Marketing Expenses Surge 40%, EV Subsidies Hit Record Highs
In the April-June quarter of this year, Subaru significantly increased its electric vehicle (EV) marketing expenses in the U.S. market by 40% compared to the same period last year. The funds were primarily allocated to promoting three EV models: Solterra, Uncharted, and Trailseeker. According to data, Subaru provided an average marketing subsidy of $9,650 for each Solterra sold during the quarter, $9,155 for each Uncharted, and $8,982 for each Trailseeker. In contrast, the average subsidy for the popular gasoline model Outback was only $3,036 during the same period, indicating that Subaru’s marketing costs for EVs were approximately three times higher than those for gasoline vehicles.
These subsidies included various incentives such as cash rebates and low-interest loans to stimulate consumer purchasing. However, despite the substantial investment, Subaru sold only 10,064 EVs in the U.S. market during the first half of the year (January through June), accounting for just 3.3% of its total sales of 307,340 vehicles. Among them, Solterra sales dropped by 21% compared to the same period last year, while the newly launched Uncharted and Trailseeker each sold approximately 2,500 units by the end of June. In stark contrast, Subaru’s gasoline models Forester and Crosstrek achieved sales of 100,640 and 87,623 units, respectively, during the same period, highlighting the comparatively weak performance of its EVs.
Operating Profit Plummets 44%, EV Strategy Faces Adjustments
The steep marketing expenses directly impacted Subaru’s financial performance. The company’s operating profit for the first fiscal quarter (April-June) fell by 44%, dropping from $472 million in the previous year to $263.2 million. Additionally, Subaru recorded a $362 million impairment charge in May due to slowing EV demand and postponed its plan to produce an independently developed EV at its Oizumi plant in Japan, reflecting a cautious stance toward the EV market outlook.
Subaru has been known for its lean and efficient marketing strategy, but this year, it was compelled to significantly increase subsidies to sustain EV sales. Analysts suggest that the cancellation of the $7,500 federal EV tax credit in the U.S. last year may have contributed to Subaru’s decision to ramp up marketing efforts. Nevertheless, despite the substantial subsidies, Subaru’s total U.S. sales for the first half of the year still declined by 4.5% compared to the same period last year, signaling intense competition in the EV market and the need for greater consumer acceptance of electric vehicles.
Subaru has not yet disclosed specific adjustments to its future EV strategy, but the high marketing costs and sluggish sales performance have placed evident pressure on the company’s financial health. As competition in the EV market intensifies, whether Subaru can boost EV sales without sacrificing profitability will be a critical challenge moving forward. Furthermore, potential adjustments to its EV product lineup or production plans will also warrant close attention.
