Puppies and all-wheel drive: How Subaru built its ardent fan base

The Japanese automaker marketed itself to underserved customers.

January 16, 2022, 10:10 AM

Some automakers tout engine performance, cutting-edge technology or exclusivity to attract buyers. Japanese automaker Subaru has a different approach.

In 2019 the company transformed 10,000 square feet of the Javits Convention Center in New York into a state-of-the-art immersive exhibit where Yellowstone's Old Faithful geyser and Denali's snowcapped peak were the focus -- not the company's sport utility vehicles.

Deer, foxes and muskrats can be spotted along the walking trails at Subaru's Indiana facility, the sole U.S. manufacturing plant to be designated a backyard wildlife habitat by the National Wildlife Federation. Materials on site are either reused, recycled or repurposed and in 2004 the plant achieved zero landfill status -- another industry first.

"Business has to have a purpose besides selling cars and making money -- it has to make our society better," Thomas Doll, president and CEO of Subaru of America, Inc., told ABC News. "We pride ourselves that we have that community aspect."

Subaru's best-selling models are the Forrester, pictured, and the Outback.

Subaru, a longstanding partner of the National Parks Foundation, has given more than $68 million to organizations working to conserve national parks and helped fund projects to protect over 85 million acres in 400 national parks. The company also donates millions of dollars to various charities such as Make-A-Wish and ASPCA as part of its "Share the Love" event, now in its 14th year. Shelter puppies are often the stars of Subaru's auto exhibits and the marque has helped find homes for more than 74,000 rescue animals across the country.

"Subaru's support of various causes attracts a certain type of buyer and really does contribute to their success," Ed Kim, president and chief analyst of AutoPacific, told ABC News. "Subaru customers are among the most affluent."

Subaru is the largest corporate donor to the ASPCA. The Subaru Share the Love Event has helped find homes for more than 74,000 animals across the country.

Industry watchers agree that Subaru could do even more to protect national parks and the planet: Build more EVs. Owners who are eager for an all-electric Subaru will have to wait until later this year, when the Solterra SUV enters production.

"We're a small company but we're not afraid of EVs," Doll said.

Slower road to electric vehicles

The small automaker decided early on to tap into potential markets that were overlooked by mainstream brands, according to Kim.

"It was the first auto brand that actively marketed to the LGBTQ community when no one else was doing that," he said. "It attracted a lot of LGBTQ customers and became a brand for people who identified with a more progressive mindset."

Karl Brauer, executive analyst of iSeeCars.com, said Subaru's aggressive push as a lifestyle utility automaker -- one that also offered standard all-wheel drive for its vehicles -- was prescient and helped boost sales.

"Subaru made off-road vehicles a core component of its entire brand image a decade or more ahead of the industry," he told ABC News. "The company decided what it wanted to be and it's worked really well. It's cultivated a fairly specific and loyal customer base."

The 2022 Subaru Outback Limited.

The company, though, has been surprisingly slow to bring an electric vehicle to the market. Subaru currently only makes one hybrid -- the Crosstrek plug-in. In November, it debuted the Solterra, an AWD, emissions-free ute that was developed in partnership with Toyota. The Solterra gets an estimated range of more than 220 miles and produces 215 horsepower from its front and rear electric motors. Sales begin in mid-2022.

"It's a technically advanced EV that's versatile and has a lower center of gravity and better handling," Doll said.

Federal regulations are going to require that Subaru participate in the electric world, according to Stephanie Brinley, an automotive analyst at IHS Markit.

"The company can't sit out that part of the market," she told ABC News. "That's the reality."

Added Kim: "The mindset of a Subaru customer is so perfect for electrification. They'd be more than happy to pay more for a hybrid or an EV."

The Subaru Crosstrek Hybrid gets up to 17 miles of pure electric driving.

Chip shortages and younger drivers a challenge

The lack of EVs, however, has not caused the company to lose sales nor customers, according to Brauer. What has? The ongoing global chip shortage. Subaru of America delivered 51,146 vehicles in December, a 19.5% plunge from a year ago. In 2021 the brand sold 583,810 vehicles, a 4.6% drop compared to 2020.

"It's not a demand problem, it's a supply problem. We're trying to recover from this microchip shortage which is much worse than [2020]," said Doll. "Retailers are sold out essentially -- each dealer has six cars on average. We have car lines that are sold out. It pains me ... but there is nothing Subaru can do. We're not going to produce cars without certain chips or build a car and park it until a chip comes in."

Kim noted that all automakers are still struggling to build vehicles and stock showrooms as consumer demand soars.

"The chip shortage is real," he said. "Subaru is suffering like almost everyone else. The product is sought after but Subaru doesn't have the means to build cars without all these chips."

The 2022 Subaru WRX.

Subaru has another obstacle to conquer this year: Getting young drivers to buy its newly revamped BRZ sports car, a slinky, lightweight rear-wheel drive coupe that's geared toward male drivers in their late 20s and early 30s. Even Doll has questioned how much longer true performance cars, like the BRZ and WRX sedan, can survive in the U.S. But scuttling production of either car is not on the table -- for now.

"The BRZ and WRX are gateways to the brand," said Doll. "And we're definitely committed to the manual and expect 85% of customers to buy the manual in the BRZ."

The rear-wheel drive 2022 Subaru BRZ sports car features a more powerful 228 horsepower, 2.4-liter horizontally opposed engine.

In fact, performance cars and Subaru's rally racing history have brought dedicated enthusiasts to the brand, who learned about these conveyances from video games and internet groups.

"So many U.S. enthusiasts wanted the WRX -- they were screaming for this car -- but it took a while for Subaru's U.S. division to bring these models to the country," said Kim. "This is a fantastic performance car with a tremendous legacy in rallying."

He added, "These buyers skew very heavily male and are not political. There is a cultural divide between Subaru's regular lineup versus its performance lineup."

Driver Scott Speed competing with his WRX STI rallycross car in the 2021 Nitro Rallycross Championship.

Charitable causes, puppies, conservation, AWD -- all these factors have solidified Subaru's position in the hyper competitive automotive industry, according to Brinley. Now Subaru has to accept that it is no longer a niche automaker.

"A lot of customers connect and identify with the brand," she said. "The constant challenge for Subaru is brand authenticity."