FUJHY Subaru Corporation (PK)

By Sean McLain in Detroit and Chieko Tsuneoka in Tokyo 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 16, 2018).

Subaru Corp. is striking a rare note of optimism about American car buyers by projecting a bump in 2018 sales even as overall volume declines, as it brings a behemoth SUV with 19 cupholders to U.S. showrooms.

The projection, released Monday, comes as the broader U.S. market is expected to decline for the second consecutive year after years of record sales. Analysts predict sales for the overall market will slip to about 16.7 million from 17.2 million in 2017.

Subaru has consistently outpaced its peers in the U.S. market, using a stable of roomy wagons to reap the benefits of the shift in consumer tastes toward sport-utility vehicles. It's seen its sales more than triple in the last decade as it became a major player. More than 60% of its sales are made in the U.S.

The company expects U.S. sales to increase 5% this year to 680,000, compared with the 648,000 delivered in 2017. The company is enjoying strong demand for its Forester and Crosstrek crossovers, and is anticipating a bump from its new, seven-seater Ascent, a behemoth with all those cupholders.

Competitors Toyota Motor Corp. and Nissan Motor Co. say they are aiming to keep sales roughly flat in a shrinking market. Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said Monday at the Detroit auto show that he expects his company has a "better than 50% chance" that the company will post an increase due to the launch of a redesigned Ram pickup and two redesigned Jeep SUVs.

It also has another problem not facing most other auto makers in the U.S. The Japanese auto maker said it doesn't have enough supply of its most popular models.

"In the U.S., we have real inventory shortage for Crosstrek -- just two weeks now," said Subaru Chief Executive Yasuyuki Yoshinaga.

The company has little choice but to double down on the U.S. despite the shrinking market for new cars. "We can't change it even though we want to," said Mr. Yoshinaga.

Subaru had planned to boost growth in China and Russia, but neither effort is going well. It sold 6,000 vehicles in Russia last year, down from a peak of 22,000, despite a recovery in the economy there.

"In China, we are really struggling," Mr. Yoshinaga said. It doesn't have any local production in China and has been unable to grow sales amid a price war among auto makers.

Write to Sean McLain at sean.mclain@wsj.com and Chieko Tsuneoka at chieko.Tsuneoka@dowjones.com

(END) Dow Jones Newswires

January 16, 2018 02:47 ET (07:47 GMT)

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