Almost one in two U.S. residents sees snow only in the movies and in photos. For most of Canada, well, it’s not called the Great White North for nothing.
So it stands to reason that Subaru, the car company synonymous with all-wheel drive, would have a higher market share in Canada than in the United States. Except it doesn’t. In 2017, after another record year, Subaru Canada Inc.’s market share grew to 2.7 per cent; south of the border, Subaru of America achieved 3.8 per cent. The discrepancy, at least in part, is due to dealers’ difficulty getting enough of Subaru’s hot-selling models. The shortfall is from strong demand, a company executive said, adding that production increases should ease the problem.
Clearly, despite six straight years of growth and Canada recently surpassing Australia as the third-largest market for the brand, Subaru still hasn’t reached its true potential in this country.
“[Market share] discrepancies between the U.S. and Canada likely have to do with a limited supply of product that Subaru Canada can get their hands on,” said Robert Karwel, senior manager of J.D. Power Canada's automotive practice.
“Factories in Japan and U.S. will ship product to the most profitable jurisdictions first. If they could import more, they would likely sell more.”
‘GETTING OUR FAIR SHARE’
Ted Lalka, Subaru Canada vice-president of product planning and marketing, doesn’t know which market is more profitable, “but I can tell you the people at Subaru Corp. recognize Canada as a very important market. As we have been requesting additional production, we have been getting our fair share. I see no evidence of them favouring one market over another.”
Apart from still being tight on Crosstrek compact utility, “simply a case of customer demand exceeding expectations,” said Lalka, “in total now, we’re at the point where we can basically satisfy customer demand.”
Supply was particularly constrained when initial demand for the Legacy/Outback exceeded forecasts after its redesign in 2014. But that has been resolved with substantial increases in production capacity at Subaru’s plant in Indiana.
In part, Subaru’s higher market penetration in the United States might also be a matter of history. Subaru entered the U.S. market in 1968, giving it a 10-year head start over Canada
In both countries, the distribution rights were initially held by American privateers — the flamboyant Malcolm Bricklin in the United States, and, in Subaru Canada’s case, Larry Barnes, a Chevrolet dealer in Boise, Idaho. Perhaps an American owner lacked the local knowledge or the commitment to maximize the brand’s potential in Canada.
“The U.S. had a huge head start on of us in terms of brand awareness and building a core base of owners,” said Lalka.
In 1989, Subaru parent company Fuji Heavy Industries in Japan (now named Subaru Corp.) brought the Canadian operation in-house as Subaru Canada Inc. That year, Subaru sold 6,172 cars in Canada and things got even worse before getting better. An early-1990s economic downturn, and a misguided attempt to “mainstream” Subaru by offering front-wheel-drive models to compete directly with Honda and Toyota, resulted in a sales dip to 4,183 units in 1995.