Subaru Case Study - The Arthur Page Society

Subaru needs to grow its consumer base by pursuing other niche markets without damaging the
relationships it has cultivated thus far.
THE U.S. AUTOMOTIVE INDUSTRY
According to JD Power and Associates, there are over 40 automotive makers selling
vehicles in the United States today. 4 The United States, the largest market for light vehicles in
the world, saw sales of over 13.2 million vehicles in 2008. One year prior, sales exceeded 16.1
million vehicles. 5 See Table I for a breakdown of 2008 U.S. sales by company:
5
Source: Ward’s Automotive 6
The automotive industry, one of the largest manufacturing industries in the United States
today, has been in turmoil for the past few years due to factors such as the economic recession,
increased oil prices, and poor management decisions. By February 2009, U.S. automotive sales
were the lowest they had been in the past 25 years. 7 American-owned General Motors and
Chrysler received a combined $17.4 billion bailout from the U.S. government in December
2008. 8 A few months later, Chrysler filed for Chapter 11 bankruptcy on April 30, 2009; 9 General
Motors followed suit on June 1, 2009. 10
In 2008, Japanese auto manufacturers led U.S. sales, comprising 47.5% of the market.
American manufacturers comprised 34.8% of total U.S. sales, followed by other foreign imports
(primarily European) at 17.7%. 11
To stimulate sales, the U.S. government initiated the car allowance rebate system
(CARS) on July 1, 2009, 12 commonly referred to as “cash for clunkers.” Under the program, in
exchange for trading in a drivable vehicle 25 years old or newer that received 18 miles per gallon
or fewer, consumers could receive a credit of between $3,500-$4,500 on the purchase of a new,
more fuel efficient vehicle. 13 The program lasted until August 25, 2009; 700,000 vehicles were