The Forester factor: an unexpected reason why BRZ / FR-S / GT 86 production capacity is limited

As the universally rave reviews come in and hoopla builds over the Subaru BRZ and its Toyota and Scion 86 / GT 86 / FR-S stablemates, the flip side of this popular acclaim becomes evident: a high demand/low supply situation. On March 6, Reuters reported that the first month’s worth of orders for the Japanese domestic market Toyota 86 totalled roughly 7000 vehicles, or 7 times the 1000 unit per month JDM sales target. Three weeks later, a news release from Subaru corporate parent Fuji Heavy Industries reports 3551 BRZs sold in Japan in the nearly 2-month period between February 3 and March 27, nearly quadruple the JDM target of 450 BRZs per month. And, on Friday 13 April, FT-86Club‘s blog cited a Nikkei report that due to the huge backlog of orders, Japanese market deliveries of the Subaru BRZ will be pushed back to January 2013.

Does that mean that Subaru is prioritizing export BRZs? Maybe, but don’t expect a much brighter supply-and-demand situation here in the United States. As Diana T. Kurylko of Automotive News reported on April 2,

…only about 500 (BRZ) units will be available each month for the U.S. market.

That means that some of Subaru’s 620 U.S. dealers won’t have a BRZ at launch and most will get only one car a month.

It is unlikely the United States will receive more than about 6,000 of the rear-wheel-drive coupes a year even in a full-year of production, said Michael McHale, Subaru of America’s director of corporate communications.

“The only way we get more is if another market doesn’t sell its share,” he said.

Subaru will produce 100,000 units annually of the BRZ and its two sister cars, the Scion FR-S and Toyota 86, at its Gunma factory in Japan. The worldwide allocation for the three brands has not been disclosed.

McHale said Subaru of America asked for only 6,000 annually. He said the U.S. sales arm made a conservative request because little was known about the car during most of its joint development with Toyota.

Earlier this year, Scion boss Jack Hollis said his brand expects to sell 10,000 to 15,000 units of the FR-S in 2012.

Those 100,000 units of annual joint BRZ / FR-S / GT 86 production, by the way, are an increase versus original plans for 60,000 cars per year, and were officially confirmed by Yasuyuki Yoshinaga, president of Fuji Heavy Industries Ltd. on March 16. As to Michael McHale’s contention that “the U.S. sales arm made a conservative request because little was known about the car during most of its joint development with Toyota”, at least one pundit has suggested that it was skepticism over the salability of a rear-wheel-drive Subaru in a corporate culture so ingrained with “the beauty of all-wheel-drive” that led to the low BRZ take rate by Subaru USA.

The Gunma five
As we were reminded a few paragraphs above, and as hardcore Toyobaru coupe fans fully well know, the sports cars are built at a Subaru facility in Japan’s Gunma prefecture (the equivalent of a state or province). More precisely, they are located in the vicinity of Ota city. And, yes, we use “they” advisedly, for, as the official Fuji Heavy Industries Corporate website’s Domestic Facilities page informs us, there are, in fact, 5 distinct Gunma plants: Ota North and Isesaki manufacture automotive parts; Oizumi is the powertrain (automobile engines and transmissions) facility; and then come the two actual carmaking plants: Yajima, which builds Legacy, Exiga, Impreza and Forester (and, presumably, their Outback and XV Crosstrek offshoots); and the Gunma Main Plant, which, according to that page, builds R2, R1, Pleo, Sambar and Stella kei microcars.

Outdated info and an unexpected revelation
Needless to say, copyright 2012 at the bottom of the page notwithstanding, the above information begs for some serious updating. Besides the obviously-missing BRZ and its Toyota/Scion siblings from the Gunma Main Plant information, none of the Subaru models listed above are currently built at Gunma Main. The R2 kei 5-door hatchback and its even shorter R1 3-door sibling were discontinued in March 2010. The original, Subaru-engineered-and-built Pleo ceased production in December 2009, replaced in April 2010 by a rebadged Daihatsu Mira built at the Oita (Nakatsu) Plant No. 1 of Daihatsu Motor Kyushu. Similarly, the original, Subaru-engineered-and-built Stella was replaced in May 2011 by a rebadged Daihatsu Move built at the latter’s Shiga (Ryuo) Plant. Subaru’s last surviving self-engineered kei vehicle, the Sambar microvan ended production on 29 February 2012, as shown above right.

Doesn’t this mean, then, that the Gunma Main Plant is free and clear to build nothing but BRZs and its Toyota and Scion variants? Apparently not, according to Dominick Infante, National Manager, Product Communications at Subaru of America. At the second New York Auto Show press day, he informed this author that, because worldwide sales of the Forester compact crossover SUV had barely dropped off even after the current, 3rd-generation (SH)’s fifth year in production, a number of them are produced at the Gunma Main Plant to supplement the majority that is built at the Gunma Yajima Plant. A surprising and unexpected revelation, then, that suggests some potential Forester vs BRZ conflict in allocating Subaru resources and production capacity.

