Latest news with #Osaki
Miami Herald
28-06-2025
- Automotive
- Miami Herald
Subaru Is Making a Huge Bet on the Forester to Navigate Trump Tariffs
Japanese automaker Subaru is resting on its bestseller, the Forester crossover SUV, to be its north star as it navigates the rough seas caused by the Trump administration's heavy automotive tariffs. According to a new report by Nikkei Asia, Subaru hopes the new Forester SUV will help cushion the blow from steep tariffs and keep its footing in its most important market. At the company's annual shareholder meeting in Tokyo this week, Subaru President Atsushi Osaki made it clear that Subaru will stay committed to its stateside customers. "We'll overcome this by maintaining the U.S. as our main market and balancing it with Japan and Canada," Subaru President Atsushi Osaki said at the automaker's annual shareholder meeting on June 25. To say that Subaru depends on the United States auto market to survive would be an understatement. According to its figures, more than 70% of Subaru's global sales are in the United States-far more than its Japanese automaking rivals like Honda and Toyota. In fiscal 2024, Subaru sold 662,000 vehicles in the U.S., or 71% of its total global sales of 936,000. Despite this, Subaru's manufacturing situation leaves it vulnerable to Trump's tariffs. Roughly half of Subarus sold in the States are Japanese imports, which means they're now subject to the 25% tariffs imposed by the Trump administration earlier this year. Subaru estimates those tariffs could cost the company $2.5 billion if they do not work proactively, making its $2.79 billion operating profit from the 2024-2025 fiscal year useless. However, the atmosphere around the shareholder meeting suggested that Subaru would heavily rely on the Forester as a savior for the marque. The latest version of the brand's most popular SUV first went on sale in the U.S. in 2024 with a purely gasoline version, followed by a Toyota-developed hybrid model released earlier this year. Demand is already strong. According to figures from Subaru of America, 15,434 Foresters moved off dealer lots and into the driveways of new owners in May 2025. As of last month, 84,629 Foresters had been sold since the start of this year, a 3.5% year-over-year increase. In addition, Osaki noted that strong Forester sales in Japan could reduce the impact of U.S. tariffs. "The new Forester is performing extremely well," Osaki said. He also added that the hybrid version was selling beyond its expectations. To help further cushion its tariff impact, Subaru plans to ramp up production in its U.S. factory in Indiana, its only overseas plant that makes finished cars. Starting this fall, Subaru will invest 40 billion yen (~$277 million) to begin producing the new Forester at the plant. The factory currently churns out around 340,000 to 350,000 vehicles annually, but Osaki said it could push past 400,000 with the new investment. Still, shifting more production away from Japan caused concern among shareholders. Subaru's domestic manufacturing operations are centered in Gunma prefecture, where many of its suppliers are also based. Osaki acknowledged the dilemma, noting that boosting U.S. output is impossible without its suppliers. "It's true that it would improve our ability to deal with the tariffs, but it would be would be difficult without cooperation from all of our suppliers," Osaki said in response to shareholder questions. "We need to think about this comprehensively." Subaru itself is in a precarious position. Last month, it informed dealers that price increases would add an additional $750 and $2,055 to the cost of vehicles, depending on the model and trim. Specifically, Forester buyers got a price hike between $1,075 and $1,600, depending on trim, while Crosstrek and Impreza buyers got hit by a $750 price bump. At the time, Subaru did not explicitly cite the tariffs as the reason behind the price bumps but noted that they are a response to "current market conditions." "The changes were made to offset increased costs while maintaining a solid value proposition for the customer. Subaru pricing is not based on the country of origin of its products," it said. Fast-forward to now, it seems that Subaru is proactive in recognizing what is working and what is not, though it is tough to tell what the tariff picture will be. According to a new report by Bloomberg, Japan's chief trade negotiator Ryosei Akazawa is on his way to Washington, D.C., to hold his seventh round of trade negotiations with his American counterparts. Copyright 2025 The Arena Group, Inc. All Rights Reserved.
