Subaru: FY2012 ends with record sales and net income

Vehicle sales in the US increase for fifth consecutive year

2013/04/05

Summary

 Fuji Heavy Industries (FHI), the manufacturer of Subaru-branded vehicles, projects all-time records all around in FY2012 including the consolidated vehicle sales of 722,000 units, sales volume of 1,890 billion yen, operating income of 107 billion yen, and net income of 76 billion yen.

 In April 2008, FHI expanded its partnership with Toyota and Daihatsu for development and production while opting for a phased discontinuation of all mini vehicle development and production (the discontinuation plan was completed in February 2012). The company's ultimate aim was to concentrate on the development and production of highly value-added small- to medium-sized passenger cars by leveraging on its Boxer engine (horizontally-opposed engine), all-wheel drive, collision prevention, "EyeSight" and other unique technologies.

 The concentrated development has led to the launch of BRZ, facelifted Legacy, all-new Impreza XV and all-new Forester all in 2012. As a result, Subaru sales of non-mini vehicles in the Japanese market topped 100,000 units (108,000 units) for the first time in seven years since 2005, and also outnumbered the sales of mini cars (which sold 70,000 units). The company ascribes the steady increase of income to the brisk sales of highly profitable models and to high utilization rates of plants.


 (Note) The "mini car" is a unique category in Japan of vehicles with piston displacement of 660cc or less, overall length up to 3.4 meters or overall width up to 1.48 meters. The mini cars represent approximately one third of the Japanese automobile market because of tax privileges in addition to the low purchase price and ownership cost. However, their market is limited to Japan and the automakers are forced to settle for small margins.


 This report refers to all small- to larger-sized vehicles other than the mini cars as the "non-mini vehicles."


 FHI's model development efforts, primarily targeting the US market, proved to be successful. The company expects its US sales to increase continually for five years in a row to 336,000 units in 2012 and 365,000 units in 2013.

 FHI is facing difficulties in starting local production in China in FY2015 as originally planned. Nevertheless, the company is strengthening its sales structure there to import more vehicles and sell 100,000 units in FY2015.

 FHI is following a medium-term business plan "Motion-V" spanning from the fiscal 2011 to 2015 in which the company aspires to sell 850,000 vehicles globally in FY2015. FHI plans to increase sales especially in North America, China and other areas (Russia, Southeast Asia, etc.) after the US.

Progress of the "Motion-V" medium-term business plan for fiscal 2011-2015

Targeted income  FY2015: Consolidated operating income of 120 billion yen with 6% consolidated profit rate
Consolidated sales plan for FY2015 Planned  900,000 vehicles worldwide (including 350,000 units in the US, 180,000 in China)
Revised in May 2012  The plan was amended as local production in China starting before the end of the medium-term business plan has become implausible (original plan calls for producing 50,000 vehicles in 2013 and 150,000 in 2015). The plan was revised to 850,000 vehicles worldwide including 410,000 in North America (380,000 in the US) and 100,000 in China on the shipment basis (OEM and CKD inclusive).

FHI's consolidated unit sales by the area
(1,000 units)
FY2008 FY2009 FY2010 FY2011 FY2012

 FY2015
Plan
North America 207.1 249.8 307.1 308.6 389.8 410
China 26.2 48.9 62.4 48.3 50.2 100
Japan
Europe
Australia		 178.8
56.8
36.7		 171.3
37.3
35.0		 158.1
48.2
41.2		 172.3
39.1
36.9		 159.6
47.1
38.7
Three regions total 272.3 243.6 247.5 248.3 245.4 270
Others 49.7 20.5 40.0 34.6 36.8 70
Worldwide 555.3 562.8 657.0 639.9 722.3 850
Source: FHI's financial statements
(Notes) 1. Russia is included in other areas.
2. More sales are expected in North America than planned (410,000 units in FY2015).


