How important is the iconic Outback wagon to Subaru? Very.
In fact, it's so important that it tends to overshadow some other strong Subaru models -- like the all-new Legacy sedan.
Back in April, we heard Yasuyuki Yoshinaga, CEO of Subaru parent Fuji Heavy Industries (NASDAQOTH:FUJHY), explain why the Outback is central to Subaru's game plan for the U.S. market -- and why the U.S. market is central to the company's global plans.
It's no surprise, then, that the Outback has traditionally received the lion's share of Subaru's marketing efforts. That has helped Outback sales, and the Subaru brand overall -- but to some extent, the Outback's mechanical sibling, the Legacy sedan, has suffered.
The Outback and the Legacy share a great deal under the skin, and they are engineered as a pair. When it's time for all-new models, Subaru tends to release them in quick succession -- but the marketing focus on the Outback tends to overshadow the Legacy.
But Subaru says they're doing it differently this time -- and they're hoping to see some big sales gains for their stalwart sedan. As Motley Fool senior auto specialist John Rosevear explains, Subaru is gearing up to give the all-new 2015 Legacy its own big marketing push -- with some ambitious sales targets in mind.
A transcript of the video is below.
John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com. Subaru is making a very big bet on its all-new 2015 Legacy sedan. Subaru unveiled the all-new Legacy at the Chicago Auto Show back in February, and they've been arriving at dealers over the last several weeks. And now Subaru is launching a huge marketing campaign -- at least, huge by Subaru standards, anyway -- for their all-new sedan.
Automotive News this week quoted Subaru executives as saying that the spending on this campaign would be 150 percent more than any prior marketing effort they've made here in the U.S.
Subaru has of course seen very big growth in the U.S. over the last several years, the compact Impreza and the Forester have seen big gains, as has the Legacy's sibling, the Outback wagon. But Legacy sales haven't grown as much as those other products. Part of the problem is that people think of Subaru as the all-wheel-drive brand, they're just naturally drawn to products like the Forester and the Outback, and I think the Legacy kind of gets overlooked.
But as we reported earlier this year, the new Legacy is a little bigger than the old one, a little roomier, and loaded with up-to-date high tech safety features. And apparently, Subaru now thinks it's ready to go head-on with the big-name midsize sedan contenders.
Now, aside from full-size pickup trucks, midsize sedans make up the biggest market segment in the U.S. auto market. And there are four big sellers here, Toyota's (NYSE:TM) Camry, Honda's (NYSE:HMC) Accord, Nissan's (NASDAQOTH:NSANY) Altima, and Ford's (NYSE:F) Fusion. The Legacy has been just a tiny player in that market.
Last year, Subaru sold just over 42,000 Legacys in the U.S., a tiny number compared to the 408,000 Camrys that Toyota sold, or even the 234,000 Focuses that Ford sold. But Subaru seems to think they have an opportunity to gain some ground. Subaru's U.S. marketing chief Bill Cyphers told Automotive News that the company is aiming to sell 60,000 Legacys over the next 12 months, that would be almost a 50 percent increase from 2014 sales.
But Subaru isn't aiming to get that gain by being aggressive on price. Subaru's incentives on the new Legacy are less than $1,000 per car, pretty small in this segment, and Subaru isn't planning on boosting them to chase sales. Instead, they're looking to the increased strength of the brand that has come as sales have increased over the last few years, the strength of their new product, and a traditional marketing campaign.
That campaign will feature a series of TV commercials running from now through September. Those commercials include a new tag line: "The Legacy is not just a sedan, it's a Subaru."
So can they really boost Legacy sales by close to 50% over the next year? I'm thinking that they probably can, they've got an opportunity with a solid new product and they're putting some marketing muscle behind it, it's a classic formula for success, but we'll find out. Thanks for watching.
John Rosevear owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. 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.
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