Subaru Sees Both Opportunity and Risk in Joint Sports Car Effort with Toyota

Subaru gets its marching orders

By Brendan Moore

05.28.2008

Subaru has got be happy with the recent announcement that they will develop a front-engine, rear-wheel-drive sports car with it’s corporate owner, Toyota, and then sell a Subaru-branded version of that same sports car alongside the Toyota version in the market in 2011. Neither Subaru nor Toyota has a real sports car now, and it’s been a long time since Toyota has had a RWD sports car. And Subaru executives have got to be over the moon about the Subaru boxer engine being chosen as the engine in the new sports car.

But, all is not daisies and lollipops at Subaru, as they have some valid concerns stemming from being the (very) junior partner in this arrangement, as well as a concern about damaging the brand equity they have built up around having all of their vehicles possess AWD in most of their market regions.

A recent article in Automotive News highlighted these concerns:

Subaru’s overseas marketing chief Masatsugu Nagato says the car will lure new customers into showrooms and expand the company’s audience.

But Subaru’s marketing will have to “be very smart” to keep its car from being overshadowed by the Toyota-badged sister model, Nagato told Automotive News at the Beijing motor show.

Subaru, which chalks just 7 percent of Toyota’s global sales volume, is also wary of having its niche image as an all-wheel drive specialist diluted by the rear-wheel drive sports car.

“A potential question could be cannibalization,” Nagato said April 20. “We may lose our longstanding territory, or we may lose the great niche brand image. The potential risk is there.

“We can avoid this. On this occasion and opportunity, we can grow more,” Nagato said. “In order to do it, we have to be very smart on marketing strategy.”

The joint effort certainly presents a set of interesting questions regarding differentiation. Will the Toyota version look predictably bland, with the Subaru design team given free rein in terms of taking risks? Will both designs be exciting and daring? Will both designs be bland? Will one version have a more powerful engine option or will the powerplants be equal? What about the interiors? Will one of the versions have a decidedly upmarket trim level? How will the production volumes for each brand be determined? Will Subaru get a top-of-the-line AWD version just to assuage the pain to the Subaru brand image?

No one knows yet, and its quite likely that the people at Toyota and Subaru don’t know yet, either. It will be very interesting to see what decisions they make in the joint effort and how those decisions manifest themselves in the actual cars.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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1 Comment

  1. I hope we get the flat-four and the flat-six offered, and futhermore, I hope we see both engines offered in other Toyota vehicles whether they’re in a shared model or not.

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