How Subaru went from rags to riches in 50 years

Once little more than a niche auto-maker that built cheap cars, Subaru outsold Mazda and Volkswagen combined in 2017 in America, shifting 647,956 vehicles.

It has set annual sales records for 10 consecutive years and we expect its success story will continue in 2018 with the introduction of the Ascent, an eight-seater crossover.

It wasn’t always that way. For a while, it looked like Subaru’s star would never rise. It struggled early on and it nearly went out of business less than a decade after selling its first car on American soil. Join us for a look at the highs and lows of Subaru’s 50-year history in America.

Subaru introduces the 360 (1958)

Subaru parent company Fuji Heavy Industries (FHI) took baby steps into the automotive industry when it introduced the 360 in 1958. Classified as a kei car in Japan, the tiny two-door got its name from the 356cc two-stroke, two-cylinder engine that powered it. The specifications sheet listed 16hp, a three-speed manual transmission and mechanical brakes all around.

The 360 wasn’t Subaru’s very first car; that honor goes to the 1500 from 1954. It represented the firm’s first attempt at mass-producing a car, however. Japanese buyers loved it - it’s considered part of the nation’s cultural heritage today - but no one at FHI envisioned selling the car in America at the time.

Creating Subaru of America (1968)

Industry-wise businessmen Malcom Bricklin and Harvey Lamm founded Subaru of America on February 15, 1968. Their company sold franchises to entrepreneurs who wanted to distribute the 360 and the Vespa-like Rabbit scooter Subaru also made. The young company set up its headquarters in Bala Cynwyd, Pennsylvania. It moved to New Jersey two years later.

The 360 by the numbers (1968)

The first 360 disembarked on American shores in May 1968. The US-spec model came with a 25hp two-cylinder engine mounted behind the passenger compartment and a four-speed manual transmission. It took 37.5sec to reach 50mph and, with enough road and a favorable tail wind, it eventually topped out at 69mph. Although the 360 was tantalizingly slow, its fuel economy left buyers speechless.

Importantly, the 360 was light enough to receive an exception from federal safety standards. Consumer Reports infamously branded it ‘the most unsafe car on the market,’ which left a stain on the brand’s reputation that remained visible for years.

Subaru of America - the first years (1968)

Importing a cheap economy car into America was easier than it sounds in the 1960s. Selling it, however, was a completely different story. Subaru attempted to lure curious buyers into showrooms by undercutting better-established brands like Volkswagen and Fiat on price. The 360 started at $1297 in 1968, which represents about $9100 today. That same year, the Beetle and the 850 cost $1699 and $1427, respectively.

Early ads used the accurate but unflattering catchphrase ‘cheap and ugly does it’ to advertise the 360. The firm sold 332 cars in 1968, 2407 the following year and 5590 in 1970. 

Subaru’s first front-wheel drive car (1970)

All things considered, the 360 sold relatively well in America. More examples found a home in 1968 alone than Citroën sold 2CVs during the decade the model lingered on the American market. But it wasn’t a volume model and it would never become one. To keep growing, Subaru introduced a second car named FF-1 in 1970. It stood out as the firm’s first front-wheel drive model, and the first Subaru powered by a flat-four engine. Its success helped annual sales reach 24,056 units in 1972.

Subaru’s line-up grows (1973)

Subaru launched a newer car, the Leone, to keep up with demand from buyers in America and in Japan. US-spec models adopted the GL and DL nameplates. The line-up included a sedan, a coupe and a station wagon. They all came with a flat-four engine and front-wheel drive.

Global forces take their toll on Subaru (1973)

Subaru, like rivals Honda and Toyota, should have benefitted from the 1973 oil crisis but another global force nearly slaughtered the brand’s American division. The exchange rate between the rising Japanese yen and the US dollar forced parent company FHI to raise its prices in America, which caused sales to collapse. Michael McHale, Subaru of America’s director of corporate communications, told Autocar the near-death experience still represents the lowest point in the auto-maker’s American history.

Subaru goes four-wheel drive (1975)

Subaru began selling four-wheel drive cars in Japan in 1972 but it didn’t offer the configuration in America until 1975. The DL/GL station wagon stood out from other four-wheel drive models on the US market because it looked and drove like a regular passenger car. Subaru sponsored the US ski team to flaunt its wagon’s all-terrain capabilities, a bet which paid off in just a few short years.

In 1975, Subaru sold 41,587 cars in America. That number spiked up to 80,826 in 1977. The mercurial US market is a tough nut to crack, but four-wheel drive helped Subaru finally blaze its own path to prosperity. It took some of its competitors decades to catch up.

Living with a Brat (1978)

The Brat (an acronym which stood for Bi-drive Recreational All-terrain Transporter) underlined America’s growing importance to Subaru’s bottom line in the 1970s. The Leone-based model was primarily designed to compete in the growing small pickup segment in the US, though it put a bigger focus on leisure than rivals like the Ford Courier and the Chevrolet LUV.

Early models came with rear-facing jump seats in the cargo compartment. They cleverly helped Subaru avoid the notorious 25-percent tariff known as the Chicken Tax by making the Brat a four-seater passenger car instead of a two-seater pickup. 

Subaru’s first sports car (1985)

Subaru boldly moved into the sports car segment when it introduced the XT. It showed a different, sportier side of the brand few buyers were familiar with. Remember: this was well before the WRX became a force to be reckoned with in rally circles. Subaru had escaped the roasting inferno of Consumer Report’s damning label but its name remained a byword for economy car.

