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Subaru Wins Big on the Boom in "Crossover" SUVs

Sales of Subaru's Forester SUV have been white-hot since the all-new model rolled out last spring. Forester sales were up 47% last month. Source: Subaru.

SUV sales are booming, and some commentators have suggested that the industry is headed for another crisis. 

But there are good reasons to think those concerns are wildly overblown. For starters, this time around, Detroit hasn't neglected its small-car lineups. For another, the SUVs that are seeing booming sales aren't just big trucks from Detroit. 

Nearly all of the major automakers are reaping the benefits of this market shift -- including one brand prized by fans for (among other things) fuel efficiency: Subaru.

A crossover boom for the company that pioneered the idea
We've seen booming sales for Fiat Chrysler's (NASDAQOTH: FIATY  ) stalwart Jeep SUV brand, and big year-over-year increases in SUV sales at Ford (NYSE: F  ) , Toyota (NYSE: TM  ) , BMW (NASDAQOTH: BAMXF  ) , and others.

Those gains have (mostly) been driven by the new wave of "crossover" SUVs, all-wheel-drive capable vehicles built on platforms shared with car models. But the company that helped pioneer the "crossover" idea hasn't been left out of the fun.

Subaru said last week that July of 2014 was its all-time-best sales month in the U.S., following on a gain of more than 16% in the first half of 2014. 

In a way, Subaru's recent success is more good evidence that this new SUV boom isn't like the last one.

Subaru's hot seller at the moment is the Forester, a small crossover SUV that was all-new last spring. That new version got strong reviews from the likes of Consumer Reports, and it has proven to be very popular with buyers.

Forester sales long trailed those of the Outback, but as you can see, as the all-new Forester started arriving at dealers in the first half of 2013, sales surged.

Source: Subaru

That surge has continued into 2014. Year-to-date sales of the Forester are up almost 47%, a huge jump for a product that has always been among the brand's more popular models.

But the Forester isn't Subaru's only hit right now. Dealers now have good supplies of the all-new Legacy sedan, and sales were up almost 49% in July -- even though the 2015 Legacy's marketing campaign is just beginning. 

The all-new 2015 Subaru Outback is now rolling out around the country. Expect strong Outback sales to drive more gains for Subaru in the second half of the year. Source: Subaru.

The Legacy's sibling, the ever-popular Outback wagon, is also all-new for 2015. It's just now starting to arrive at dealers in quantity. Outback sales were up 12% in July. Will its gains increase as the year goes on? 

The 2015 Outback should drive more gains as the year goes on
The Outback -- essentially, a Legacy wagon with added off-road capability -- was one of the first "crossover" vehicles to find a big market. It has been among Subaru's best-sellers for most of the last two decades, and the company has big expectations for the all-new model.

The old Outback's sales growth slowed a bit after the all-new Forester made its debut last spring, suggesting that the new model was stealing some sales from its sibling. How will the Forester fare alongside the all-new Outback? It'll be interesting to see.

But Subaru is certainly going to put some marketing muscle behind its new crossover. Earlier this year, Yasuyuki Yoshinaga, CEO of Subaru parent Fuji Heavy Industry (NASDAQOTH: FUJHY  ) , came to New York to explain why the Outback is key to Subaru's efforts in the U.S.

Right now, Subaru's marketing is focused on the all-new Legacy. But I think it's a safe bet that we'll see a big marketing push for the Outback this fall. Will sales follow? Stay tuned.

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Read/Post Comments (3) | Recommend This Article (6)

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 August 11, 2014, at 8:04 AM, AcuraT wrote:

    While Subaru started this market for the most part, competitors are catching up. Even the Buick Encore gets better gas mileage than the new Subaru Forester (but is more luxiourous - and expensive - as well). The Forrester gets by with 22 city, 29 highway (except 32 highway for the premium 4 cylinder model) while all Buick Encore's get 23 city/30 highway which is quite comparable. Pickup is about the same for each (both are slow). Still, Subaru is selling a lot of the Forresters - so is Buick of the Encore. Shows that both manufacuters have a hot model in that respect.

  • Report this Comment On August 11, 2014, at 3:21 PM, TMFMarlowe wrote:

    The Encore is indeed doing pretty well. Its sibling, the Opel Mokka, is doing very well indeed in Europe. It's a strong product, and GM has to be pretty pleased with it.

    But the Subaru brand has a lot of strength for those looking for long-lived, four-season, dependable transportation. Don't discount that.

    Thanks for stopping by.

    John Rosevear

  • Report this Comment On August 12, 2014, at 6:36 PM, SkepikI wrote:

    <But the Subaru brand has a lot of strength for those looking for long-lived, four-season, dependable transportation. Don't discount that.>

    All it would take for me to repeat would be a minor improvement in gas efficiency, say a RELIABLE hybrid and the same awesome snow, ice and wet road handling as my 99 Outback with 413,963 mi (heading for 500k).

    BUT I don't see it yet. Subaru has about 2 years I reckon to keep me...but growing oversized and overweight Outbacks wont do it. I am more likely to go for a really good road car..maybe 2015 Fusion Hybrid plug in a year old.... while some may view this as not comparable, my needs are diverse and If I cant get a five star efficient nasty driving small SUV, then I will shift gears and go for a five star road car and hope the small SUV market takes a turn for the better in oh, 2016 or 2017

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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