Fuji Heavy Industries (FUJHY -4.11%) has every right to gloat over the latest achievements of its automotive division, Subaru. The company's 2014 Forester recently won the Motor Trend Sport/Utility of the Year for 2014. In the contest's six-year history, this is the Forester's second win, and Subaru's third, in that hotly contested category.
The 2014 Subaru Forester XT. Photo credit: Subaru.
As critics rave about the compact SUV's design, engineering, and performance, buyers are queuing up before dealer lots. Before launching the 2014 Forester, Subaru had in mind a monthly sales target of 8,000 Foresters in the U.S. -- but it underestimated the new Forester's appeal. Subaru easily sold around 10,000 units every month, and in August and October sales went north of 12,000 units.
While investors surely love this winning streak, they may also wonder whether it's sustainable. Fortunately for Subaru, there are plenty of reasons why this run will likely continue.
5 reasons why Forester's sales could keep rising
1. The small SUV/ crossover segment is growing fast: Small families with babies and pets are increasingly turning to small SUVs and crossovers -- utility vehicles built on car platforms. These vehicles are less bulky, more fuel-efficient, less expensive, and easier to maneuver , and take up less garage space than bigger SUVs.
LMC Automotive estimates that crossover sales grew from 405,000 in 2000 to over 1.6 million last year. And, in 2003 sales have already crossed that mark with two months to spare. The growing popularity of crossovers augurs well for the Forester.
2. The Forester appeals to Americans: The Japanese automakers understand American tastes uncannily well. The design and appearance of the Honda (HMC -1.87%) CR-V or Toyota (TM -1.93%) RAV4 are as American as you can get; no wonder they dominate the popularity charts year after year.
Subaru has also honed its skills in this department. The Forester is much wider and roomier than before, customized to American preferences. Via this clever redesign, the new Forester has secured a position for itself beside the segment leaders.
|
Vehicle |
2013 |
% Change over 2012 |
2013 Market share |
|---|---|---|---|
|
Honda CR-V |
251,636 |
7.7% |
14.3% |
|
Ford Escape |
250,543 |
13.9% |
14.3% |
|
Chevrolet Equinox |
202,583 |
11.2% |
11.5% |
|
Toyota RAV4 |
177,832 |
22.6% |
10.1% |
|
Nissan Rogue |
137,588 |
16.4% |
7.8% |
|
Subaru Forester |
96,953 |
56.7% |
5.5% |
Source: GoodCarBadCar.net
3. AWD is a big attraction: Most compact crossovers including CR-V and RAV4 offer front wheel drives (FWD) as a standard feature, and all-wheel drive (AWD) as an option, making Forester's standard AWD is a big scoring point. Whether climbing up mountain roads or simply going to the neighborhood supermarket in a snowy winter, people find the AWD extremely handy.
People also often associate AWD with additional safety, which works for Forester in areas that do not get snowfall. Subaru has been trying to build a presence in the Sun Belt for quite some time, and 2014 Forester's top safety rating from the Insurance Institute for Highway Safety will bring it closer to this goal.
4. Good mileage: Forester's fuel efficiency is encouraging for an AWD crossover. The 2014 model achieves 22/32 mpg city/highway with the base engine, according to automotive website thecarconnecton.com. In comparison, the 2014 CR-V and 2014 RAV4 with base engines and FWD offer 22/31 and 24/31 city/highway mpg, respectively.
5. New design: The 2014 model year marks a total makeover for the Forester. Subaru fans are revelling in the new features, like more interior space, upgraded materials, and turbocharged engines. And their fondness is showing up in the new Forester's sales numbers.
The 2014 Forester also distinguishes itself from its competition through its low beltline and large windows, which allow very good visibility. Automotive website newcars.com says that many crossover models have a coupe-like tapered window design, which limits visibility.
Ever since the 2014 Forester arrived at the dealer lots in spring, there has been no looking back for it. In October, sales increased by an incredible 137% year over year .
Source: GoodCarBadCar.net
Wrapping up
The U.S. is Subaru's largest market, accounting for nearly half of its total sales, and it has a big bearing on the company's future prospects. Luckily for investors, the company's heading in the right direction.
Subaru will most likely double its 2009 U.S sales this year. And while most of its models sell well, but the Forester is a perennial favorite. It alone has accounted for 28% of total U.S. sales in 2013. The new Forester's bright prospects portend well for Subaru's future success in America.
