Dive Brief:
- Subaru is bracing to end the year with a 15% profit drop as sales drop and sales incentives climb. This comes despite a nearly 20% jump in operating profit to 222 billion yen ($1.5 billion) during the first half of fiscal year 2025, according to its Nov. 1 earnings report.
- Overall sales decreased from 469,000 to 450,000 vehicles in the first half of the year, down 20% year over year, Subaru reported. For the full year, the company is forecasting a 26% decline globally.
- That trend was reflected in the U.S., where Subaru’s sales slid by 10% during the first half of 2025. The company anticipates a 33% decline in the market for the full year.
Dive Insight:
Subaru is aiming to become more adaptable to market changes, offering consumers a wide range of powertrain options while also reducing supply chain costs.
The automaker is pushing to better align its production with monozukuri, the Japanese style of manufacturing that relies on segmentation to turn the process into a relay, ensuring each aspect of assembly is complete before passing on the work, President and CEO Atsushi Osaki said in translated remarks on Nov. 1.
The change aims to cut Subaru’s development process, lead time, production process, configuration and number of parts in half as it shifts towards battery electric vehicle production, according to an August 2023 management policy.
“As times have changed, the scope of our business has expanded due to diversifying customer needs and vehicles become increasingly complex,” Osaki said. “We view this approach as the rational result of responding, as efficiently and effectively as we could, to the constraints that arose as we grew and adapted to the times.”
In addition to the monzukuri method, Subaru is prioritizing value creation through technology, specifically when it comes to BEVs. It’s working with several companies to develop technologies for its future vehicles, including Austin, Panasonic Energy and AMD.
For example, Subaru will integrate chipmaker AMD’s EyeSight and AI into its internally developed electronic control unit, which controls Advanced Driver Assistance Systems and vehicle dynamics.
