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Thrifty Fans Help Subaru Weather the Recession

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“Recession-proof” usually refers to industries like insurance and health care that continue to do brisk business in a downturn, but is there such a thing as a recession-proof brand? If there is, Subaru may be Exhibit A.

For the first half of 2009, every automaker in the United States sold fewer cars than during the same period in 2008 except Subaru, according to Autodata. Even Hyundai, which stemmed losses and gained 12 percent market share with its if-you-lose-your-job-you-can-return-your-new-car Assurance plan, was down 8 percent. In July, when the federal government's Cash for Clunkers program boosted auto sales across the board, Subaru's rose more than 50 percent compared with the previous July.

Subaru’s 4 percent jump in sales for the first half of 2009 (versus the industry’s average 32 percent decline for the same period) doesn’t have an obvious impetus. The brand’s ad spending for the period, for instance, was $55 million—down 22 percent  from a year earlier, according to Nielsen Co. data. Subaru’s advertising, which employs the tagline “Feel the love,” hasn’t won any big industry awards for Carmichael Lynch. (“Not spectacular enough,” said director of corporate communications Michael McHale.) Subaru’s social media strategy rests on the shoulders of one man. (McHale again.)

Subaru did have some advantages in the current economic environment, though. It was one of the few car companies pitching new products, the 2010 Outback and Legacy, which boasted better mileage than the previous year’s models. The company also has no models that cost more than $29,999 (list), limiting the brand’s exposure to the luxury market, which was hit hard in the current recession.

But to get to the root of Subaru’s appeal, consider this statistic: 40 percent of Subaru owners pay cash for their car, more than double the industry average. That reveals a truth about the brand’s customer base: they’re thrifty and conscientious.

Wes Brown, an analyst at Iceology, which has consulted for Subaru on marketing issues for a decade, said that if Subaru is recession-proof, it’s because it markets to a psychographic that is itself able to withstand the economic downturn better than most.

“They have a customer base that apart from being naturally pragmatic are very financially savvy,” Brown said. He recalled that eight or nine years ago while doing research for the brand in Portland, Ore., he found that all the Subaru buyers not only paid in cash, but had done all the paperwork ahead of time. “That’s the mentality of a Subaru person,” he said. “If that’s the way you think, you have been relatively insulated [from the recession.] If you want to go out and get a new car, you go out and get a new car.”

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