Related report: "Two million mini vehicles sales expected in Japan in 2012" (posted in December 2012)


Sales plan for 2013 (calendar year): Plans set for a new all-time record in global sales of 750,000 vehicles

 FHI registered an all-time worldwide sales record of 707,000 vehicles in calendar year 2012. To be more precise, FHI achieved all-time sales records in the US (336,000 units), Canada (31,000 units) and Australia (40,000 units).

 FHI plans to sell 750,000 units in 2013. While the company's sales at home are expected to decline from 178,000 to 162,000 units, the company plans to expand sales in all overseas markets to achieve 11.2% increase from 529,000 to 588,000 units in total. The all-new Impreza XV and Forester will contribute to the sales increase through the year. And also the increased supply of the Impreza resulting from a greater capacity at the Gunma Main Plant will contribute.

Retail quantities by the region in calendar years: Results in 2012 and plans for 2013
(1,000 units)
Japan US Canada Europe Australia China Others Worldwide
Results in 2012 178 336 31 42 40 43 35 707
Plans for 2013 162 365 36 44 42 58 44 750
2013/2012 91.0% 108.6% 116.1% 104.8% 105.0% 134.9% 125.7% 106.1%

Source: FHI New Year Press Conference 2013.1.15
(Note) "Others" include Russia.

 


Japan: non-mini vehicles sold more than mini cars in 2012 and exceeds the 100,000 units mark for the first time in seven years

 FHI sold 178,000 vehicles in Japan in 2012 including 108,000 non-mini and 70,000 mini vehicles. Non-mini vehicles sales topped the 100,000 units mark for the first time in seven years since 2005 and also outnumbered the mini vehicles sales for the first time ever.

 FHI anticipates that the total demand will decline in 2013 by about 10% from 2012 due to the end of the eco-car tax credit privilege and is hence projecting Subaru car sales of 162,000 units for 2013. The company plans to continue to sell more than 100,000 non-mini vehicles in Japan while maintaining a stable sale of about 60,000 units of mini vehicles.

FHI: New vehicles sales in Japan by the model

2005 2006 2007 2008 2009 2010 2011 2012
Legacy 59,370 52,066 38,215 26,317 28,226 27,407 22,354 25,983
Impreza 28,937 26,031 33,994 24,729 21,704 24,053 21,664 51,998
BRZ 4,830
Forester 20,099 14,855 12,520 23,104 12,879 14,035 14,465 12,440
Exiga 9,710 9,881 11,519 7,369 8,627
DEX 1,104 2,698 1,063 330 4
Trezia 963 7,552 4,103
Total non-mini 108,406 93,042 84,828 85,050 75,491 79,139 73,806 108,070
Total mini car 149,567 152,192 140,990 121,693 97,996 97,558 84,895 69,651
Grand total 257,973 245,234 225,818 206,743 173,487 176,697 158,701 177,721
Source: Japan Automobile Dealers Association, Japan Mini Vehicles Association
(Notes) 1. The total for non-mini vehicles includes other vehicles of unknown model names.
2. FHI's sales of mini vehicles will continue by OEM supplies from Daihatsu.

 

 


North America: Sales increasing for five years in a row in the US with plans to sell 380,000 units in FY2015

 In the US, FHI sold 336,441 units of Subaru cars in 2012 (up 26.0% from 2011) including the all-new Impreza that launched in early 2012 and sold more than 80,000 units, twice as many from the previous year. The company registered all-time sales records for five years in a row in the US (the only automaker in the US to post five consecutive years of sales growth).

 The number of dealerships in the US remains unchanged at about 620 but roughly one third of them began to sell Subaru vehicles recently. Many of them are highly capable dealers that once sold GM and Chrysler cars during the hard times.

 FHI, anticipating that the light vehicle market in the US will recover to the 15 million units level, plans to sell 365,000 units in 2013. The forward-looking forecast is based on the projected sales of the new Forester, the XV Crosstrek and the reduction of lost sales opportunities as the stock shortage is being corrected.

 According to the company's medium-term business plan "Motion-V," FHI is to sell 350,000 units in the US in FY2015, the last year of the plan. The target was revised upward to 380,000 units in May 2012. The company is reportedly eyeing a new goal of 400,000 units as it experiences brisk sales in the South that was once considered a weak spot for the company.

