Last week's announcement that Toyota wants to raise its stake in Subaru's parent company Fuji Heavy Industries looked to have no down side. Subaru gets $300 million with which to build a new factory, Toyota gets greater access to FHI's high tech batteries for hybrids, and both get to build the affordable RWD/AWD coupe that we're all waiting for.
But the bean counters in Toyota City have noticed that Subaru's kei car division spends a fortune on developing quirky micro cars such as the supercharged Vivio that Colin McRae campaigned in his first rally (above), the worlds smallest four-seat convertible (below) and the fabulous R2D2. The trouble is, profit margins on such marvels of engineering are wafer thin, and that is not the Toyota way. So, come the next decade, Subaru will only sell OEM kei cars made by another member of the Toyota family, Daihatsu.
Most analysts think this this is a good idea, but this one ain't so sure. Eighteen years ago I bought a rear-engined rear-wheel-drive Subaru Sambar. It was such a hoot to drive that I traded up to a Rex, then an RX-R, then a WRX and I now drive a Forester STI. In all likelyhood, my next car will be an Impreza STI.
Will rebadged Daihatsus garner such brand loyalty from young buyers in 2010?
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Reader Comments (Page 1 of 2)
John R @ Apr 16th 2008 10:38AM
So, this is how the Borg assimilation starts...
Richard @ Apr 16th 2008 10:41AM
This is really a shame.
I am a loyal Subaru driver, having begun with and SVX here in the states.
Subaru offers brilliantly engineered, really well built cars that are boat loads of fun to drive. It seems though, that they never have the funds to really promote enough to capture more business from the non-enthusiast (Camry, Malibu...buyers). I wish we had that little R1 over here. It would be a great city car.
Hopefully, this does not mark the beginning of the end of Subaru brand character as so many have feared.
Temple @ Apr 16th 2008 11:03AM
Its expected. Nissan doesn't build their own Kei-cars even, they are built by Suzuki. And Toyota's kei-car division is already heavily allied with Daihatsu (which Toyota owns 52% of).
The thing is the Kei-car market may be the largest automotive market in Japan taking more then half of the countries sales, however, its an incredibly low profit margin business (new cars can be bought for around ~$10k).
Also, being that all cars are the same dimension (as regulated to get kei-car classification) and use the same type of engine design (660cc inline three cylinder with or without forced injection) it makes little sense for manufactures to have bespoke designs between brands.
This is absolutely the right choice for Subaru since now they can focus on their other platforms.
Mirko @ Apr 16th 2008 11:03AM
In Europe, the new Justy is just a rebadged Daihatsu Sirion. Not quite keicar territory, but sad nonetheless. AWD isn't even available as an option, although it is on the Daihatsu.
godda9u @ Apr 16th 2008 11:13AM
FXT != FSTi
unless you don't live in US
stefan @ Apr 16th 2008 11:18AM
The forester STI is a JDM model.
Mirko @ Apr 16th 2008 11:17AM
@godda9u:
Autoblog's info about Justin Gardiner:
A Brit who's been stuck in Japan his entire adult life, writing about cars for the industry, bankers (the "B" is silent) and print media. New to Blogging.
Also, he had a Subaru Sambar... were those available in the US?
godda9u @ Apr 16th 2008 12:25PM
please read my first post again
"unless you don't live in US"
yes, i read he said he had a subaru Sambar and my understanding is from 18 years ago.
i can assume he's not in US then, but can't assume that now, since some call their FXT as FSTi. close but not quite. i am a FXT owner myself, even if i switch to FSTi suspension, turbo, intercooler, ECU, body parts etc, i am still missing the 6 speed manual vs. our 5 speed.
same for integra GS-R != integra typeR, civic SI != civic typeR
tankd0g @ Apr 16th 2008 11:47AM
I guess I'd care if they were sold here, since the newest Kei car we can get in Canada is 15 years old this is going to take a while to kick in...
why not the LS2LS7? @ Apr 16th 2008 11:49AM
Subaru was better off under GM.