In base form, the wedge-shaped XT came with a four-cylinder engine and front-wheel drive. The range-topping model offered a turbocharged flat-four and all-wheel drive. Subaru later expanded the line-up with a model named XT6 that received a flat-six engine. At $17,745 in 1988 (about $37,000 today), the XT6 occupied the highest rung of the Subaru hierarchy.

Today, the XT nameplate lives on as one of the Forester’s trim levels.

The first Subaru with a ‘made in America’ label (1989)

Following the path blazed by rivals Honda and Toyota, Subaru began evaluating the idea of building a factory in America. It was an immense undertaking for a small company so executives teamed up with Isuzu, another Japanese auto-maker with a restrained footprint, to open an assembly plant in Lafayette, Indiana. Early on, the factory built the Subaru Legacy and the Isuzu Rodeo.

The original Impreza (1993)

Subaru introduced the first-generation Impreza to replace both the Justy and the Loyale, though the latter remained available through the 1994 model year. It looked considerably more modern than its boxy predecessor but it retained the time-tested formula of a flat-four engine and either front- or four-wheel drive.

The Impreza station wagon later spawned the Outback Sport, which gave buyers a more affordable alternative to the Legacy-based Outback.

Surfing the SUV wave (1995)

Period ads called the original Subaru Outback the world’s first sport utility wagon. The formula was simple: Subaru took a Legacy station wagon, gave it a little bit more ground clearance and added rugged-looking styling cues such as plastic cladding on the sides and model-specific bumpers. It was cheaper than developing an SUV from scratch and it worked just as well.

An instant hit, especially in America’s mountainous regions, the Outback paved the way for Subaru’s meteoric rise and inspired competitors to build their own toughened-up wagons.

Subaru buys out Isuzu (2001)

Isuzu struggled in the American market while Subaru thrived. In 2001, FHI purchased Isuzu’s part of the Indiana factory for $1. Isuzu left the American market shortly after while Subaru expanded production in Lafayette. It notably built the Camry for Toyota between 2007 and 2016.

The WRX heads to America (2001)

Subaru began selling the WRX in America in 2001. The model came with a turbocharged 2.0-liter flat-four engine that made 227hp and 217lb ft of torque. It brought the experience Subaru gained while winning World Rally Championship (WRC) events during the 1990s to American enthusiasts for the first time. The WRX STI remained a forbidden fruit until it finally reached showrooms in 2004.

The Saabaru (2004)

Dazzled by Subaru’s success, General Motors purchased a 20-percent stake in FHI in 1999. The short-lived tie-up spawned a Saab-badged version of the Impreza named 9-2X that Subaru built alongside its own version of the car in Japan. The Aero model shared its turbocharged 2.0-liter flat-four engine with the WRX. Production ended after the 2006 model year and GM severed its partnership with FHI.

The 21st century Brat (2002)

By the early 2000s, Subaru had found its niche. It excelled in turning passenger cars into brawny soft-roaders that handled themselves well off the pavement. Designers channeled the Brat’s spirit in 2002 when they introduced the Baja, an Outback-pickup cross with a small but practical cargo bed. It launched in the unique (and enviable) position of having no true rivals on the American market. Production lasted through the 2006 model year, though sales fell well short of expectations. 

Subaru’s second SUV (2005)

Subaru’s first SUV, the Bighorn, was an Isuzu Trooper-based model that never left Japan. Its second SUV, the B9 Tribeca, was designed for and built in the US. From hindsight, it was too small for its segment and even the most hardcore Subaru enthusiasts prudently called the front-end design unsavory.

Saab should have received a badge-engineered version of the B9 Tribeca, which it called the 9-6. Designers grafted the company’s corporate grille in lieu of the Impreza-inspired face and considered it a good job well done. The GM-Subaru split ended the project before it came to fruition. One of the two prototypes built sits in the Saab museum in Trollhattan, Sweden, as a prosaic reminder of what could have been.

Americanizing Subaru (2007)

During the 2000s, the US indisputably emerged as Subaru’s most important market. Sales nonetheless dropped to 187,208 units in 2007, down from 200,703 the previous year. The company consequently decided to make its next-generation cars bigger in order to cater to American tastes and lock horns with the competition.

Annual sales grew to 187,699 in 2008 and they haven’t stopped swelling since. They even climbed 15% year-on-year in recession-ravaged 2009, an utterly disastrous year for practically every other carmaker, when the overall market collapsed 21%.

Subaru’s record-breaking decade (2017)

Subaru sold 647,956 cars last year in the US, an all-time record that marks 10 consecutive years of sales increases. No longer an underdog, the Japanese firm became one of America’s largest auto-makers by finding a blueprint that works and sticking to it.

The Outback (pictured) remains its best-selling car (188,886 units), closely followed by the Forester (177,563 units). The Impreza-based XV Crosstrek comes in at a distant third (110,138 units).

Subaru of America turns 50 (2018)

Subaru of America celebrated its 50th anniversary by introducing a limited-edition version of every nameplate in its catalog at the 2018 Chicago Auto Show. They all receive the same Heritage Blue paint job, chromed trim and emblems plus edition-specific alloy wheels. Inside, Subaru added silver seatbelts and commemorative logos stitched into the front seats and the floor mats.

Production of the 50th Anniversary cars is limited to 1050 examples of the Crosstrek, Forester, Impreza, Legacy and Outback, 600 WRXs, 200 WRX STIs (pictured), and 250 BRZs.