I don't often read articles quoting SCI's Marketing VP. This one's from http://www.globemegawheels.com/servlet/ArticleNews/TPStory/LAC/20041014/WHINSIDE14/cars/.Subaru looking to take brand upscale

By ALEX LAW
Thursday, October 14, 2004 - Page G8

Quiz the average Canadian about the nature of Subaru and you're likely to hear about sturdy, inexpensive and eccentric compact cars from a plucky little company that believes in the virtue of all-wheel-drive and horizontally-opposed engines.

One word you aren't likely to hear from those consumers in relation to Subaru is "premium," which is interesting since that is much on the lips of the people who run that plucky little company.

Actually, Subaru isn't a little company at all, plucky or otherwise; it's part of a conglomerate called Fuji Heavy Industries and an active participant in GM's huge global alliance.

Since it designs and creates the cars, it's that big Japanese firm that has Ted Lalka and his colleagues in Mississauga, Ont., using that word "premium," but Subaru Canada's vice-president of marketing seems to be okay with the notion of taking the brand upscale from the "fondness" that people feel for it now.

What Lalka is not okay with is any suggestion that "premium" is synonymous with "expensive," as he does not use the word to describe what the new Subaru models are all about and resists the idea if it's raised. But clearly this is what Japan has in mind, since the senior players at Subaru have suggested the plucky little brand could, by the end of this decade, share equal billing with BMW.

The corporate thinking is that consumers will be so thrilled by how much better the new Legacy and Outback are than previous models that they'll be glad to give the Subaru dealers more money for the privilege of owning them.

The latest models are certainly better than anything to bear the Subaru badge before, especially in terms of refinement. They have slicker styling, use better components, fit together tighter, run more quietly and operate more smoothly.

Unfortunately, you can say the same things about pretty much every vehicle on the road in relation to its predecessor. Somehow, Lalka and his colleagues will have to convince people that Subaru's upgrade is more meaningful than anyone else's. In Lalka's mind, the key to being a premium car company is pretty simple.

"I define premium as pride of ownership regardless of features," he said in an interview in the company's head office, which will soon move to its fourth location in 20 years, each of them bigger than the last.

Lalka believes that, if you think "I know I made the right decision" and have a sense of pride, "then that's what premium is all about. It's no longer about Corinthian leather. It's not about that any more; it's more about do I feel proud that I bought a Subaru."

Lalka said that pride would be different from the pride that some people take in buying, say, a Lexus or BMW. "For us, it's about how the person made the right decision and how they feel good every time they get into it," he said.

"It's dependable and it puts a smile on my face; its sensible in that I didn't spend more than I had to it. It's all the right things for me, and fun to drive."

Those "right things," by the way, are "reliability and durability and leadership in all-wheel-drive technology."

To get to this new position in the market, Lalka said, Subaru knows it's going to have to find a new brand of buyer.

"We're finding that there's a declining number of retirees," he said, "with an increasing number of professionals and younger people, particularly with WRX and Impreza overall. The type of people those models attract are very different."

Cross shoppers for WRX also looked at Audi and BMW, Lalka said, "and Volvo and VW are appealing to Legacy buyers. That's a really good indicator that we're attracting a different type of person."

These new buyers tend to buy more upscale versions of the new products, Lalka said, with more and pricier options, which of course pleases him because they're more expensive and profitable.

He is quick to add, however, that "at the same time, in Canada the volume opportunities are with the more affordable trim levels. So we pay special attention to less expensive models, which are positioned very competitively."

Whatever their price positions, Subaru models are being reasonably well received by Canadian consumers. Subaru Canada is experiencing sales growth. It's modest to be sure (1.2 per cent by the end of September), but it is growth in a declining market.

Lalka said it "wouldn't be appropriate for me to say what our sales target is," but he previously talked about doubling Subaru's share of the Canadian market to around 2 per cent, which would be in the neighbourhood of 32,000 units in an average year.

That's a lot of pride of ownership for Subaru or any company in this country, especially if it means paying more for the privilege.

alaw@globeandmail.ca

SCI can certainly talk the talk about improving the brand's image and sales here, but they're eventually going to have to put their money where their mouth is and work on their marketing strategy. Any VP of marketing who is happy with Subaru Canada's current web site, for example, has a long way to go in understanding why Subaru is still a niche player in a country where you'd think AWD cars would sell very well.

what I've been saying for sometime, which does not necessarily mean (hugely) more expensive, but more of "best in class."

Bob

Wow... Subaru's very boastful in their statements. I hope they can meet selling potentials like that of BMW. But they first need to have the mind of a reputable company like that...

