The 2015 Subaru Legacy Concept: Will This Stunning New Car Ever Make it to the Road?

By now, most car enthusiasts know that Subaru's new Legacy concept, which it debuted at the Los Angeles Auto Show, is a stunner.

Subaru's 2015 Legacy Concept unveiled at the Los Angeles Auto Show. Photo credit: Subaru.

But Subaru -- the automotive arm of the Japanese Fuji Heavy Industries (NASDAQOTH: FUJHY  ) -- is infamous for turning jazzy concepts into subdued production versions.

A concept car is exactly what the name suggests: a concept or framework for the future models that the auto maker would build. Very rarely do exact replicas of concepts go into production. Take, for example, the WRX production version that Subaru launched beside the Legacy concept on the same dais at the LA showing. It's nothing like the beauty that we saw at the New York Auto show in March.  

As the market experts make up their minds whether to get floored by the Legacy concept's new look, or remain sceptical until the car actually arrives at dealer lots, I want to tell you about a few mostly overlooked facts that will decide Legacy's fate, and explain why this car's success is crucial for investors in Fuji Heavy Industries.

For an investment in Fuji Heavy to be successful the company needs to see the new Legacy succeed in three areas: safety rating, mileage, and price differential.

Safety rating
Legacy's top safety rating scores a big point. The 2014 Legacy has "five-star" crash test ratings in front, side, and roll-over tests from the National Highway Traffic Safety Administration, and also earned the Insurance Institute for Highway Safety's 'Top Safety Pick+' rating.  

If the 2015 Legacy retains these safety ratings, they could prove a big competitive advantage. America's most popular mid-size sedan, Toyota (NYSE: TM  ) Camry, has recently gotten into trouble with its safety metrics, losing Consumer Reports' recommendation as one of the most reliable cars. The Camry sedan is still ruling the sales charts, but its future sales may be affected if it doesn't take action. Other segment leaders like Honda (NYSE: HMC  ) Accord and Ford (NYSE: F  ) Fusion all have top safety ratings  . 

Legacy's mileage has been its sore point so far. Even with constant variable transmission (CVT) and 2.5-litre flat-four engine, the sedan provides 24 miles per gallon (mpg) in the city and 32 mpg on the highway. It's no match for Camry's 25/35 mpg or Accord's 26/34 mpg on city and highway respectively, even with similar engines and transmissions. So any improvement on that front will be good for sales.

Finally, the Legacy's affordability has worked in its favour. The 2014 model's manual transmission version costs $21,000, and the automatic $22,000, according to Kelley Blue Book. Even with the car's all-wheel-drive (AWD), its price is on the lower side when compared to other mid-size sedans with front-wheel drives. The 2014 Camry and 2014 Accord sedans both start at more than $22,000,  while the Fusion with an optional AWD comes for nothing less than $33,000 .

Design is the wild card
Let me put this straight -- the new Legacy concept is a visual delight. It oozes style and glamour. When Subaru unveiled the car, you could almost hear the crowd draw a collective breath, and the applause from the normally stoic journalists said it all. The car had a sleek four-door-coupé design, with sharp angles and huge 21-inch wheels. The signature hexagonal three-bar grille sat on the car front, and the angular headlights were accentuated with inset halos.  

The 2015 Subaru Legacy Concept from the front. Photo credit: Subaru.

It's a great design, but I would agree with the experts that we'll need to see what the real production car looks like. Legacy has been around for the last quarter of a century, and it has never been known for its looks. Its fan following has mostly come from its functionality and its AWD, which makes it an excellent choice for winters. Any improvement on the design front could make a definite impact on sales. But, for now it's mostly a wildcard.

Putting it in perspective

In all our excitement over the Legacy concept's design, let us not forget the fundamental question: How good an investment is Fuji Heavy, and how much should the Legacy sway any investment decision about the company?

Fuji Heavy  is earning big returns for its investors. The stock has gained 157% in the last one year  and business has never been better. Fuji Heavy owes its success to Subaru's roaring U.S. business. Subaru contributes nearly 93% to Fuji Heavy's total sales, and generates over half of it from the U.S. Subaru's U.S. sales have increased 28.3% year-over-year through November    .

Now, more than 10% of Subaru's U.S. sales come from Legacy -- hence the attention that it's receiving. In 2013, Legacy sales have been tepid, slipping 8% through November . Subaru is hoping to change that and generate more momentum. The stunning Legacy concept is a teaser to stir some real excitement before the 2015 model hits the market early next year.

Now that the company has successfully captured the market's attention and set the stage for the upcoming launch, watch out how the Legacy fares in terms of its true differentiators -- safety rating, mileage, and price differential -- with anything on the styling front as a bonus. I do not think you will be disappointed.

2 more automakers with miles of open road ahead
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Read/Post Comments (11) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 07, 2013, at 9:36 AM, DNROS wrote:

    Subaru has always been known to prefer function over form. The above depicted, beautiful Legacy concept, has a sleek design, which means narrow rear-seat side-windows and poor visibility. A relatively low roof-line may limit the head-space for the rear-seat passengers. It may make it tougher, for many potential buyers, to get in and out of the car.