We should note, however, that in the United States, 2011 calendar year Forester sales totaled 76,196, a 10.44% decrease from 2010’s 85,080 units, a decline undoubtedly fueled by the aftermath of the 3/11 Great East Japan Earthquake and tsunami. As for 2012 sales thus far, January saw sales of 5117 Foresters, a steeper 11.87% decline versus January 2011’s 5806 units sold. Similarly, February saw 5565 Foresters sold, a 12% drop compared to February 2011’s 6334 units moved.

Looming large: the Impreza factor
If the notion of some Foresters being built at Gunma Main potentially curtailing BRZ / FR-S / GT 86 production concerns you, you may be downright troubled by a passage from the fifth Subaru USA March 2012 News Archive entry that has also been echoed in a number of Fuji Heavy Industries English language news releases:

Subaru Gunma Main Plant, where minicars were previously manufactured, was recently renewed for the Subaru BRZ and Toyota 86 production. FHI plans to produce the Impreza at the same plant by March 2013.

The new 4th-generation Impreza (GP/GJ) has certainly been an unequivocal success, with an almost 87% U.S. sales increase in December 2011 versus year-earlier numbers, and 2012 increases soaring into the triple digits, including a 175.51% jump in January 2012 vs January 2011. And don’t even get us started on what might happen when the successor to the current GE/GH/GR WRX and STI emerges some time next year.

What about Subaru’s Indiana facility in the U.S.?
With all this potential jostling over capacity at Gunma Main, we can’t help but wonder if Subaru’s major production facility outside Japan, the United States’ Subaru of Indiana Automotive facility in Lafayette can’t help somehow. It would certainly bolster FHI’s bottom line by building more in a weak dollar locale as opposed to the less profitable strong yen Japan. Yet, here, too, production capacity constraints collide, with U.S. 2011 Legacy and Outback sales having increased 9.49% and 12.09%, respectively, over 2010, and 2012 thus far also showing year-on-year increases for the two lines versus year-ago figures.

With Toyota Camry maintaining its lock as the United States’ best-selling car, we wouldn’t bet on them surrendering capacity to their factory “landlord” in Indiana, either. As Wikipedia informs us, Toyota began producing 30,000 to 40,000 Camrys per year at SIA in 2007, with plans to gradually increase this to 100,000 units per year.

One logical suggestion would be to discontinue the Indiana-only sourced Tribeca mid-size crossover SUV and free up that capacity for something else. After all, the Tribeca isn’t even sold in Japan. Yet, U.S. sales of the largest Subaru increased almost 13% in 2011 (for a total of 2791 units), and an even higher 15.15% in January 2012. February’s 21% year-over-year dip, however, may well be a more typical Tribeca sales pattern.

Should Subaru eliminate the Exiga?
Similarly lackluster (if not more so) numbers are probably posted, we’re willing to bet, by the fourth Subaru line built at Subaru’s Gunma Yajima facility, the Exiga. This is a marginally shorter and narrower 3-row boxier 4-cylinder Tribeca alternative on the same 108.2″ wheelbase that is only offered in Japan and some nearby right-hand-drive markets such as Australia and Singapore.

What should Subaru do? Kaizen Factor suggests…
Tight production capacity may certainly appear to be an enviable problem, especially if you’re a volume European carmaker with excess capacity such as General Motors’ Opel, Fiat or Peugeot/Citroën. Nonetheless, juggling all these successful car lines at Subaru facilities in Japan and the United States in order to meet demand and maximize profitability is a task not to be taken lightly. It is at this point that this Kaizen Factor author plays armchair quarterback, indulges in informed speculation and suggests the following:

Kill off Tribeca and Exiga. If there’s one niche in which Subaru has seen marginal success, it’s in the 3-row crossover SUV/wagon segment. Neither Tribeca nor Exiga will be particularly missed if discontinued, and their demise will open up some production capacity at Subaru of Indiana Automotive (SIA) and at the Gunma Yajima Plant, respectively. And what if Subaru dealers clamor for an entry in this segment? With all the rebadged Toyotas and Daihatsus sitting below Impreza in Subaru’s Japanese domestic market lineup, one more large one wouldn’t be a big deal. Europe has also seen a handful of those, powered by their inline engines of origin. A Subaru-badged version of, say, the Toyota Verso small minivan (itself the foundation for the Prius v) would be a viable solution, and might even finally give the Mazda5 some long-overdue competition in the United States. Plus, it wouldn’t be the first time Subaru goes down this route. Under General Motors’ partial ownership, Subaru offered the Traviq (a rebadged 1st-generation Opel Zafira 7-seat compact MPV). Of course, if Subaru did something like this and offered a rebadged vehicle in North America with an inline or vee cylinder configuration instead of the company’s signature flat (horizontally-opposed) engines, we can already hear the cries of bloody murder from Subie loyalists already up in arms over the BRZ’s lack of all-wheel-drive…