 FHI's Indiana plant, SIA (Subaru of Indiana Automotive, Inc.), has capacities for 170,000 units of Subaru cars and 100,000 units of Toyota Camry on commission. The company plans to increase the Subaru car production capacity for 30,000 additional units in the summer of 2014. It has also been reported that the capacity of the Camry producing line will be increased by 70,000 units in 2016 to start mixed production of the Impreza currently imported from Japan.

Unit sales of new vehicles by the model in North America

2006 2007 2008 2009 2010 2011 2012
US Impreza 41,148 46,333 49,098 46,611 44,395 41,196 81,799
Legacy 84,442 78,428 66,876 64,997 38,725 42,401 47,127
Outback 21,333 93,148 104,405 117,553
BRZ 0 4,144
Total Subaru car 125,590 124,761 115,974 132,941 176,268 188,002 250,623
Baja 5,241 1,127 2 0
Tribeca 18,614 16,790 10,975 5,930 2,472 2,791 2,075
Forester 51,258 44,530 60,748 77,781 85,080 76,196 76,347
XV Crosstrek 7,396
Total Subaru truck 75,113 62,447 71,725 83,711 87,552 78,987 85,818
Subaru 200,703 187,208 187,699 216,652 263,820 266,989 336,441
Canada 16,190 16,504 19,892 23,034 27,805 26,984 31,003
Total North America 216,893 203,712 207,591 239,686 291,625 293,973 367,444

Source: Sales in the US taken from Automotive News, those in Canada taken from Ward's Automotive Yearbook.
(Note) Models written in blue are those produced in North America.

 

 


China: Postponing local production and strengthening sales structure to sell more imported cars

 FHI was to sell 66,000 vehicles in China in 2012 but sold only 43,000 vehicles due to the worsening Japan-China relations. However, sales are picking up and FHI now plans to sell 58,000 units in 2013. The Forester accounts for more than a half of sales in China. FHI is set to achieve sales growth in 2013 with the introduction of the new Forester and the XV followed by the BRZ.

 FHI once planned to start joint production in China in 2013 with Chery Automobile but the approval of the plan by the Chinese government is still pending. The plan to start a joint production before the end of the medium-term business plan (until March 2016) appears unlikely. Consequently, sales plan for FY2015 in the medium-term business plan was revised downward from 180,000 to 100,000 units.

 FHI is following a policy to pursue sales expansion by exporting assembled cars. In January 2013, Subaru of China, Ltd. (SOC), FHI's wholly-owned Subaru car sales company in China, accepted 40% equity contribution by Pangda Automobile Trade, a multi-brand automotive dealership in China, and became a joint venture company. The new company will utilize the know-how of the Chinese enterprise and strengthen corporate organization including labor increase to expand the number of dealerships from 182 in the early part of 2013 to 200 by March 2016.

 

Starting KD production of the XV in Malaysia in December 2012

 In December 2012, FHI began knock-down production of the Subaru XV in Malaysia jointly with Tan Chong Motor Assemblies Sdn. Bhd. Production started with annual capacity of around 5,300 units that will be sold in Malaysia, Thailand and Indonesia. FHI was selling about 300 vehicles annually in those countries and plans to increase sales to approximately 10,000 units in 2015.

 FHI is planning to produce models for Australian market that are currently produced in Japan.

 

 


Production structure: Global capacity to be 800,000 units in the summer of 2014, 850,000 units in FY2015

 In February 2012, FHI ended production of the mini commercial vehicle, the Sambar, at the Gunma Main Plant in Japan and discontinued the production of mini vehicles. In March 2012, the company began the production of the Subaru BRZ/Toyota 86, a co-developed model with Toyota.

