Why Does Subaru Keep Making the Outback Bigger and Bigger?

Sales of the Subaru Outback continue to increase, although the size of the vehicle continues to get bigger and bigger.

Jul 27, 2014 at 4:30PM


2015 Subaru Outback. Source: Subaru

Over the years, Fuji Heavy Industries (NASDAQOTH:FUJHY), the parent company of Subaruhas increased the Outback in size, moving from a smaller, zippier wagon, to a larger, heavier vehicle. Has this been a good move by Subaru or are customers up in arms about the change, refusing to buy the model? 

Although the design of the Outback has changed, it's purpose and practicality has not. As Motor Trend wrote in its review of the 2014 Outback

"[Subaru] moved from selling smaller wagons to making unibody crossovers, and these vehicles resonate with buyers. The company's Forester and Outback have gotten larger over time, but not so large that they scare off loyal Subaru fans."

A deeper look at the Outback
Let's examine how the car size has increased over time, starting in 2000. The blue line represents the overall dimension of the vehicle by combining the height, length and width. The green data represents the vehicle's cargo space. Here are the results:

Subaru Size Outback 

Source: data from MSN Autos and Motor Trend

As you can see, the Subaru Outback has slowly climbed in both overall size and cargo space. Often times when cars increase in size, handling, fuel economy, acceleration and other performance metrics take a hit.

For instance, in 2008 the Outback's cargo space climbed to ~34 cubic feet from 28 cubic feet. The vehicle's miles per gallon fell from 21.5 in the city and 27.5 on the highway in 2007, to 18.5 in the city and 25.5 on the highway in 2008.

Although to be fair, the miles per gallon in 2010 actually increased slightly from 2009, despite the vehicle gaining in overall size, but its acceleration took a hit.  

But Subaru appears to have recognized the importance of a bigger ride, which is both more comfortable and convenient for American customers. Looking at the vehicle's sales customers would seem to agree. 

Year Outback Sales Change (year-over-year)
2009  55,356 -- 
2010  93,148 68.25% 
2011  104,405 12.1% 
2012  117,553 12.6% 
2013  117,553 0.4% 
2014 (year-to-date)  62,755  Not Available Yet

Source: GoodCarBadCar.net

Currently, the Outback is on pace to top its sales from 2013. Seasonally, the second half of the year has generally been stronger for the Outback than the first half of the year, dating back to 2010, so we'll see if that's the case this year as well. 

As you can see in the chart above, Outback sales increased somewhat drastically in 2010. But the sales spike likely had less to do with the vehicle's size and more to do with the economy, which was in "recovery mode" in 2010. 

Overall however, sales have trended higher over the past five years, indicating that customers do indeed enjoy the added size to their ride. 

Overall trends
While "Americanizing" today's automobiles to be larger and larger is sometimes frowned upon, most enjoy the added comfort and increased cargo space. 


2015 Subaru Outback. Source: Subaru

According to the Wall Street Journal, car sales in 2014 -- as in, actual cars -- are up just 0.4%, when compared to the same time period in 2013. On the other hand, crossover sales are the highest growing segment, with a 12.9% increase in sales, while large, small and luxury SUV sales are up 11.4%, 10.9% and 10.3%, respectively. 

Final thoughts
While customers love the compact size of the older Outback models, the newer ones have perks too. Clearly overall, customers feel comfortable trading up to a larger model, as sales have increased each year as a result. 

Based on strong overall auto sales in the United States and the Outback's tendency to sell better in the second half of the year than the first half, I'm looking for it have a strong finish to 2014 and end the year with a modest sales gain of approximately 5%. Look for the overall trend of SUV and crossover sales to continue higher.

Warren Buffett's worst automotive nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

Bret Kenwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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