Bring all Legacy and Outback production to the United States. A number of Toyota models that sell primarily or exclusively in North America are only built here, namely Matrix, Avalon, Venza, Sienna, Tacoma, Tundra and Sequoia, with Highlander set to join the list in late 2013. Honda and Nissan (including their luxury brands) also offer a number of North America-only built models, as has Mitsubishi in the past, so why shouldn’t Subaru do the same with its now quite large Legacy sedan and Outback wagon? We’d imagine that the U.S. is by far the largest market for those models, anyway, so building them all here sounds like a good way to increase Subaru production capacity back in Japan for all the fun, sporty, truly Subaru stuff. And we say that advisedly, since the company in the U.S. has just discontinued for 2013 its last link to Legacy’s enthusiast-friendly past: the 2.5GT turbo manual sedan. A shame, for the line that in the past included such tantalizing variants as the spec.B sedan and 2.5GT wagons now signals its new mission as just an all-wheel-drive Camry/Accord/Altima alternative.

Bringing all Legacy and Outback production to the States also means that those sporting spec.B Legacys, available in sedan and wagon versions that still have a following in Japan and Australia even in their current BM/BR 5th-generation would also be built here. And, given that fact, perhaps Subaru can be persuaded to leave and sell a few of them over here…

As to a potential Legacy/Outback vs Camry fight for capacity at SIA, maybe Toyota could be persuaded to give up a smidge of Camry output in favor of Subaru if it means more capacity at Gunma Main for potential Toyota or Lexus-badged FR-S / GT 86 spinoffs. Wishful thinking, I know…

Keep most if not all Forester and Impreza production away from the Gumna Main Plant. With Exiga gone and Legacy/Outback coming exclusively from the U.S., that would leave the Gunma Yajima plant building just Forester and Impreza/XV Crosstrek. As such, any need for Gunma Main to produce overflow Foresters and Imprezas would be minimized, or even curtailed altogether, in turn maximizing production of BRZ / FR-S / GT 86 and any future variants thereof.

What about a new factory or production location?
The suggestions above are seemingly the least disruptive and most cost and time-effective solutions to an apparent capacity crunch facing Subaru (and, by extension, Toyota). There are always, of course, a myriad of other alternatives, from further, more elaborate juggling among or between the five Subaru Gunma facilities in Japan and SIA in the U.S. to building an all-new Subaru factory (such as a rumored Russian assembly plant by 2015) to the flip side of the current SIA Camry arrangement: setting up a Subaru or “Toyobaru” line in one of Toyota’s North American production facilities. With most of the world’s excess carmaking production capacity centered in Europe, the Old Continent could also provide alternatives. Given the strong Japanese production presence throughout Great Britain (think Toyota, Honda and Nissan) and a likely strong Japanese supplier base there, buying and repurposing General Motors’ endangered Ellesmere Port facility in northwest England is but one possibility that comes to mind.

These options, however, are far more involved, convoluted and time and money consuming. Needless to say, this is an area of expertise far above this humble scribe’s capabilities, and we’ll leave it to the corporate honchos, bean counters and production engineers to determine if, ultimately, Subaru might be on a growth spurt beyond what its six current major production facilities can handle.

A hardcore enthusiast’s ultimate dream goal: meeting demand, and creating a BRZ / 86 family
Toyota and Subaru’s short and mid-term goal, we’re sure, is meeting burgeoning demand for the current 4-cylinder, 2-liter naturally aspirated FA20-powered 86, GT 86, BRZ and Scion FR-S 2+2 sports coupes. Longer-term, though, this author believes, as many car forum posters and blogosphere denizens do, that the creation of Tetsuya Tada, Yoshio Hirakawa and Toshio Masuda is simply too good to confine to that single coupe. And, indeed, beyond the obvious more powerful version of that coupe, all sorts of additional body styles have been suggested and rendered, from a 4-door sports sedan (one we hope doesn’t look like the Best Car illustration above right with its fussy side sculpturing and odd Toyota badge/Lexus spindle grille mashup) to a convertible to speedster to the fanciful illustrations by FT86Club.com member Ichitaka05 that include targa and shooting break body styles, not to mention a Lexus-badged small 2-seater.

A final, parting thought
Perhaps, though, Subaru and Toyota have more downbeat and levelheaded notions of BRZ’s and FR-S/86’s long-term sales potential, with our wishful flights of fancy shot down by the numbers crunchers. Maybe, beyond the convertible shown above (as famously rendered by Germany’s Auto Bild) and go-faster powertrain tweaks, there won’t be any spinoffs or derivatives. In that case, the carmakers might be sobered by the traditional trendiness and brief shelf life of many past sports coupes. Perhaps adding some Forester and Impreza capacity at Gunma Main could, instead, turn out to be a visionary move.

BRZ, FR-S and GT 86 as a one or two-year wonder whose sales will then fizzle out faster than a bum firecracker? Heaven forbid things turn out that way…

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One thought on “The Forester factor: an unexpected reason why BRZ / FR-S / GT 86 production capacity is limited

  1. Pingback: Subaru debuts a turbo version of the FA20 engine | Kaizen Factor

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