Japan’s Subaru posts higher profit as car sales jump
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Subaru on Thursday posted a better-than-expected rise in its quarterly operating profit, buoyed by higher sales in the United States, its biggest market, where other Japanese automakers are struggling with slower demand.
Operating profit at Japan’s No.6 automaker came in at 119.3 billion yen ($1.08 billion) in the first quarter ended June, up 17.5 percent from a year ago and exceeding the average forecast for 114.8 billion yen from seven analysts polled by Thomson Reuters I/B/E/S.
Most Japanese automakers have been hit by both an overall slowdown in the U.S. market and a growing preference for bigger car models, versus the sedan.
Subaru has, however, managed to buck this trend, reporting a 12.3 percent jump in sales in the world’s No.2 auto market after China, with models such a revamped version of its Impreza sedan, along with the Forester SUV and Outback SUV crossover.
Subaru raised production capacity last year at its plant in Indiana and was able to deliver more units over the quarter in the United States, which accounts for around 60 percent of its global sales volume.
The automaker’s U.S. marketing strategy has focused mainly on affluent and liberal-minded consumers, with advertisements featuring slogans such as love and inclusion.
It has won over consumers living largely on the west and east coasts – a concentration that has allowed it to leverage its production capabilities, which are a fraction of those of Toyota Motor and other bigger rivals like Nissan Motor Co.
Toyota is expected to announce a 16 percent drop in its quarterly operating profit, according to analysts surveyed by Thomson Reuters I/B/E/S, while Nissan last week posted an almost 13 percent slide in profit, dragged by rising incentives to sell its cars in the United States.
Questions & Answers
Q.What is helping Subaru to achieve higher sales in the United States, unlike other Japanese carmakers?
What is helping Subaru to achieve higher sales in the United States, unlike other Japanese carmakers?
Subaru has bucked the trend through strong sales of models like a revamped Impreza sedan, along with the Forester and Outback SUVs. Their U.S. Marketing strategy targeting affluent, liberal-minded consumers on the coasts has also been effective.
Q.How did Subaru's operating profit compare to analyst expectations for the quarter?
How did Subaru's operating profit compare to analyst expectations for the quarter?
Subaru's operating profit for the first quarter was 119.3 billion yen, exceeding the average analyst forecast of 114.8 billion yen. This represents a better-than-expected rise compared to the previous year.
Q.What proportion of Subaru's global sales volume comes from the United States market?
What proportion of Subaru's global sales volume comes from the United States market?
The United States market is significantly important to Subaru, accounting for approximately 60 percent of its total global sales volume. This makes it their biggest market by a substantial margin.
Q.How have other major Japanese automakers performed in the U.S. Market recently?
How have other major Japanese automakers performed in the U.S. Market recently?
Toyota is expected to report a 16 percent drop in quarterly operating profit, while Nissan recently posted an almost 13 percent slide. They have been affected by a market slowdown and increased buyer preference for larger car models.
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