Filed under: Government/Legal, Japan, Subaru, Toyota, Earnings/Financials
Is Toyota preparing to purchase Fuji Heavy outright?
Winding Road is reporting that a recent change in Japan's anti-trust regulations might mean that Toyota has a clear shot at acquiring a controlling interest in Fujji Heavy Industries, the parent company of Subaru. Lest you think this might be some pie-in-the-sky notion, Subaru admits it could use the help. Toyota already has an 8.7% minority share in Subaru's parent company. With the changes in restrictions, Toyota could make a move and gobble up Subaru and all of its awd motorsports prowess.
TheCarConnection interviewed Subaru CEO Ikuo Mori, who basically admitted that Subaru might not be long for this world without Toyota's cash infusion. That doesn't mean we'd see badge engineering between the brands anytime soon, however. This wouldn't be like its partnership with GM according to the spokesperson. No 9-7X-like crossover projects are expected, but changes are in the works. Subaru apparently has set its sights on Southern California as a new focal point for the future of the company. And some extra cash would certainly help Subaru achieve its goal of increasing worldwide sales by 15% over the next three years.
[Source: Winding Road]
Reader Comments (Page 1 of 2)
Steve 3:10PM (4/12/2007)
So is that why the new impreza looks like a corrola?
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whofan 3:14PM (4/12/2007)
Subaru builds better cars than Toyota. What a backwards world we live in. If the tables were turned who would bother to purchase Toyota?
Toyota is smart I`ll give them that much.
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Ken 3:22PM (4/12/2007)
I would rather see Porsche buy Subaru - that would be cool.
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Owen 3:23PM (4/12/2007)
#2. You're spot on. Toyota knows how to build inoffensive very well. Subaru’s engineering is top notch, their design is no better than Toyotas. I guess inoffensive Subarus wouldn’t be the end of the world, but I fear that they would also make the suspension "innofensive" as well in the sake of saving a buck as Toyota tends to do, next thing you know they'll lose the Boxer engines and go with a cheaper to produce V6 in the name of cost savings, which will say bye-bye to the symmetrical AWD, which will introduce torque steer and unpredictability. The engineers at Subaru are smart, smarter than the bean counters at toyota. Their designers are the ones that need to be put out to pasture. And as many people bash the new hatch WRX, when I saw it in NYC last weekend, all I could think was that if I couldn’t have my BMW 1 series hatch, this is the closest I was going to come. Yes, they could have done better with the grill and the taillights with all of its faux-bling. But that sheet metal is gorgeous.
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Fazzster 3:35PM (4/12/2007)
From a pure business standpoint, this will be really good for Subaru. Toyota knows how to run a company. The key is to leave the Subaru product alone and let a Subaru be a Subaru. We have all seen what happened when GM started making GM engineered Saabs; we ended up with Swedish branded Chevy Malibus......
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throwback 3:48PM (4/12/2007)
I don't know why this has not happened sooner. As soon as Toyota bought GM's Subaru stock, I assumed Toyota would absorb them. Say good bye to boxer engines if they do.
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tweezy 3:55PM (4/12/2007)
"So is that why the new impreza looks like a corrola?"
I was about to say something similar, except in my opinion, the Impreza looks more like the previous-gen Camry.
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arcsine 3:59PM (4/12/2007)
Whatever happened to that Subaru-engineered Toyota coupe in the rumor mill? I'd drive a Celica with a WRX drivetrain any day of the week.
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araemo 4:00PM (4/12/2007)
#5: I don't know what subaru's you've driven lately, but the base Impreza(IE, the Impreza without the "WRX" badging) does have an 'inoffensive' suspension(Well, it offended me, but I'm not the target for that kind of car).
I've never felt a suspension so soft or with so much body roll on a 'small' car.
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Turbofrog 4:01PM (4/12/2007)
All this speculation of Subaru losing its identity is completely unfounded. There's no reason to eliminate the company's competitive advantage - Toyota already builds Toyotas, they don't need to dedicate resources to a smaller company with a smaller dealer network to sell more of the same.
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Hamud 4:01PM (4/12/2007)
I see this a good think, as far as Toyota could only put money and not hands on Subaru...
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Hamud 4:03PM (4/12/2007)
Woot, i really mistyped up there, I meant "I see this as a good thing".
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Felix 4:15PM (4/12/2007)
I agree with turbofrog. We're not giving toyota enough credit. They know they're boring and they know boring is what MOST people want. They also know they need interesting cars for the rest of us.
Why would they buy subaru simply to turn it into a toyota competitor by making them boring? Toyota may be many things, but they are NOT stupid.