Yahoo
22-05-2025
- Automotive
- Yahoo
Subaru weighs options to curtail a potential $2.5B tariff hit
This story was originally published on Automotive Dive. To receive daily news and insights, subscribe to our free daily Automotive Dive newsletter. Subaru could face a $2.5 billion hit from tariffs unless it takes measures to mitigate the impact, a company spokesperson said in an email to Automotive Dive. But the automaker is proactively working to avoid that fate by weighing strategies to reduce costs fueled by higher duties on parts and vehicles brought into the U.S., company officials said while discussing its fiscal year 2025 earnings on May 14. Subaru, like other automakers, is exploring boosting domestic production and considering its suppliers' capacity, the spokesperson said. The automaker's only U.S. manufacturing site, located in Lafayette, Indiana, is currently at a normal operating level of around 350,000 units, the spokesperson said, adding that 'the plant does have capacity to ramp up.' Sales in the company's key North American markets continue to show strong momentum, President and CEO Atsushi Osaki said on the earnings call. Subaru's best-selling vehicle in the U.S. is the Forester compact SUV, which sold 69,195 units year-to-date through April, a 4.2% year-over-year improvement, the automaker reported. This bodes well for Subaru's plant in Indiana, where the automaker will start building the vehicles in the fall, Osaki said. The company invested 40 billion yen ($274 million) in the facility where it will manufacture the Forester and Forester Hybrid next spring. Subaru is ending its production run of the Legacy sedan in Indiana this spring and also is ending production of the Outback at the end of the year, according to a company spokesperson. 'The all-new Forester began sales last year in North America and this spring in Japan, and has been met with greater-than-expected reception and demand from customers,' Osaki said. While Subaru is proceeding with its plan to build the Forester in the U.S. and remains committed to its shift to electrification, Osaki said global uncertainties have moved the company to reevaluate its investment plans. 'Although the business environment is undergoing major changes, we are committed to overcoming these challenges together as one team,' Osaki said. The uncertainty caused by tariffs has moved Subaru to withhold its future guidance. However, Osaki said that even if the impact of U.S. tariffs continues throughout the fiscal year, it still aims for at least 100 billion yen ($685 million) in operating profits. 'We will strive to further enhance profitability by continuing to improve productivity and create new revenue opportunities,' he said. Recommended Reading Subaru the most reliable car brand: Consumer Reports
Yahoo
14-05-2025
- Automotive
- Yahoo
Subaru rethinks electrification, braces for $2.5 billion tariff impact
Import-reliant Subaru will rethink its electrification strategy, including the timing of investments, amid new global trade tumult and uncertainty about future emissions regulations. CEO Atsushi Osaki said the overall direction toward electrified vehicles remains unchanged. But the pace of Subaru's rollout and the amount of money it plows into the technology is under review as the company braces for sliding sales and withholds earnings guidance. 'We are re-evaluating our plans, including the timing of investments, in light of not only today's rapidly changing environment but also medium- to long-term external business factors surrounding our company,' Osaki said May 14 while announcing fiscal year financial results. The move comes as Subaru dives deeper into hybrids with a gasoline-electric version of its popular Forester crossover for the U.S. and after the unveiling of a new Trailseeker full EV. Sign up for the Automotive News Cars & Concepts newsletter, a weekly roundup of new and future product, design and auto show news. Executives said the Trump administration's tariffs could cost Subaru Corp. some $2.5 billion in the current fiscal year if the company doesn't take any actions to mitigate the impact. Subaru, which relies on imports from Japan for about half of its sales in the crucial U.S. market, said it could not give a full forecast for the current fiscal year ending March 31, 2026. It joined fellow Japanese carmakers Honda, Nissan and Mazda in refraining from an outlook. Subaru is now considering ways to ramp up output of U.S.-made vehicles. Its sole U.S. factory, in Indiana, churned out 345,000 vehicles in the just-ended fiscal year. In the extreme, it could be cranked up as high as 500,000 vehicles, Senior Managing Executive Officer Tomoaki Emori said. But the current supplier base is geared for around 370,000, he said. 'We still have the production capacity, so we would like to mitigate the impact of tariffs while making use of it,' Emori said. 'Under the current circumstances, there is probably no way not to expand in the U.S. We must think about how to go about that.' Osaki said Subaru wants operating profit of at least ¥100 billion ($667.7 million) for the current fiscal year. That goal is just a quarter of what Subaru earned in the fiscal year ended March 31, 2025. 'Even if the impact of U.S. tariff policy continues throughout the fiscal year, we will implement various measures and are aiming for operating profit at the ¥100 billion level as an initial target,' Osaki said. 'At the same time, we will strive to further enhance profitability by continuing to improve productivity and create new revenue opportunities.' Subaru will flesh out a forecast as soon as it has better clarity, Osaki said. Osaki's assessment came as Subaru announced a 13 percent decline in operating profit to $2.7 billion in the company's fiscal year ended March 31. Rising incentives in the U.S., combined with falling sales volume, drove the profit decline. Revenue dipped 0.4 percent to $31.3 billion), while global sales retreated 4.1 percent to 936,000 vehicles in the 12 months. Total vehicle deliveries in North America, Subaru's biggest and most important market, declined 4.1 percent to 732,000 vehicles. Canada volume added 2,000 vehicles to a record 70,000. Deliveries in Europe fell 17 percent to 23,000. Sales in Japan advanced 5.4 percent to 104,000. Looking ahead to the current fiscal year ending March 31, 2026, Subaru withheld financial forecasts citing the uncertainty in the global trade environment and U.S. tariff policies. But the company expects sales to post another year of declines. Subaru now sees global volume declining 4 percent to 900,000 vehicles. Sales will be dented partly by interrupted output at the company's Yajima plant in Japan, which is being retooled to prepare for in-house production of next-generation EVs. Subaru declined to give a regional breakdown for its sales outlook. The trajectory for battery electric vehicle growth is getting fuzzy, Osaki said. 'We are currently making various preparations for a BEV-dedicated plant, but I feel that we may have to review what type of vehicles to produce at that plant, such as mixed production with gasoline products, depending on the situation,' he said. At last month's New York auto show, Subaru said it would introduce a second EV to its U.S. lineup next year with the 2026 Trailseeker, an Outback-sized two-row crossover that the Japanese automaker is expected to make at its domestic production hub north of Tokyo. Subaru has said it wants to electrify all its vehicles — with either standard or plug-in hybrid setups or full battery-electric systems — in the first half of the 2030s. But U.S. regulatory change is also factoring into Subaru's rethink of that approach. This week, Republicans in the U.S. House of Representatives proposed eliminating the tax credit incentive for EVs and rolling back aggressive fuel economy rules meant to stoke EV sales. 'It is becoming more difficult to decide how to incorporate electrification into our production mix,' Emori said. 'While the shift to electrification and EVs is slowing down, EVs are the main scheme for dealing with global warming. We will consider the production lineup while thinking about how to incorporate hybrids and plug-in hybrids.' Have an opinion about this story? Tell us about it and we may publish it in print. Click here to submit a letter to the editor. Sign in to access your portfolio