Let's start with Subaru's interior product improvement, but the options table sure looks empty.

Any VP of marketing who is happy with Subaru Canada's current web site, for example, has a long way to go in understanding why Subaru is still a niche player in a country where you'd think AWD cars would sell very well.

It's not just the website or Subaru's marketing in general. A lot of it IMO has to do with the Canadian economy and society. People simply do not have as much money to spend on cars as Americans. Despite the obvious market appeal of AWD cars, most Canadians just buy cheaper FWD cars and put snow tires on them. For most people that works just fine; I know it did for me the 10 yrs I spent driving in Ontario. I think Subaru's attempt to go upscale is going to make that even worse, at least in Canada.

It's not just the website or Subaru's marketing in general. A lot of it IMO has to do with the Canadian economy and society. People simply do not have as money to spend on cars as Americans. Despite the obvious market appeal of AWD cars, most Canadians just buy cheaper FWD cars and put snow tires on them. For most people that works just fine; I know it did for me the 10 yrs I spent driving in Ontario. I think Subaru's attempt to go upscale is going to make that even worse, at least in Canada.
I'm sorry Mike, but I think your opinion is well out of date. Economies get stonger and weaker over time, and at the moment the Canadian economy is much stronger than the US (and really has been since 2000, but people have been reluctant to spend until recently). If this was 15 months ago I MAY have put some stock in your opinion on this, but certainly not now. Canadians don't spend as much on cars because other things are more important to us (like vacations)...generally speaking. It's more of a social aptitude than anything else, and has less to do with actual disposable income. I also suspect you'd be very surprised at just how many Subarus are on the road here now, than there were in the mid to late 90s. Outbacks and Foresters are everywhere. 6 years ago I could have counted on two fingers the number of people I knew who owned Subarus, and I was one of them. These days I could give you at least 12, and that's outside my familiy (who own 5). In fact these days there are 3 just on my parent's street!

Subaru has gone from the deep end of the automotive recognition to a known company relativaly speaking

before the outback, only car afficionados and university teachers knew what a subaru was, now almost everyone knows about the brand. Read the previous test drive of the new legacy in Canadian papers and magazine, every writers starts by saying how boring subaru was, and how things changed with the WRX, than the STI and now the new Legacy... this aint coming solely form the writers but by many car enthusiasts as well. And in many car guides, the legacy is now compared to Volvo's, Audi's not with Camry and Accords anymore, this is a sign that their move upmarket is somewhat working. Sure it takes more than simply that, but there is a beginning to everything, and now it's just the beginning, especially with car makers such as BMW, Audi and Mercedes going downmarket in their car range (smaller and cheaper benzes and bimmers to attract younger people to the brand)

I agree the Canadian market has its own peculiarities, but that's no secret, and some other lower-volume brands have done a much better job selling their vehicles to the Canadian car buyer than Subaru has. It's as if they're happy with their niche market status, where the car is left to sell itself by word of mouth. Most of the people who have asked me about my Subaru either have no idea what makes it different from any other compact Japanese car, or they see it as an interesting oddity of a car that sounds good when I describe it to them but they're not sure they'd consider buying one because the Subaru brand is too marginal or unfamiliar. Personally I'm all for Subaru trying to reposition itself as a "premium" marque if it means they'll actually spend some money to put a clear idea in the heads of consumers about what Subaru is all about as a product.

I'm sorry Mike, but I think your opinion is well out of date. Economies get stonger and weaker over time, and at the moment the Canadian economy is much stronger than the US (and really has been since 2000, but people have been reluctant to spend until recently). If this was 15 months ago I MAY have put some stock in your opinion on this, but certainly not now. Canadians don't spend as much on cars because other things are more important to us (like vacations)...generally speaking. It's more of a social aptitude than anything else, and has less to do with actual disposable income. I also suspect you'd be very surprised at just how many Subarus are on the road here now, than there were in the mid to late 90s. Outbacks and Foresters are everywhere. 6 years ago I could have counted on two fingers the number of people I knew who owned Subarus, and I was one of them. These days I could give you at least 12, and that's outside my familiy (who own 5). In fact these days there are 3 just on my parent's street!

I suggest you actually look up some statistics instead of just going by casual observations. Yes, the Canadian economy is doing fairly well right now, but middle-class disposable incomes are still significantly below those in the US.

Subaru's market share in Canada is about 1%--about the same as in the US--despite the fact that an AWD car would be useful to almost all Canadians whereas for many Americans AWD is not that important. Subaru's share in Canada should be more like the 5% they have in places like Vermont. I think both the marketing and the market are partly responsible for their poor record in Canada.

