China is a small market for Subaru, contrary to most OEMs.
The US accounts for 70% of Subaru’s business.
Subaru’s fiscal years ended on March 31st, 2020.
Subaru’s modest business approach is what “saved” them from a catastrophic late-2019 early 2020. They’ve embraced their niche and medium-volume position in the automotive world and have not yet decided to depend on the giant Chinese market for volume. The pandemic’s Chinese origins did not affect Subaru’s bottom line and its firm arrival in the US coincided with the closing of its 2019 fiscal-year books in late March.
Subaru’s Chinese sales dropped by 50% in late 2019 however unlike most carmakers that rely on hundreds of thousands of units in volume, Subaru’s loss came from a base of only 6,100 units. The US, which accounts for 70% of the Japanese company’s business, grew by 2.9% in 2019 to just over 700,000 vehicles, just ahead of the pandemic.
In fact, Subaru closed its Indiana plant on March 23rd, a week before the books on 2019 closed on the 31st. 2019 actually saw Subaru’s operating profits double and marked the 11th year of sustained growth in the US. These positive results inspired the goal of maintaining momentum in 2020 however the pandemic has forced Subaru to revise its plans. The Indiana plant went back online on May 11th but 34 days of production were lost which, along with weak sales, will severely affect 2020’s first quarter.
In a bid to help offset the upcoming losses, Subaru executives will cut their pay up to September and up to 30% of their 2019 bonuses.
