• Dec 23, 2009
What do Toyota, Nissan and Honda all have in common? (Besides the fact that they are all Japanese automakers, that is?) They all re-entered the subcompact market in 2006 after abandoning it years ago. What's more, Mazda is planning to bring its subcompact Mazda2 to U.S. shores next year, Suzuki has signaled its intent to enter the B-segment with its popular Swift hatchback, and the domestics are in the game with the Chevrolet Aveo and forthcoming Ford Fiesta.

So, where does that leave Subaru? After all, the company has roots in small cars, starting with its first automobile, the downright minuscule 360, all the way up to the off-the-wall, four-wheel drive, three-cylinder Justy and its unconventional CVT.

Subaru spokesman Michael McHale tells Wards Auto, "The thing with the B-sector is you have to ask how you make money at the lower levels. You look at the pricing on the B segment – it's a tough segment to make money." Indeed it is – with base models of some competitors starting just under $10,000, profits are in very short supply.

For an automaker as small as Subaru, taking a risk on what is likely to be an unprofitable model generally isn't a smart idea. In other words, don't hold your breath for another subcompact Subaru any time soon.

[Source: Wards Auto]


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  • 44 Comments
      • 5 Years Ago
      Toyota never abandoned the subcompact market. They went from Tercel > Echo > Yaris. They *did* abandon the subcompact HATCH market during the run of the Echo.
      • 5 Years Ago
      This is a Japanese competition, as Jeremy indicates, and that B segment is full. Sometimes these guys forget that the car world is in a global competition. Funny how that ugly beast in your photo looks not a little like the Yugo here: http://www.cargurus.com/blog/2009/12/23/the-world-in-cars-volvo-yugo-and-schumacher.
      • 5 Years Ago
      Thumbs up for funny article title. lol
      • 5 Years Ago
      That's too bad. The Pleo R2 turbo would be fun in the city...though I can't see driving a B-segment car anywhere else in New England...these are some crazy drivers!
      • 5 Years Ago
      i see hyundai i10 everywhere in every countries i go. they should bring them. it's very very cute in person and surprisingly roomy inside.



      • 5 Years Ago
      I agree with them. They aren't large enough and don't have the market share yet to play in that low margin battle field. Stick to what they are doing good. Maybe next generation rotation.
        • 5 Years Ago
        That would be "being greedy and charging too much for goods that aren't so special, aren't particularly attractive-looking and/or especially upscale"?
        • 5 Years Ago
        Suzuki is lucky for the small SX4 AWD (till the yet smaller Swift arrives, surely with an AWD option)...Subaru is not a threat.
        • 5 Years Ago
        David, what are you talking about? The new line of subie's may not be the most attractive car on the road but they offer a lot for the money, the new interiors are great, and if you live where it snows they make all that much more sense.

        MSRP, Canadian:
        Honda Accord - $24,790
        Toyota Camry - $24,900
        Nissan Altima - $23,798
        Subaru Legacy - $23,995

        Wow so greedy! And the Subaru is the only one with standard full-time AWD, most don't even offer it. Sounds like a bargain to me.
      • 5 Years Ago
      ""Subaru says it can't Justy-fy selling a subcompact in the U.S:""

      IN PLANE ENGLISH AFTER RUNNING THROUGH THE BULLSH^TOTERPRETER:

      ""Subaru has nothing it can offer that will compete with the rest of the competition in the sub-compact class.""
        • 5 Years Ago
        Maybe I misunderstood your original message. I thought the point was that Subaru has nothing to offer to compete. Subaru has plenty of B-segment products that compete well. The decision is all about ROI (relative small B-segment market because we like big cars here) and AWD brand dilution.
        • 5 Years Ago
        Perhaps you should do some homework and see what Subaru is good at and has available outside of US.
        • 5 Years Ago
        That's not the point what it has outside the US...we're talking about INSIDE the US. If it's got a successful with an option already available, why the hesitation?
      • 5 Years Ago
      The mate of that car, but in white, was my first car. Awesome unit, complete with a 3-cylinder, electronically controlled CVT, and 50:50 4X4 drivetrain. With good tires, I was never able to get it stuck, and we get some crazy weather here in Nova Scotia.
      • 5 Years Ago
      Is anyone else here concerned about Subaru? They seem to me making some really strange moves these days. Dropping out of the WRC (their biggest advertising angle) being one of the biggest. It just seems to me they are having some very major financial trouble, and are covering it up with excuses like 'we cannot justify the cost of such a move'. B-Segment cars are only going to get more popular from here, and for them not to jump on the band wagon worries me.
        • 5 Years Ago
        I wouldn't worry just yet. Yes, they pulled out of WRC. That could be a cost saving maneuver or possibly because of the impending rule changes. Regardless, don't forget that Subaru was one of only two car companies that showed a positive growth in sales last year (http://www.autoblog.com/2009/01/05/by-the-numbers-2008-phew-glad-thats-over-edition/). Essentially, they were about flat with 2007, but that's much better than their competitors.

        I think not building a B-segment is just Subaru sticking with what they do best. They're small and a bit of a niche player. Volume has never really been their game. That's what they'd need to produce a car with lower profit/unit. The other companies can use the B-segments as loss leaders or low-profit units to drive people into their showrooms to have the opportunity to upsell them into a bigger car. They have the volume to support that. Subaru doesn't want to take the financial risk. They've generally tried to focus on what they do well. As a result, they continue to sell like gangbusters in areas similar to the Pacific NW and Colorado. Occasionally, they sell to enthusiasts by coming out with unique, niche rides like the WRX or the Brat. It's a conservative move, but they've usually played the market that way.
        • 5 Years Ago
        Suby leaving WRC because they can't use the boxers or AWD that make their cars distinctive?

        Smart move!
        • 5 Years Ago
        No one said that they could not use the boxer. If you are referring to the S2000 rules that are coming up, that wasn't until 2011. And as for AWD, both the current WRC spec as well as the S2000 spec state that you HAVE to have AWD. The only rule that restricts the AWD system is the use of only one electronic controlled differential to be in the centre position with the front and rear being either viscus or mechanical. They left becuase they could not afford to pay their bills. Fuji Heavy Industries, the parent company of Subi was quoted as saying that it was, in part, due to the economic down-turn, but also because they "had achieved its sporting and marketing objectives". In short, they were hurting financially, and thought they would be cutting the fat by pulling out of their number one (and only major) motor-sports venue.

        What's worse, they have decided to make a return to the rally world, but in the form of the IRC. This, to me, is a slap in the face of Petter Soleburg, Chris Atkinson, and the championship that helped make them as big as they are today.
      • 5 Years Ago
      I like subs in my compact stomach POW
      • 5 Years Ago
      As much as I admire Subaru’s design and engineering, I think that their “symmetrical all-wheel drive all the time” marketing here in North America has them “boxed” into a niche that won’t be easy to escape without diluting their current brand values.

      Back when the Justy was new (and into the mid ‘90s), Subaru offered both FWD and 4WD/AWD in all of the models they offered in the US. Their version of the upcoming FT86 coupe (if offered in RWD) will be a signal that they’re expanding beyond AWD-only. An Aveo /Fit/Versa/Yaris fighter would be a logical follow up.

      Don’t be surprised if the next-generation Yaris has some Subaru input so they can use that platform for a Subie sub-compact with a choice of FWD/AWD a la Suzuki SX4. I know I’d be interested if one was offered.
      • 5 Years Ago
      They were branded J10 s where I used to live. Its kinda funny because the uber jet in Battlefield 2 is the Chinese J10. It always made me think I was getting my ass handed to me by a Subaru.
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