Subaru's Sales Boom: Thanks to the Weaker Yen

Case Analysis: Subaru’s Sales Boom Thanks to the Weaker Yen
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Case Analysis: Subaru’s Sales Boom Thanks to the Weaker Yen
The case discusses the significance of currency value fluctuations on the United States sales of Subaru, Japanese automobile manufacturer. The Japanese yen was relatively strong against the U.S. dollar until the year 2012. Before then, Subaru was experiencing a pricing disadvantage against it competitors compared to its competitors in the U.S. market because most of its production facilities were located in Japan. It was a costly process for Subaru because it had to import vehicles to the United States, unlike its main market rivals who had maintained their production facilities in the United States. Besides, the U.S. market has been the largest global consumer of Subaru vehicles and therefore the strategy resulted in a sales decline in the U.S. market. But since the value of the Japanese yen against the U.S. dollar declined from 2012, exports from Japan to the United States became cheaper thus booming Subaru sales in the U.S. market.
There might be several reasons why Subaru had kept its production facilities only in Japan for a long time rather than in its main market, the United States. The company produces limited types of vehicles unlike its market rivals such as Toyota. It would therefore unwise to just follow the global footsteps of the other Japanese companies. In this case, the company had to stick to a few market niches that are familiar. Instead of offering a wide variety of vehicles like its competitors and reach as many consumers as possible, Subaru prefers providing good value for money and using product quality as its competitive tool in the market. Consequentially, the company had to maintain a high domestic production rate with little concern over the currency rate but with great care for quality and consumer satisfaction.
Subaru’s local production and export strategy has become a highly profitable proposition for the company and its parent, Fuji Heavy Industries Ltd. Fuji Heavy recorded high profits due to the high demand for Subaru vehicles in its largest market, the United States. The strategy was successful in improving reliability ratings for Subaru vehicles relative to that of the industry and strengthened its consumers’ satisfaction l...