(Let me remind you btw that I grew up in Ottawa, so this is not just some ignorant Yank writing.)

SCI can certainly talk the talk about improving the brand's image and sales here, but they're eventually going to have to put their money where their mouth is and work on their marketing strategy. Any VP of marketing who is happy with Subaru Canada's current web site, for example, has a long way to go in understanding why Subaru is still a niche player in a country where you'd think AWD cars would sell very well.

The company is indeed making strides in the right direction -- even as far as the Web sites and advertsing is concerned. Go pick up a brochure for a 2005 Subaru and the corresponding 2004 brochure. There is a big difference. They seem to be making a solid effort in all aspects of the game, from the vehicles to the Web sites to the brochures and even the dealerships. It is a slow process, but one that is bearing fruit already.

Go pick up a brochure for a 2005 Subaru and the corresponding 2004 brochure.

Speaking as a graphic designer, I prefer the '04 brochures over the '05 brochures. But you are right, if you compare the brochures to those of "several" years back—which were really awful in many respects, the new brochures much better, and appeal to a more sophisticated buyer.

Bob

I suggest you actually look up some statistics instead of just going by casual observations. Yes, the Canadian economy is doing fairly well right now, but middle-class disposable incomes are still significantly below those in the US.

(Let me remind you btw that I grew up in Ottawa, so this is not just some ignorant Yank writing.)
Uh, hum. Now first of all maybe you could point out where I said Canadians had “higher middle-class disposable incomes”, because I don't remember posting that at all! What I can point out is where you said "IMO has to do with the Canadian economy". And as you begrudgingly seem to have acknowledged, the Canadian economy IS doing better than the US, and has been for a while. If you need more proof, perhaps you could look up the statistics on that, rather than using your casual MIS-observations and innuendo. Try searching under "trade deficits" (or surpluses in our case) or "federal budget deficits" (or surpluses in our case), or look up the stats that show the US Federal debt is around 1.5 times more per capita than the Canadian Federal debt. And this is the despite the fact that we had to deal with SARS, BSE (border is still not open for trade on that one), chicken flu, the softwood lumber crap, the big blackout (which hit our most major industrial and commercial center) and have a government run health care system.

However since you brought up the “higher middle-class disposable incomes” in the US issue, maybe we’ll touch on that as well. From what I can remember (and please correct me if I’m wrong) those statistics compare disposable income when spent in another country, AND use a standard fixed currency rate for comparison. They do not take the price of goods in the host country into consideration. So, although Canadians may not have as much money to spend on a trip to France, that does not mean our money does not go further in our own country. For instance:

- Groceries are cheaper in Canada (I’ve read between 35-50%, at least in urban areas)
- Housing is cheaper in Canada (at least until recently, and when compared to Northern States which need central heat)
- Our health care is paid for BEFORE our disposable income is calculated (because we pay for it in our taxes). By the way, while I’ve got the audience I may as well point out that a very large American study found earlier this year that our health care system costs less that half per capita than it does in the US. Which is the opposite of what US politicians like to claim, with the private sector being more efficient and all.
- Our prescription drugs cost 30-50% less than they do in the US. Big item in the news these days isn’t it?
- Our cars (until recently) have been much cheaper to purchase new than for the equivalent in the US. Remember all those articles and court cases last year about car companies not allowing US customers to buy cars in Canada??? Then there’s used cars, which are just another good example.

And of course it also doesn’t include the fact that companies are required in Canada to give 2 weeks vacation off a year, rather than the 1 week in the US. And believe me, many of us middle-income people take a lot more than that. But as I stated in my last email that is a lifestyle choice, if Canadians want to work the extra weeks they can. The moral of the story is that the “higher middle-class disposable incomes” statistics don’t tell the whole story.

I’m sorry for getting so far off topic, but I just couldn’t let Mike’s comments go when I feel they’re no longer valid and have always been cyclical. The statements above would lead one to believe that Canadians have always lived below the standard of Americans, and that is not even remotely close to the truth. I should also point out that aside from the comments above I feel Mike is one of the better contributors to this board, so please don’t think I’m trying to vilify you Mike.

:lol: Thanks for that last comment; just for that I'll give you a polite response.

Again, look up the stats on disposable income. Take your pick of middle-class or overall; Americans have more disposable income. Even taking purchasing-power parity into account, yes, Canadians have always lived below the standard of Americans. Not horribly below, and Canada has a lot of pluses like lower crime, but the disparity is still there.

Yes, healthcare spending is lower in Canada. Partly that's because of better lifestyle choices, partly its because of rationing aka waiting lists. Canadians simply don't get as high quality medical care as Americans.

