Records 7 Years in a Row

Somehow, Subaru has remained immune to the economic downturn.  While many American brands struggled in their own market, Subaru saw increased sales every year except 2008.  2012 was a particularly profitable year with a record-breaking 336,441 units sold. But, 2013 is looking even better…

According to Dean Evans, chief marketing officer for Subaru’s America division, they’ve already sold 281,652 Japanese cars in 2013 with over a quarter of the year left to go. That’s a 29% increase over the same period in 2012, and Evans estimates they’ll end the year with somewhere between 410,000 and 420,000 units sold. What’s more?  This number would be 10,000 to 20,000 higher except that they’ve hit a manufacturing ceiling.

According to Evans, the primary drivers behind their increased US sales this year are the refreshed Forester, the new XV Crosstrek and the always popular BRZ. Moving forward, Subaru anticipates further growth with their new Legacy and Outback coming next year. Between new models and a $100 million increase to their US media marketing budget, Evans is looking to end 2015 with 500,000 units sold, which is a figure they’ll shatter if they continue growing 20%+ every year.

Mazda’s Japanese-Only Production Finally Biting Back

The story isn’t quite so optimistic for our most favorite Japanese automaker, Mazda.  2012 was a great year with a 26.4% sales growth, but 2013 has slowed down a bit – just 6.8% growth so far this year. That’s certainly better than what they experienced from 2008 – 2011, but it’s still not where they want to be.

As we’ve discussed many times before, Mazda’s recent success is due to three primary factors: (A) the glowing reception of their SkyActiv technologies across the board, (B) a favorable yen-dollar currency exchange, and (C) their knack for designing truly beautiful automobiles. Their two currently available SkyActiv vehicles, the CX-5 and Mazda6, have both done incredibly well for themselves – CX-5 sales are up 82% over this time last year, and the Mazda6 is doing even better with a whopping 167% surge during August. Furthermore, sales are expected to be extremely strong in the last quarter of 2013 as the 2014 Mazda3 (with SkyActiv) hits dealerships across the country.

So, what’s the problem?

Well, believe it or not, Mazda’s mediocre growth during 2013 is NOT due to a lack of demand. Rather, the problem is that they only have on plant located in Japan, and they simply don’t have enough cars to go around; demand exceeds supply. For example, they’re selling 60% of their total Mazda6 inventory every single month, and they only have a 40-day supply of CX-5’s after their record-breaking August sales. It’s been a huge struggle for them to keep up with consumer demand during 2013.

There are certainly worse problems to have than customers wanting more of your product than you can produce, but nobody wants to leave money on the table. To address this excess demand, which is focused especially on their SkyActiv models, Mazda is opening a new plant in Mexico at the beginning of 2014. Other than that, they’re going to keep doing what they’re doing – designing very attractive cars that drive well and have excellent fuel economy.

Only time will tell how these two Japanese car makers will fare in the bullish market that’s expected to stretch at least through 2016, but hopefully after reading this post you’re as optimistic as us. Subaru has already demonstrated a capacity for success with or without the industry’s cooperation, so it seems likely that they’ll hit their goal of 500,000 sales by the end of 2015. Mazda, however, is a bit more of a gamble… They clearly know how to design and market their cars, but they’ve typically thrived as a smaller, Japanese-only exporter. They’ve never operated their own international plant – they’ve worked with Ford, but never on their own. Nonetheless, we’re hopeful and we think you should be too. Let us know your thoughts in the comments below!