 FHI has plans to increase production capacities in Japan and the US. Accordingly, the production capacity at the main plant in Japan was increased from 150,000 to 180,000 units in the summer of 2012. Subaru of Indiana Automotive, Inc. (SIA) will increase its Subaru car production capacity in the summer of 2014 from 170,000 to 200,000 units. As a result, FHI's global production capacity for assembled cars will increase to 802,000 units in 2014 and to 850,000 units by March 2016.

Planned production quantities
(1,000 units)
2011 2012 2013 Plan FY2015 Plan
US (SIA) 162 185 172 210
Japan 419 569 569 580
Total 580 753 741 790
Source: FHI New Year Press Conference 2013.1.15
(Notes) 1. Japan value includes that of the Toyota 86.
2. Production in 2013 is expected to remain unchanged in Japan and decline by approximately 7% overseas as the stock shortage is gradually being corrected after increased production in Japan and overseas.
3. Figures do not include KD production that started in Malaysia in December 2012.

Planned production capacities
(1,000 units)
2012 2013 Plan 2014 Plan FY2015 Plan
US (SI) 170 170 200
Gunma Works, Japan Main Plant 150 180 180
Yajima Plant 422 422 422
Total 742 772 802 850
Source: FHI New Year Press Conference 2013.1.15
(Notes) 1. FHI is set to construct a global annual production capacity of 850,000 vehicles by FY2015 in line with the sales quantities in the medium-term business plan.
2-1. The above production capacity at SIA in the US represents production of the Subaru cars and does not include production of Toyota Camry (100,000 units) on commission.
2-2. It is reported that SIA in the US plans to increase capacity of its Camry production line by 70,000 units in 2016 and start mixed production of the Impreza currently being imported from Japan.
3. The Yajima Plant in Gunma, Japan, has been producing Subaru-branded non-mini vehicles.
4. The Impreza and Impreza XV being produced at the Yajima Plant are also produced at the Main Plant since August 2012. The concurrent production (referred to as "bridge production" by FHI) is aimed at responding to changes in demand and leveling operation at the two plants.

 

 


Model plans: Strengthening SUV lineup as the new profit source and launching HVs in 2013

 FHI launched all-new models one after another in 2012. The BRZ co-developed with Toyota and launched in March was followed by the facelifted Legacy series models in May fitted with the new-generation Boxer engine and the new CVT, the urban crossover Impreza XV in October, and the new Forester in November. FHI plans to launch the first Subaru hybrid in 2013 and the next Legacy series models in 2014.

 FHI is following the policy to strengthen market appeal of the Impreza XV, Forester, Legacy Outback and other SUVs and turn them as the new profit source.