Your prescription drugs are cheaper because of price controls. The only reason that's possible is that the drug companies make up their R&D costs by charging market rates in the US. Essentially US drug consumers are subsidizing Canada etc.

Cars are only slightly cheaper in Canada than the US. Mostly that's because of lower demand due to the aforementioned lower idsposable income.

2 weeks vacation is the norm for new employees in the US. I've never heard of anyone only getting 1 week.

:lol: Thanks for that last comment; just for that I'll give you a polite response.
Thanks Mike, but responses should always be polite. I'll admit I've been guilty of not following the rule myself.

Again, look up the stats on disposable income. Take your pick of middle-class or overall; Americans have more disposable income. Even taking purchasing-power parity into account, yes, Canadians have always lived below the standard of Americans. Not horribly below, and Canada has a lot of pluses like lower crime, but the disparity is still there.
First of all, before the late 60s Canadians had higher disposable income than the US, according to your statistics. So the "always" comment is a little off. Secondly, I seem to remember that from the mid-80s through the mid 90s, Canada had the highest standard of living IN THE WORLD according to the UN (I don't believe the US was even in the top 10). In fact, for at least 11 years straight, the UN considered Canada the best country in the world to live. So I really don't know where you got your statistics to prove otherwise, but it wasn't from the world body. So please, I invite you to show me the statistics which prove "even taking purchasing-power parity into account, yes, Canadians have always lived below the standard of Americans". Those statistics don't exist, becuase the statement is just plain wrong. Oh, and I thought of another one, Post Secondary education in Canada is about a third of that in the US for equivalent programs. And our universities are VERY well respected world wide.

Yes, healthcare spending is lower in Canada. Partly that's because of better lifestyle choices, partly its because of rationing aka waiting lists. Canadians simply don't get as high quality medical care as Americans.
The same study which showed that the cost of our health care was less, also stated that the quality of care was the same or better. Again, the study was done by American Doctors! The ONLY thing the Canadian health system has trouble with, is a shortage of doctors and equipment. We have the same equipment as the US, just less of it. And really, what's worse...having to wait 3 weeks for an MRI or not being able to get one period because you can't afford it? And just recently, our Federal government injected a HUGE amount of money into the system with the intention to reduce our waiting times to a far more reasonable time. When Canadians hear American politicians talk about our healthcare system, we laugh, and then feel "sick" because of how incredibly ignorant they are about it. I mean, Canada has no shortage of flu shots this year! And they're free! Mike, I'm sorry but you seem to be a little more out of touch with the Canadian situation than you think.

Cars are only slightly cheaper in Canada than the US. Mostly that's because of lower demand due to the aforementioned lower idsposable income.
In 2000 one of my co-workers came back from a long job in California. Before he returned he decided to buy a new car...a Dodge Intrepid (no accounting for taste). The price of the car in US$ turned out to be the same as in CAN$. Meaning if it was US$20k, the price in Canada was CAN$20k. Obviously he bought it in Canada. At the time our dollar was around 0.67US. SO that's what, 33% cheaper? That's hardly slight. The price of cars in Canada is (for the most part) dependent on the value of the currency AND demand, just like everywhere else in the world. In the last year the Canadian dollar has gained over 30% on the US$, as a result our cars are only slightly less expensive than in the US, and in some cases slightly more expensive. Also, our factory to dealer incentives were nowhere near as agressive as in the US, and our interest rates weren't as low. So by your argument...now that our cars are close to the same price as yours, we must have more money to spend!?!?!?!

2 weeks vacation is the norm for new employees in the US. I've never heard of anyone only getting 1 week.
Once again putting words in my mouth. I didn't say those numbers were the norm, they are the legislated minimums. Most Canadians get 3 weeks, plus quite a few more "civic" holidays. Canada is WELL KNOWN to have vacation times somewhere between the US and Europe. Even the people I'm working with in Atlanta were joking with me about it early this year (you know...how do you Canadians make money? Are you working next week? etc...). If you think the case is otherwise, then you have a lot more reading to do. You may want to try something other than the US news.

After-tax disposable income for middle income earners in the US is significantly more than that for the average middle income Canadian, and it holds true for residents of virtually every state. Why you folks go on debating that is hard to understand, since it has been so well studied and documented. (google it, and you'll find several good references.)

One other significant difference for those same average middle incomers is the cost of Subaru ownership. Again, Fuji Industries has priced identical models higher in Canada (esp. the turbo Outback and Forester, and 6 cyl Outbacks), to which you also have to add a higher freight and PDI cost (about 40% more) as well as federal and provincial taxes, which together are at least 14 percent of purchase price. Then there's the higher cost of fuel (which in the Canadian west at least, is also disproportionately higher for premium, the octane recommended for the models mentioned.) And of course, the hidden tax deductibility for the finance costs (via tax breaks for mortgage interest, which act as incentives to buy new cars rather than pay off home mortgages...)

