Subaru Bets on New Forester SUV to Counter US Tariffs

According to foreign media reports, Atsushi Osaki, the president of Japanese automaker Subaru, stated at the annual shareholders' meeting that the company is pinning its hopes on the new Forester SUV to mitigate the impact of tariffs imposed by the Trump administration. Subaru is also weighing how much production to shift to the US. The US market accounts for over 70% of Subaru's sales, the highest among all Japanese automakers. In the fiscal year ending March 2025, Subaru sold 662,000 vehicles in the US, representing 71% of its global sales of 936,000 units. Subaru's all-wheel drive SUVs, particularly suited for complex terrains and cold climates, are especially popular. However, half of the vehicles sold in the US need to be exported from Japan. This heavy reliance on exports makes Subaru particularly vulnerable to the auto tariffs implemented by President Trump earlier this year. If effective countermeasures are not taken, this tariff policy could result in a $2.5 billion loss in operating profit for Subaru, nearly 90% of the company's total operating profit of 405.3 billion yen (approximately $2.79 billion) from the previous fiscal year, effectively erasing its annual profit gains. In response, Atsushi Osaki stated, "We will maintain our core market position in the US while strategically balancing our operations in Japan and Canada to mitigate the current crisis." From the information released at the Subaru shareholders' meeting, it is clear that the company is heavily betting on the new Forester to counter the tariff impacts. This new model is set to launch in the US in 2024, starting with a gasoline version, followed by a hybrid version in the spring of 2025 for both the US and Japan. The hybrid model boasts excellent fuel efficiency, featuring Subaru's self-developed engine and Toyota's hybrid system. Osaki mentioned, "The new Forester is performing very well in the market, with hybrid model sales exceeding expectations, leading to extended delivery times due to high demand." Subaru's only overseas manufacturing base is located in Indiana, USA. The company plans to initiate a 40 billion yen capacity upgrade project this fall, at which point the factory will begin producing the new Forester. Osaki noted that the factory currently has an annual production capacity of about 340,000 to 350,000 units, with hopes to increase it to over 400,000 units. Increasing the production ratio of best-selling models in the US will help control costs. In just April, orders for the Forester model approached 12,000 units, more than double the previous single-month sales record. Subaru indicated that strong sales of this model in Japan are also expected to buffer the impact of US tariffs. However, Subaru's potential shift of production capacity overseas due to over-reliance on the US market has raised concerns within Japan's domestic industry. As a significant production base for Subaru, Gunma Prefecture in Japan hosts not only Subaru's vehicle manufacturing plant but also its core supply chain system. In response to a shareholder's question about whether the company would increase production in the US (including engine production), Osaki stated, "Indeed, this would enhance our ability to respond to tariff impacts, but it will be challenging without the cooperation of all suppliers. We need to consider this comprehensively."