FHI: Model plans for 2012-2014

Facelifted Legacy May 2012  FHI launched significantly refreshed Legacy series cars fitted with the new-generation Boxer NA 3.6-liter/2.5-liter engine,direct-injection 2.0-liter turbo engine and 2.5-liter turbo engine combined with the new Lineartronic CVT. The start-stop system feature is available as with the new Impreza that was introduced in December 2011.
 The new Legacy is the first Subaru car with a standard feature of a "brake override system" that places priority on the brake and reduces the throttle opening if the accelerator and the brake pedals are pressed simultaneously when the car is running at a certain speed or higher.
New Impreza XV October 2012  The Impreza XV is a small-sized SUV based on the new Impreza that was released for sale in Japan in December 2011. Designed after the product concept of "urban adventure" the XV is characterized by a neat, airy proportion and the powerful impression of an SUV. The car has a minimum ground clearance of 200mm but the overall height is only 1550mm, low enough for multi-level parking facilities.
 The car is equipped with the new-generation Boxer NA 2.0-liter engine and the new Lineartronic CVT. This combination improves torque in the most often used range from low to medium speeds while increasing fuel economy to 15.8km/liter. FHI has set the monthly sales goal at 5,000 units worldwide, including 1,000 in Japan.
New Forester November 2012  The fourth-generation all-new Forester was developed with the goal to maximize its value as a true SUV and represents a drastic evolution in a car's basic performance of driving.
 The combination of the new-generation Boxer NA 2.0-liter engine and the new Lineartronic CVT has resulted in better drivability and fuel economy (15.2km/liter). The model fitted with the new-generation Boxer direct-injection turbo-engine "DIT" is combined with the high-torque Lineartronic CVT for high-performance driving and excellent environmental performance (13.2km/liter).
 FHI has newly developed an AWD control system, X-MODE, that provides an integrated control of the engine, transmission, VDC and other key components and improves the car's performance in rough road surfaces. The previous model sold approximately 170,000 units worldwide in FY2011 and the new model was launched with a 15% higher goal (approximately 200,000 units). The car's sales goal for Japan is set to 2,000 units a month.
Refreshed Stella January 2013  The Subaru-branded mini car, the Stella, is an OEM version of the Move by Daihatsu. The revamped model has the JC08 mode fuel economy of 29.0km/liter, the highest ever among the mini vehicles with the overall height of 1,550mm or higher.
 The collision preventive system, Smart Assist, is made available on all trim levels (for 40,000 yen to 50,000 yen). When a collision with another car ahead is anticipated when the car is traveling at low speeds from 4km/h to 30km/h, the system warns the driver with an audible alert, or the system applies an emergency braking to avoid collision or mitigate damage of impact. The system is also fitted with an AT unintended start suppression control and other functions.
VIZIV Concept
(PHV)		 yet-to-be-
announced		  FHI exhibited its PHV concept, VIZIV, at the Geneva International Motor Show held in March 2013. The car is fitted with a 2000cc diesel engine and two dedicated motors for the front and the rear wheels, respectively.
 VIZIV is a coined name that stands for "Vision for Innovation" and expresses the future direction of Subaru-brand vehicles.
XV Crosstrek Hybrid 2013  FHI unveiled the first Subaru-branded HV "Subaru XV Crosstrek Hybrid" at the New York International Auto Show starting on March 27, 2013. The car is planned to be released for sale in 2013.
 A horizontally-opposed engine is combined with a motor drive system to improve both the fuel economy and driving performance. The hybrid system is partially based on Toyota's technology but FHI is working on an original technology to combine the horizontally-opposed engine with the system. This is FHI's way of pursuing Subaru originality with hybrid vehicles as well.
Next Legacy 2014  FHI plans to totally redesign its prevailing lineup of the Legacy in 2014. In addition to the outstanding driving performance that has been the company's strong appeal in the market, FHI will seek highest fuel performance among the vehicles of the same class as well as the design quality. Production will start first in the US, which shows that the company prioritizes the US market.
 It has been reported that the next Legacy will have a diesel version available for the first time in Japan, most likely the 2000cc horizontally-opposed diesel engine mounted on the Forester and other models already sold in Europe.

 

Expanding the availability of the driver assistance system "EyeSight" to cars sold in Australia and North America

 FHI's driver assistance system "EyeSight" designed to reduce damage from collision and other impacts was first integrated in the Legacy in May 2008. The system was revised in May 2010 and the latest (second) version is available as of March 2013 on the Legacy, Impreza, Exciga, Forester, and Impreza XV.

 The EyeSight is used on nearly 80% of the Legacy/Outback sold in Japan.

 The system's availability began in January 2012 on models sold in Australia and in the summer of 2012 on models sold in the US. These systems have the same specifications as those on the models sold in Japan.

 FHI has completed revising the EyeSight and the third version reflecting higher collision avoidance performance is expected to be introduced in the market in 2013.

EyeSight: Updated version 3 with enhanced collision avoidance function to be available in 2013