If you doubt my remarks about base price comparison, go to Subaru.com and .ca, and compare MSRP for the models mentioned, then go to a currency converter (like XE) to get the US car's price in Canadian dollars. The differences are big, and that's before taxes, remember. No jurisdiction in the US taxes vehicle purchases the way Canada does. The real cost of a car is the bottom-line, drive away price, and we pay many thousands more.

This thread was initiated to discuss Subaru's aspirations for premium branding and status. I think it'll be a much bigger struggle than their VP of marketing suggests. I know lots of owners of Volvo, BMW, Mercedes, Acura and Lexus. I also know lots of Subaru owners. None of those who drive Subarus switched from the aforementioned brands, but I know that some of the others drove Subarus in the past. (I should say that I'm not including STi owners in that remark. I only know a few of them, and they're definitely NOT the same marketing targets as most of the other Subaru lineup.) Loyalty to Subaru products does seem to figure high among many owners, and Fuji can count on most of them. It's attracting the new buyer that's the challenge, esp. at with the higher priced models. In the next several years we're only going to see more crossover and AWD vehicles competing with Subaru. I think in Canada it's going to be a tough go.

Wow too much to read here, for me right now, so i skipped a bunch.

This statement quoted from above sums me up completely: "It's dependable and it puts a smile on my face; its sensible in that I didn't spend more than I had to it. It's all the right things for me, and fun to drive."

And by buying the 2004 Legacy I saved $9,000 towards a 2005 or later Legacy GT or Outback XT. Which I plan on buying in the next 3 to 5 years.

I just hope a WR-Limited version makes it's way over here.

Secondly, I seem to remember that from the mid-80s through the mid 90s, Canada had the highest standard of living IN THE WORLD according to the UN (I don't believe the US was even in the top 10). In fact, for at least 11 years straight, the UN considered Canada the best country in the world to live. So I really don't know where you got your statistics to prove otherwise, but it wasn't from the world body.

That UN comparison was intended to rank poor countries and was based on things like literacy and life expectancy. Yes, Canada does very well on those measures, but that says little about disposable income.

Oh, and I thought of another one, Post Secondary education in Canada is about a third of that in the US for equivalent programs. And our universities are VERY well respected world wide.

True; I went to U of Waterloo and got an excellent education. The universities are heavily subsidized, though, which means ultimately paid for largely out of taxes.

The same study which showed that the cost of our health care was less, also stated that the quality of care was the same or better. Again, the study was done by American Doctors! The ONLY thing the Canadian health system has trouble with, is a shortage of doctors and equipment. We have the same equipment as the US, just less of it. And really, what's worse...having to wait 3 weeks for an MRI or not being able to get one period because you can't afford it? And just recently, our Federal government injected a HUGE amount of money into the system with the intention to reduce our waiting times to a far more reasonable time. When Canadians hear American politicians talk about our healthcare system, we laugh, and then feel "sick" because of how incredibly ignorant they are about it. I mean, Canada has no shortage of flu shots this year! And they're free! Mike, I'm sorry but you seem to be a little more out of touch with the Canadian situation than you think.


"free" right :rolleyes: Nothing is free, you just pay for it in your taxes. (where do you think that HUGE amount of money comes from?) When you make something seem to be free, though, you just increase demand and soon you are back to waiting lists and needing even more money. And its not just the wait lists, which cause serious problems for many people; some treatments are not available at all. (Note btw that you have admitted there are unreasonable wait times.)


In 2000 one of my co-workers came back from a long job in California. Before he returned he decided to buy a new car...a Dodge Intrepid (no accounting for taste). The price of the car in US$ turned out to be the same as in CAN$. Meaning if it was US$20k, the price in Canada was CAN$20k. Obviously he bought it in Canada. At the time our dollar was around 0.67US. SO that's what, 33% cheaper? That's hardly slight.


One example doesn't prove anything. In general cars are not that much cheaper in Canada. (Neither is food for that matter.)


Anyway, this is fun but really more of a PP thing. The reality is that for whatever reason Canadians have less money to spend on cars than Americans. That affects Subaru's marketing, especially this upscale plan.

forgot some reading for you:

Canada-U.S. income gap keeps growing: http://www.crfa.ca/research/research_canadausincomegapgrowing.htm

Mike, your reference underscores the point I was trying to make. Subaru Canada faces a huge challenge, whether they focus on increasing market share (keep in mind the actual spreads in US vs Canadian disposable income graphs, as well as that 5-year trend) or re-branding to a 'premium' product.

