Eleven years ago, Where the Suckers Moon documented the life-deadening process of trying to build Subaru’s brand identity in the United States. They’ve still got problems, and some in the auto industry say a switch in their corporate alliances between GM and Toyota is the result of bullheadedness on branding strategy.
Despite a high-profile campaign faced by Lance Armstrong, they’re still having problems breaking through in North America.
What sort of problems? When the possiblility of Armstrong’s being dumped after a two year high profile advertising campaign was floated this past spring, Edmunds’ Inside Line assessed the possibile impact this way:
“What this means to you: Unless you’re a huge Lance fan, this switch won’t mean much.”
Five years ago, GM accrued a 20% stake in Fuji Heavy Industries, Subaru’s parent. It seems that this investment was interpreted differently on each side of the Pacific: in the U.S., GM was clearly buying into an auto brand with a unique image: As James Treece describes in Auto News today (sub. req.):
“Subaru offered a well-earned reputation for durability to people who wanted all-wheel drive but, for whatever reason, did not want an SUV. In other words, Subaru had a brand niche as unique as Volvo’s safety image.”
In Japan, Fuji’s executives thought the new relationship was based on Subaru’s technology: their all-wheel drive platform and their “boxer” engine.
When GM floated the idea of Subaru and Saab models sharing components, Fuji’s dedication to the “boxer” as a point of differentiation for their brand became a real obstacle. Sure, rally fiends know what the damn thing is, but does the average LL Bean customer - Subaru’s real North American target market?
The end result? GM and Fuji have now dissolved their relationship. In its stead, Fuji has recruited Toyota to pick up a smaller (8.7%) stake.
Strategic move by Fuji? Doubt it. There are some benefits for Toyota, but it doesn’t look like your average American-style strategic relationship.
The WSJ confirmed this impression today: “But little is known at this point. Friday, Toyota and Fuji said they still are considering how to work together and have no details yet.”
Guys! This isn’t the 80s! Japanese companies have to stop making reciprocal investments for tradition’s sake! GM may be a dog of an auto company with wavering support from fickle customers tempted by outrageous discount pricing and daunted by high oil prices, but it did make the initial commitment to the relationship. Detroit brought Fuji to the dance, but Fuji just didn’t want to put on the pretty dress - or the variety of frilly bows - to help move the product.
As for Fuji/Toyota? Merrill Lynch auto analyst Tatsuo Yoshida noted in a report that if Fuji wants this relationship to work it “must set aside any pride or shame and put all its effort into cooperative projects.”(Auto News)