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dcwf 4:21PM (4/12/2007)
Why not leave Subaru as Subaru? (after all, that's what makes a Subaru a Subaru -- sorry) Toyota now has three divisions in this country: Scion, Toyota, and Lexus. They each target a different market segment. In the U.S., Subaru's market segment is totally different from Lexus or Scion, and only partially overalps with Toyota itself.
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Lithous 4:46PM (4/12/2007)
"Subaru CEO Ikuo Mori admits that for all intents and purposes, his company would likely not survive without Toyota’s deep pockets."
So, before the regulations changed, why didn't we see a Subaru Death Watch series? Oh, Farrago knew about the regulation change and that Toyota would buy them and that doesn't count as "death" apparently (well, unless GM got bought by Toyota or some other company then he would be pronouncing himself successful in that the real GM would be dead).
I'm just starting to get a hang of truth as it pertains to cars. Wow, mind boggling stuff.
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Stéphane Dumas 4:48PM (4/12/2007)
Maybe I'm too pessimistic, but I ponder if it could be the beginning of the end for Subaru in the long-term, following a path similar to Hino? I spotted a French article about Hino at
http://www.leblogauto.com/2006/12/tiroirs-de-l%E2%80%99insolite-hino-alpine.html (you need Google translation or Alta-vista to translate from French to English)
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mk 4:50PM (4/12/2007)
I don't know... This could go either way.
Subaru is nailing it's own coffin with ugly designs, lack of support, lack of marketing, and HUGE lack of options. But their chassis design, and inherent AWD Boxer-engined platform is sound, and has great potential.
With money, subaru could turn it around, and bring their designs back up. However, their American headquarters in New Jersey needs to be brought in line. Compare the Legacy/Outback lineup in North America to all the other markets, and you will see what I mean. Tribeca is a US-target product, and the WRX is built in Japan, with less involvement from Subaru's american arm.
OR, with Toyota's control, the integrity of Subaru could be compromized in search of market growth.
The 08 WRX is severely handicapped by trying to play "me too" in the hatchback game, when it has AWD, and a Turbo WRX and STI (coming) variant that play in tougher segments. The soft econobox "corolla-esque" styling will not, and is not playing well there. More of that from the master-of-bland Toyota, and Subaru will die regardless.
Subaru is harder-core and more sporty than Scion, but could learn a few customer-relations lessons from Scion. Subaru is not just a toyota competitor. It offers something different, and much more enthusiast-centered.
Money infusion would be good. The wrong decisions on Toyota OR Subaru's part, regardless of the money, could be lethal to Subaru at this point.
Andy Why southern california? Subarus aren't hot-rod culture cars, even though some are fast, Why not somewhere farther north, where AWD Subarus sell better? (and avoid the costs associated with doing business in the People's Republic of California.)
People in LA don't drive subarus, by and large. They drive more expensive, and less practical cars, if at all possible. How about new england, The upper midwest, or the northwest? somewhere where value, quality and AWD are useful. And performance is still asked for, as well.
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stratojet 6:47PM (4/12/2007)
#14
Toyota is ordinary amd is as fun as shopping for a fridge or a washing machine.
People, not Toyota, are bland and boring.
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SherbornSean 6:54PM (4/12/2007)
Get a clue, people. Toyota isn't buying Subaru to be nice and let them eat up their cash. They know that Subaru's business model is unworkable and Subie will die without radical change.
As soon as Toyota buys Subaru, they will absorb it into the Borg. Boxers are gone, as are independent platforms. The Impreza becomes an AWD Corolla; the Legacy/Outback an AWD Camry and the Forrester an AWD Rav4.
Dead Subie Walking.
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KJC 7:00PM (4/12/2007)
Subaru is a niche market manufacture and did well flying under the radar of the big boys. They are the SAAB of Japan. However, to increase market share and they went mainstream with the B9.
Subaru invested a lot in the B9 and lost. Most of the profits from the Legacy, Outback, and Impreza went into the development of the B9.
Subaru never had a huge cash on hand to invest so when the B9 tanked so did their financials.
Yes, their Boxster engine and all wheel drive are solid but their design, marketing , support, and dealer network needs upgrading.
This is were Toyota can really help Subaru. Toyota will need to lend some personnel to Subaru and possibly share some dealers.
Subaru dealers seems to be always share with VW and Mazda.
I don't think a Toyota take over of Subaru will happened anytime soon if at all and it won't be like the GM model. It will be like the Hino Motors structure. Toyota is already stretched too thin with all of their global expansions.
Don't forget Toyota also, purchased shares of Isuzu, the leader of diesel engines.
Toyota build quality, business structure, marketing, capital, supplier and dealer network
Subaru all wheel drive system and boxster engine
Isuzu diesel engines
Like them or not Toyota does not mess around, be afraid Detroit, be very afraid.
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