My commute takes me past a local Subaru dealer every day, and I've noticed very little sales activity for new vehicles for the past four months (almost nothing, really, apart from a few discounted 2004s). Were it not for used car sales and their relatively higher returns, I think the dealership would be in serious trouble... It's all very well to try and establish in people's minds that yours is a premium brand, but if nobody's buying....so what? Subaru Canada will have to some outside-the-box thinking (not modelled on the US marketing models) and I think we'll be seeing the discount and incentives much earlier and deeper this year.

The Price for Subaru's in Canada varies alot depending on the Exchange rate when they were introduced. Not when we get them but when they decide to bring them out. So right now the exchange rate is very good, relative to the last couple years, and Subaru's are quite expensive right now.

Income varies across Canada alot.

In the east, the poor area, everyone is just that poor.
Now I'm not rich but where I live it is the Rich area of the Country. Our Province does very well.

Healthcare isn't free except for basic services. Everything else you have to pay for every quarter. Although at $400 Canadian a year it isn't too expensive. Also if you make less then a certain amount some or all of it is covered. Taxes are how the Medical coverage is paid for, but Taxes in Canada are less then in the states, i think. Although a couple few years ago that wasn't the case.

Highest Income tax rate right now in Canada is 22%. I'm not sure what it is in the States right now, but In England it is 40% and Japan has a high 65%. That is not counting all the loopholes and tax breaks that also apply.

As for the Premium naming. I don't mind as long as the base models are still available at a reasonable rate. Subaru's problem is that they give you every option at a mid to high price range. They have nothing that competes on the same price levels as the other manufactures base levels. Not counting BMW or Mercedes or Audi. So they want to position themselves in the Premium category to account for their higher base price. About 40% higher for the TS then a base Chevy or Ford car, like the Focus or the Optra.

Ford Focus in Canada base price 16800 to 23000 TS Wagon or Sedan Now called RS 23000 to 24500. Chevy Optra's start at 15500.

When your base price is 40% more than the competition I can see how the word Premium would make a big difference.

Interesting non Subaru discussion of Canada vs the US.

However, I'm with one of the (I think) original points - in most of Canada you would expect an AWD vehicle to be an easier sell than in most of the US. Having only the same market share sure points to incompetent marketing to me. In the US, when they finally started to market their cars to other than Vermonters, it was the Outback that got the focus - and surprise, surprise, it got the sales too, way more than they expected, it turns out.

Marketing wise Canada is considered by all marketing firms, except maybe beer ad agencies, to be to same at the US market.

In Canada Subaru is considered a Little Japanese car company. Expensive because it is Japanese. AWD is looked upon with increasing favour, but it isn't considered essential. Knowing how to drive in winter is more an art then a technological issue. It's a skill you have to learn and that you develop.

4wd is favoured in the form of Pickups and SUV's. But frequently people still will pick a big V8 over a V6 4x4, like my Hairdresser. The other thing that happens is that if it snows lots, people just stay home.

Price is definitely a major factor in the decision of purchasing a car. Therefore, for cars that have a similar price range and sine Canadians have less desposible income, perceived value is important.

The G35x, Acura TL and the Legacy GT Ltd all fall into the $42,000 Cdn price range (the TL is cheaper than the Leg GT Ltd by ~$1000). The TL packs a lot of features in the car, so if a person have only so much to spend, he/she would most likely go for the most "valued" product (also Acura/Infiniti badge vs Subaru).

It's jut the way most people would shop, doesn't have to be a car.

Taxes in Canada are less then in the states, i think. Although a couple few years ago that wasn't the case.

Highest Income tax rate right now in Canada is 22%. I'm not sure what it is in the States right now, but In England it is 40% and Japan has a high 65%. That is not counting all the loopholes and tax breaks that also apply.


Um, no, overall taxes in Canada are higher than in the US. That 22% sounds low, but even if that is the correct highest federal rate you have to add provincial taxes as well. These are much higher than US state taxes since Canada is much more decentralized.


"Canada's total tax burden is 14 percent higher than the U.S. rate, one reason Canada is losing many of its best and brightest to a "brain drain" south. [See "Are We Losing Our (Best) Minds?" Reader's Digest, January '99.] "The brain drain is a national disaster that could be largely averted by changing our tax laws," says Walter Robinson. Canadians pay the top marginal income tax rate (combined federal and provincial) of 52 percent on an income of just $59,000. Taxpayers in the United States pay the top rate of 47 percent only when their income hits the equivalent of $351,000 Canadian." ( http://www.readersdigest.ca/mag/1999/06/think_01.html )

Price is definitely a major factor in the decision of purchasing a car. Therefore, for cars that have a similar price range and sine Canadians have less desposible income, perceived value is important.

