Once the company was losing its focus and its sales. Now it's hugging the curves on a year of sales that marked an all-time high.
In 1997, sales hit $2.5 billion, following a slide during which sales fell by 56% between 1986 and 1995 and bottomed out in 1993. Prior to 1987, Subaru had 12 years of record sales and profits in the U.S.
During the slow years, it offered all-wheel-drive vehicles, but its marketing emphasis was on its unremarkable line of front-wheel-drive cars. Not until Subaru introduced its Outback line of all-wheel-drive sport wagons in 1994, and dropped fwd vehicles, did it pick up the pace.
WAGONS MARKETED WELL
Subaru President George Muller attributes the renewed success to a solid commitment to refocusing the company to market the wagons.
Initially, Mr. Muller and his marketing and advertising team projected the Outback would account for about 15% of sales in Subaru's Legacy line.
The advertising featuring Australian actor Paul Hogan, however, scored better than anticipated. Mr. Hogan, known for his role as the fearless, fun-loving adventurer "Crocodile Dundee," lent his gutsy charm to the new wagon.
Now Outback accounts for 60% of those sales and Subaru has added the Forester, another passenger car-based SUV to its lineup. Introduced in July 1997, the car sold 16,000 units by yearend.
It's a turnaround from the mid-1980s, when the company marketed its brand as low cost with ads tagged "Inexpensive and built to stay that way." Changing currency rates made it impossible to hold the line on prices and sales plummeted.
In an understatement, Mr. Muller, then Subaru's chief financial officer, acknowledged: "The company floundered a little bit in not necessarily understanding its proper place in the market."
In 1993, Subaru had an astounding 300-day supply of unsold cars in its inventory and it recorded its seventh straight year of losses, pushing the total to $750 million.
The $2 million launch of the Impreza, backed by 15-second spots during the 1993 Super Bowl, was indicative of the corporate mindset at that time.
Subaru thought of itself as a mainstream competitor. The Impreza was its answer to the Honda Civic, Toyota Corolla and General Motors Corp.'s Saturn, says Tim Mahoney, marketing director.
The commercials bombed, and so did Subaru's mainstream marketing philosophy.
"The folks at USA Today ranked the advertising some of the worst of the year," says Mr. Mahoney.
Most of the management team and the ad agency got the boot. Temerlin McClain, Irving, Texas, was brought in as a new agency following the shake-up.
"We decided very quickly thereafter that we needed to take a serious look at what Subaru is, where it fits in the marketplace and start playing to our strengths as opposed to our weaknesses," says Mr. Mahoney. "We looked at where Subaru fit in the marketplace, what our image strengths were, what our product strengths were, where we fit in the retail channel."
It was at that point, says Mr. Muller, that Subaru decided to bolster marketing for its all-wheel-drive products. Subaru had been building all-wheel- drive vehicles for two decades. The decision to concentrate marketing efforts on all-wheel-drive products required the company to change its marketing strategy.
"Here's a company that was selling 55% of its automobiles in front-wheel drive and then one day decided that from now on the only thing we're going to advertise is all-wheel-drive," says Dennis Visich, vice-chairman at Temerlin.
The shift was supported by consumer research conducted by Temerlin and Subaru. Focus groups indicated Subaru could market handling and "active safety" the way Volvo marketed passive safety features. In addition, a sizable number of SUV owners indicated they would like an all-wheel-drive that was easier to handle, easier get into and out of and one they perceived as more stable.
SUVs were gaining in popularity in the early '90s and Subaru executives tagged the niche as the company's greatest growth opportunity -- in spite of the fact the company didn't have a truck platform and wasn't prepared to make an investment to develop one.
The alternative, to go head-to-head against Chrysler, Ford and Toyota in the segment was not appealing either. That mainstream philosophy once brought the company near to bankruptcy.
"The beauty of all-wheel-drive," became the company's new advertising theme.
TV commercials showed the Subaru avoiding accidents and touted "From the wheels that slip to the wheels that grip."
Subaru decided to tout all-wheel-drive performance in a more traditional passenger car configuration. That was the genesis of the Outback and renewed success for Subaru.
Ads for Subaru feature adventure themes and chase sequences to capitalize on Mr. Hogan's popularity. The target for its message is a consumer with an active lifestyle. Supporting print ads run in biking and skiing magazines.
Subaru has stuck with that campaign for three years, helping to raise recall for Subaru from 22% in 1994 to 58% in mid-1997. That, in turn, has helped it increase sales while keeping its advertising expenditures on a per-unit sold basis below that of most of the competition.
Mr. Muller describes the company's rally as the result of a decision to "return to our roots -- the products we provided are really specialized products that work well for specific niche markets. We remain focused on our niche. We resist the temptation to jump back into the mainstream."