I think the next thing Toyota is going to do is enforce their "no exciting cars" policy on Subaru.
awdyes @ Apr 16th 2008 11:52AM
I'll have to agree... also was this such a good idea, as gas prices rise and rise, k-cars could be as important here as in asia.
Bryan @ Apr 16th 2008 12:35PM
I truly hope your wrong about that, because Toyota does make some damn boring cars.
Richard @ Apr 16th 2008 4:07PM
With the 8 or so percent that GM had I don't think you could say that Subaru was better UNDER GM.
Had they actually been under GM Subaru would now be AWD Pontiacs much like Saab are FWD Pontiacs with the key on the console.
why not the LS2LS7? @ Apr 16th 2008 9:15PM
Toyota currently only owns 10% of Subaru, although they are planning to increase their stake.
So me saying "under" GM is no weirder than right now saying "under" Toyota.
psarhjinian @ Apr 16th 2008 11:58AM
From what I recall, real kei cars aren't really high-performance regardless of who makes them. As soon as you crack the (very narrow) definition of keijidosha (60hip max, from 600cc max) you lose the tax and insurance benefits associated with the class.
Kei cars are urban grocery-getters by their very definition. When Subaru makes a kei car, it's just as much a gutless, passionless runt as anything Daihatsu makes. If they hot up a kei, it's stops being a kei. There's nothing stopping them from tuning a next-gen Daihatsu Copen; heck, it's to their benefit as they no longer have to develop the core platform on their own.
We don't have anything like this in the US or Canada (at least nothing formal; we have EPA classifications by size, and insurance risk/cost for each model, but that's it), so it's probably hard to understand the concept of a restricted class of cars. Subaru will still make/sell kei cars, but it will be sharing extensively with Daihatsu to do so. These hotted-up versions aren't kei cars now (I mean, really, 60hp!), and won't be in the future.
I'd like to see an official kei-car program over here, with tax and insurance breaks for buying something with low-power and high mileage. I think if there was a serious economic incentive, it'd work well, especially since no politician that wants to keep his/her job will touch a gas tax.
Sam @ Apr 16th 2008 12:05PM
That is sad news. I really wanted a Suburu R1. I would take that over ForTwo any day.
David Thompson @ Apr 16th 2008 1:11PM
So, what happens to the development work done on the R1e?
deadlydave @ Apr 16th 2008 1:31PM
The author lives in Japan, Can we get back on topic?
I hope that killing the Keis will free up some cash for subaru's normal cars and their performance variants. The Baja and Alcoyne SVX were both killed because they weren't advertized effectively.
Toyota needs Subaru for it's soul, just as bad as Subaru needs Toyota for capital. I would have no problem with a Toyota buyout as long as Subaru was the 'fun cars' division. From reading the post on the Corolla XRS here, it's clear the big T needs some help. The base model Impreza hatch sounds like it would beat the that tarted-up econobox like a red-headed stepchild.
hashiryu @ Apr 16th 2008 1:40PM
Why is this such sad news? What a bumch of drama queens. These are Kei cars people. 660cc, super tiny grocery getters. I agree with everything psarhjinian said, he is very right.
Furthermore Diahatsu does make some pretty decent cars [for what they are]. My first car was a homologation edition Diahatsu Charade Detomaso G201S. If that is any indication, Subaru (nor any of you.........and much much less the yanks) have nothing to worry about.
http://www.mrtrally.com.au/performance/maga.htm
Mike @ Apr 16th 2008 4:45PM
Why is this such sad news? This move won't affect most consumers directly, since they can find another brand with a fun small car. The biggest problem is that it is a dilution of the Subaru brand, which injects a little STi into each of its cars. The big problem lies down the road, when they can start rationalizing Imprezas and Legacies without boxers and AWD. That is the Toyota way, and I don't want to see Subaru go down that cold, lonely path into high profits.