The G35x, Acura TL and the Legacy GT Ltd all fall into the $42,000 Cdn price range (the TL is cheaper than the Leg GT Ltd by ~$1000). The TL packs a lot of features in the car, so if a person have only so much to spend, he/she would most likely go for the most "valued" product (also Acura/Infiniti badge vs Subaru).

It's jut the way most people would shop, doesn't have to be a car.
People still don't value the Legacy like they do with the Acura/Lexus/Infiniti, and if the Legacy is more expensive than the TL with similar configuration, people will not care about the AWD on the Legacy and just go with the TL. At the same time, Subaru can't discount the car too much because it's a slippery slope.

At least in Vancouver, people can get by without AWD, and at that class, people don't really care for performance - and if they do, G35 coupe comes first

I just confirmed my suspision with a friend regarding price differences. As I work in Canada, the min. wage, at least in my province, is $6.90 CA. Now, my friend works in the states and her min wage, at least for her state, is $6.90 US as well. Given that, the STi costs 50K MSRP in Canada vs. 30K MSRP in the US. With this in mind, it really does determine what cars can be and can't be bought here using an average Joe income.

Minimum wage is not the same thing as "average Joe income."

Minimum wage is not the same thing as "average Joe income."
A technicality...

Reguardless of the difference between the caring northern market and the larger fendforyourself southern market. jk!

What do you think of the idea of Subaru being a premium lable.

I think Subaru has a long way to go to be considered a premium label. The cars are getting better although still to most people only on par with Honda, Toyota, VW, Nissan, etc. not Volvo or BMW. The dealerships need a lot of work.

A technicality...

Not at all; minimum wage is significantly less than average wage. Minimum-wage workers cannot afford any new Subaru, let alone a "premium" one. What is relevant here is the disposable income of middle-class families.

I think in general in order for Subaru to become the premium brand that it wants to be, it should start catering to the needs of the masses while at the same time, satisying the enthusiasts who have and will always drive subarus. I think that the redesign of the interior for the 2005 models was a step in the right direction. The differences may not really be so significant but like placing a little Subaru Badge on the steering wheel as opposed to having the words "Subaru" stiched onto the steering wheel does make a huge difference to any average consumer (me included!)

I may have paid a lot more for my Subaru when compared to a base model Ford sedan but I liked the AWD and what comes stock in subaru (such as power windows/locks) are usually options that you have to add onto the base models of other cars (the Mazda 3 comes into mind in this category) are already included into the Subaru.

I think the next few years are critical for Subaru if they want to be known other than just another japanese car manufacturer!

Not at all; minimum wage is significantly less than average wage. Minimum-wage workers cannot afford any new Subaru, let alone a "premium" one. What is relevant here is the disposable income of middle-class families.
Yes I do know that min. wage is sig. less than the average wage. However, I'm just saying that while I'm looking at the min. wage, it gives an idea of what people can and cannot buy as it is a good measuring point to start looking at the playing field. The min. wage, in a sense, sets a standard to which higher incomes are established.

For example, suppose the annual income of Joe Blow is about 30K US. If he were to work in Canada doing the same job, he would be making 30K CA either way. And within one year, Joe Blow could afford an STi in the US, but can't even scrape up enough for an entry level WRX in Canada. So you see, the level of disposable income is roughly the same. Unluckily, it's when companies play by exchange rates that things start to change. Having said that, it really does determine what you percieve as a 'premium' brand.

Around here the dealerships are pretty good. Subaru Calgary is also known as Jaguar Calgary, under the same roof and Landrover Calgary at a different location. That one is cool, as they have an obstacle course to test your Landrover out on, before you buy.

The other dealership used to also be a Volvo dealership before they switch over to Subaru only.

Service reputation needs work though. But the other problem is the rice thing.

Subaru with the WRX has become a rice car company. Honda has the same thing to a point but they hide it somewhat with the Acura premium brand. Honda's are not "riced up" on the sales lot very often, while Subaru seems to thrive doing it.

The min. wage, in a sense, sets a standard to which higher incomes are established.



How do you figure that? The minimum wage is based on what various governments think should be a minimum "fair" amount. It's largely based on politics, not economic factors. Incomes above minimum wage are set by supply and demand in the free market. There's very little relationship between the two.