    Plus, I suspect, Subaru makes its cars intentionally less shape-wise attractive. Kind of buyers selection test. If you overcome its shape barrier and buy a Subaru, you must really love this brand and you are a person who likes to think differently.

    Those loyal customers pushed Subaru sales forward, when everybody else was loosing market share.

    In conclusion, no way the new legacy is going to resemble the shape of its gorgeous concept!

  • Report this Comment On December 07, 2013, at 12:30 PM, wredfern wrote:

    Above commenter is correct. No way is this what gets put out eventually, and thank god. I am a long time Subaru driver because once i started driving them it was tough to give up. A big factor in that is visibility while driving. No cars match Subaru in that regard and it ends up making for loyal drivers in the long run as test driving other cards makes this difference apparent immediately.

  • Report this Comment On December 07, 2013, at 12:36 PM, bmthomas100 wrote:

    Might want to check those mileage numbers for Accord...they're actually 27/36 not 26/34.

  • Report this Comment On December 07, 2013, at 12:56 PM, OttovonBismark wrote:

    Why would Subaru bother to bring it to market, Ford already has. It's identical to a Fusion.

  • Report this Comment On December 07, 2013, at 3:56 PM, bcweir wrote:

    Otto, if you think that car looks like a Fusion in any way shape or form, you may want to consider getting an eye exam. Eyemasters can help with that in about an hour.

  • Report this Comment On December 07, 2013, at 5:16 PM, beeper23 wrote:

    I would suggest that if you are going to rip on the Legacy for poor gas mileage you might want to at least mention that in exchange for a bit less mileage you do get the security of Subaru's top rated all wheel drive system. The Legacy is awesome in snow and icy conditions.

  • Report this Comment On December 07, 2013, at 6:31 PM, gtvracer wrote:

    Looks like a Camry..

  • Report this Comment On December 08, 2013, at 10:56 AM, robertrodriguez wrote:

    Why would Subaru wanted their sales to go through the roof? Why would they kill this design? Why would they not have the best car out there, with their engineering and design of this really cool model? I've never considered Subaru until I saw this concept Car. I will buy it because its a cool design.

  • Report this Comment On December 08, 2013, at 11:35 AM, wrevansii wrote:

    The problem with all concepts is that by the time they are actually produced they have been styled down from the original, leaving them only slightly recognizable. A perfect example is the 2015 Mustang. It is a shame as I certainly would purchase this vehicle as designed. I presently own my second Subaru and love the quality. Let's hope.

  • Report this Comment On December 08, 2013, at 3:48 PM, JDerek40 wrote:

    Been a Gearhead my whole life. Up until the mid-90's I could look at a car's profile and tell you what it was as well as the year. Most look like upside down bathtubs now. What happen to styling? Yes, this is a beautiful car. Still has the same basic shape as everything else on the road though. Cadillac is about the only maker that has discovered this wonderful thing called a SHARP ANGLE. Is it too much to ask of everyone else? Subaru had at one time a Wagon that I would love to have and actually lost out on two of them. Still looking for one but they are about as hard to find as hen's teeth. Mainly because they were driven until the wheels LITERALLY fell off.

  • Report this Comment On December 08, 2013, at 11:53 PM, AcuraT wrote:

    Subaru is having even more trouble selling the Legacy than this article lets on. We should get one thing strraight - Subaru's record sales are not coming from the Legacy or the Tribeca - two cars they have trouble selling. The record sales are from the revamped Forrester where they cannot make enough, the successful Outback, and the Impreza with its offshoots, and the BRZ.

    I have some minor insights into this . I just bought a 2013 Legacy in New England. You may find this interesting. One, the car I bought was built in March of 2013 (in late October). That means it was sitting on the lot for a half a year. Second, the dealer was selling it was massive discounts for a Subaru - as much as $7000 under list. Third, Subaru of America was offering 0 percent interest and a full value trade in (in other words, about the full black book value for my 10 year old Honda Accord). At best, the dealer and Subaru of Americ made a tiny profit at this rate.

    One last thing - the dealer in late 2013 still had 5 of the Legacys sitting around. This is with the unchanged 2014 already on the lot. It was a no-brainer for me to take the dive and buy a year old Subaru on the lot with 3 miles on it.

    Subaru is doing great - but the Legacy is not the reason it is doing great. I do agree with the article however, I don't expect Subaru next year to have a ground breaking design change. Maybe a little better fuel economy but to be honest, with AWD its mileage is almost as good as a Camry and Accord - which is good in anyone's book.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2756258, ~/Articles/ArticleHandler.aspx, 9/25/2016 6:40:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:01 PM
F $12.17 Down -0.01 -0.08%
Ford CAPS Rating: ****
FUJHY $77.04 Down -0.81 -1.04%
HMC $29.49 Down -0.70 -2.32%
Honda Motor CAPS Rating: ****
TM $117.66 Down -3.14 -2.60%
Toyota Motor CAPS Rating: ***