The Hottest Car Brand in America Needs Its 2015 Legacy to Rival Ford's Fusion

The mid-size sedan market is one of America's most important segments, but the competition is fierce. Can Subaru's 2015 Legacy reverse its sales decline with its new design?

Feb 8, 2014 at 10:15AM

Subaru's 2015 Legacy sedan needs to reverse its sales decline. Source: Subaru.

Subaru, an automotive unit of Fuji Heavy Industries (NASDAQOTH:FUJHY), is easily one of the hottest brands in America after posting back-to-back sales increases of 26% in 2012 and 2013. Subaru was also the only brand to generate six consecutive years of sales gains, with five being record sales years for the company. The company -- known for its all-wheel drive sports cars, SUVs, and boxer engine -- designs popular vehicles in many segments, except one. It has failed to win over consumers in one of America's most important markets: mid-size sedans. The competition is fierce, but the company's redesigned 2015 Legacy might be a game-changer for the company.

Is it good enough?
Last year, Subaru's sales in the U.S. topped 424,000, and the company is striving to reach 500,000 sales. But it won't accomplish this feat without a turnaround in its Legacy sales, which declined 10% last year and ranked 13th in sales amid a fierce mid-size sedan market. To better understand if Subaru can turn its Legacy sedan into a mid-size winner, let's look at which models are having success and what consumers want.

Source: Consumer Reports.

According to a survey by Consumer Reports, fuel economy, quality, and safety are top priorities when shopping around. The good news for Subaru fans, investors, or car buyers, is that the 2015 Legacy sedan delivers on all three.

Subaru says its standard all-wheel drive 2015 Legacy will have better combined fuel economy than the Toyota (NYSE:TM) Camry, Ford (NYSE:F) Fusion, Hyundai Sonata, and Volkswagen Passat; the Legacy would only trail Nissan's Altima.


Interior of Subaru's 2015 Legacy. Source: Subaru.

In terms of quality, Subaru's 2015 Legacy is its roomiest version ever, with the largest passenger cabin in the mid-size segment. It has revised powertrains and Active Torque Vectoring for better agility. The company has a record of delivering quality with consumers, and Subaru ranked sixth in brand perception out of nearly 40 brands -- according to a Consumer Reports survey that judged quality, safety, value, design, and technology. That's part of the reason 60% of Subaru's sales have come from buyers who are new to the brand, an awesome accomplishment in such a loyal automotive industry. Subaru's EyeSight technology is the highest-rated front crash prevention system, according to the Insurance Institute for Highway Safety, or IIHS. Subaru also claims its 2015 Legacy is projected to achieve the IIHS Top Safety Pick+ award.

Two other factors will play a huge role in whether the 2015 Legacy can compete with the Fusion, Camry, and Altima: exterior and technology.

Previously the mid-size sedan segment was typically filled with value based, bland looking, vehicles with good fuel economy. Ford's Fusion was really the first in the segment to break through by bringing a mid-size sedan with a more aggressive coupe styling. That enabled Fusion sales to take off, so much so that Ford had troubles keeping enough supply at times last year.

Graph by author. Source: company sales reports.

While the 2015 Legacy definitely has a more aggressive front end and boasts a sleeker, coupe-like profile, and HID low-beam headlights for a more premium appearance, it may not make the same styling splash as the Fusion did.


Subaru's 2015 Legacy. Source:Subaru

Another selling factor for consumers is technology, and the Legacy will have a massively upgraded infotainment system. In its premium version it adds a six-speaker audio system with a 7-inch touchscreen display, Sirius XM satellite radio, and iTunes tagging capability. Subaru also offers its EyeSight driver-assist system option for its premium and limited trim models, and it integrates adaptive cruise control, pre-collision braking, and vehicle lane departure warning. 

In all, Subaru has hit the most important factors to make its 2015 Legacy sedan a much more competitive option, and if its styling is aggressive enough to separate from the competition, the company could have a game-changer on its hand. If the Legacy succeeds where it has recently failed, Subaru could hit its goal of 500,000 sales much sooner than expected and continue to be one of America's hottest brands. Will the 2015 Legacy be a hit like the redesigned Fusion? We'll know soon enough.

The car buying secrets you must know
You don't know it yet, but you probably spent thousands more than you should have on your vehicle. In fact, the auto industry can be such a dangerous place for consumers that our top auto experts are determined to even the playing field. That's why they created a a brand-new free report on "The Car Buying Secrets You Must Know." The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.

Daniel Miller owns shares of Ford. The Motley Fool recommends and wns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information