Version 1 May 2008  The driver assistance system integrating all-new stereo cameras and newly-developed 3D image processing engine was first used on the Legacy facelifted in May 2008. The system costs 80,000 yen before tax.
 The system functions include Pre-collision Braking Control (to mitigate severity of impact), AT unintended startup suppression control, lane departure warning, lane sway warning, adaptive cruise control with all-speed range tracking function, and lead vehicle start alert.
Version 2 May 2010  The EyeSight system version 2 has a broader range of driver assistance and costs 100,000 yen before tax. The additional or strengthened functions are:
* Pre-Collision Braking Control: When the driver fails to apply brakes to avoid frontal collision and the difference of vehicle speeds of the two cars is less than 30km/h, braking will be automatically applied to mitigate the severity of frontal impact.
* Pre-Collision Brake Assist System: When emergency braking by the driver is detected, the system automatically applies full braking force to assist the driver.
* Adaptive cruise control with all-speed range tracking function: The maximum deceleration rate of automatic braking has been increased 1.6 times compared to the past version to enable adaptive speed control even when the vehicle ahead decelerates abruptly. When the other car stops, the system stops the own car and remain stopped.
Version 3 2013  The EyeSight system version 3 with further enhanced functions is planned for market launch in 2013. The new or enhanced functions are likely to include adaptive deceleration when the other vehicle in front running at high speeds decelerates abruptly, detection of potential danger from rear or side, automatic steering in addition to automatic braking to avoid impact when a potential danger is detected, etc.

(Note) The all-new Stella launched in January 2013 has "Smart Assist" which was developed by Daihatsu and is different from the EyeSight. The former uses a short-range laser radar which identifies the vehicle in front when driving at speeds of approximately 4-30km/h. The system averts a crash when relative speed is around or below 20km/h or assists in reducing damage at approximately 20-30km/h. It costs about 50,000 yen, half the cost of the EyeSight (100,000 yen).

 

 


All-time records forecast for FY2012 in consolidated net sales and operating and net income

 In February 2013, Fuji Heavy Industries (FHI) published its financial results for April-December 2012 and an upward revision of performance projection for the fiscal year ending March 31, 2013. The revision reflects an increase in net sales due to yen's depreciation (exchange rates of 87 yen/US$ and 114 yen/Euro assumed for January to March 2013), and the consolidated unit sales projection was increased by 8,000 units to 722,000 units.

 As a result, FHI projects all-time high records all around in net sales at 1,890 billion yen (up 24.6% from 2011), operating income of 107 billion yen (up 143.4%), and net income of 76 billion yen (up 97.6%).

FHI's consolidated financial results
(million yen)
FY2008 FY2009 FY2010 FY2011 Apr.-Dec.
FY2011		 Apr.-Dec.
FY2012		 FY2012
Forecast
Japan
Overseas		 507,500
938,300		 520,800
907,900		 467,300
1,113,200		 498,500
1,018,600		 337,500
691,900		 482,300
888,400		 659,600
1,230,400
Net sales 1,445,790 1,428,690 1,580,563 1,517,105 1,029,407 1,370,725 1,890,000
Operating income
Ordinary income
Net income		 (5,803)
(4,600)
(69,933)		 27,350
22,361
(16,450) 		84,135
82,225
50,326		 43,959
37,277
38,453		 27,854
28,713
36,756		 73,368
63,427
53,136		 107,000
99,000
76,000
Capital expenditures
Depreciation
R&D expenses		 58,000
65,100
42,800		 56,100
57,100
37,200		 43,100
49,800
42,900		 54,300
53,700
48,100		 39,200
38,900
35,600		 48,400
38,900
35,300		 72,000
60,000
50,000
Exchange
rates		 JPY/US$ 102 93 86 79 79 80 82
JPY/EUR 147 132 114 108 110 103 105

Source: FHI'S Consolidated Financial Results
(Note) Exchange rates of 87 yen/US$ and 114 yen/Euro are assumed for the fourth quarter of FY2012 (January to March 2013).

 

FHI's non-consolidated financial results
(million yen)
FY2008 FY2009 FY2010 FY2011
Net sales 969,209 952,136 1,075,923 1,038,917
Operating income (24,546) (12,522) 48,160 1,051
Net income (83,404) (32,315) 33,877 9,277
(Note) According to the Nihon Keizai Newspaper of March 23, 2013, non-consolidated operating income of 80 billion yen is expected for FY2012 due to the yen's depreciation, departure from mini car production, and sales shift to more lucrative non-mini vehicles.

 


References: FHI Press Releases and newspaper articles

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