OK, dumb question, I admit it. But how come the price relationship between an Acura TL and a Legacy GT is so different in Canada vs. the US? (Quoted as being the same, above) In the US, the TL is much more expensive, and the GT is on a par with the TSX. Esp. since Subies are built in Indiana, i.e. within NAFTA. I think Acuras are actual imports from Japan. Anyone confirm?

Our Legacy GT is $36,495 (US$29,100 at the current exchange rate) but US list is $26,095. Quite a difference.

On the other hand, our TL is $41,000 (US$32,700) with a US list of $32,900.

Bottom line is that the GT is more expensive here than in the US, but the TL costs about the same, dollar-for-dollar. It looks like Subaru decided to price the GT here on a more "premium" basis than in the US.

OK, dumb question, I admit it. But how come the price relationship between an Acura TL and a Legacy GT is so different in Canada vs. the US? (Quoted as being the same, above) In the US, the TL is much more expensive, and the GT is on a par with the TSX. Esp. since Subies are built in Indiana, i.e. within NAFTA. I think Acuras are actual imports from Japan. Anyone confirm?

Our TSX is from Japan. However I was told by the dealer that TL's are made or assembled here.

Notice most you reply to this thread are all Canadian. If some of you dont know, most of the American dont give ship to Canadian. Thats what i learn after came here for university, and Canada is really not as bad as American thought. Might not be the best, but the living stardard wise definitely is pretty high up in the rank. BTW im from HK so there is no bias to any them.

After-tax disposable income for middle income earners in the US is significantly more than that for the average middle income Canadian, and it holds true for residents of virtually every state. Why you folks go on debating that is hard to understand, since it has been so well studied and documented. (google it, and you'll find several good references.)
forgot some reading for you:
Canada-U.S. income gap keeps growing: http://www.crfa.ca/research/researc...egapgrowing.htm

In a utopian world I suppose people would read posts before responding to them. Alas, this is not a utopian world…or even close. Therefore, in the hopes that reposting my opinion several times will begin to sink in I will restate that; I DO NOT DISAGREE with the numbers on “after-tax disposable income for middle income earners”. Those numbers are completely valid, well studied, and NOT what I’m debating (although Mike’s data is from 2002, and our economy is even better now). What I am debating is what happens after the “after-tax disposable income” is calculated. So please stop trying to argue with me on something I agree with you on.

One other significant difference for those same average middle incomers is the cost of Subaru ownership. Again, Fuji Industries has priced identical models higher in Canada (esp. the turbo Outback and Forester, and 6 cyl Outbacks), to which you also have to add a higher freight and PDI cost (about 40% more) as well as federal and provincial taxes, which together are at least 14 percent of purchase price. Then there's the higher cost of fuel (which in the Canadian west at least, is also disproportionately higher for premium, the octane recommended for the models mentioned.) And of course, the hidden tax deductibility for the finance costs (via tax breaks for mortgage interest, which act as incentives to buy new cars rather than pay off home mortgages...)

If you doubt my remarks about base price comparison, go to Subaru.com and .ca, and compare MSRP for the models mentioned, then go to a currency converter (like XE) to get the US car's price in Canadian dollars. The differences are big, and that's before taxes, remember. No jurisdiction in the US taxes vehicle purchases the way Canada does. The real cost of a car is the bottom-line, drive away price, and we pay many thousands more.
Your comments regarding the cost of ownership have merit, but there may be some US costs that you’re missing (and I won’t pretend to know them all). However, based on comments I’ve seen on this board, insurance for one seems to be more expensive in the US. How this balances out I’m really not certain. But what I would add to your statement is that the real cost of the car is not only “drive away”, but also the continuing costs. As to your price statement, I will point out again that I already acknowledged that some cars are more expensive in Canada…NOW. But Mike and I are not only discussing “now”, but historically as well. The price increase of Subarus over the last few years in both countries has been very similar, the thing that has changed is the increase in the Canadian dollar to the US. If you go to http://www.x-rates.com you can see how the rates have changed over the last few years. If you try your calculation on MSRP using the $.64 dollar of a few years ago, you’ll see that the prices of Subarus in Canada were cheaper. When I bought my first new Subaru in 1999, it was around $1000 less than buying the same car in the US. The exchange rate hasn’t changed the prices of Subarus for Canadians relative to their income! If it had, we would have cars which cost quite a bit less than they do now, but manufactures generally don’t like to put prices down when there are currency changes. Plus, as I stated before it was only last year that there were US court cases (and complaints on this board) about Canadian cars being cheaper, and manufacturers not honoring cross border warranties.

That UN comparison was intended to rank poor countries and was based on things like literacy and life expectancy. Yes, Canada does very well on those measures, but that says little about disposable income.
http://www.2ontario.com/welcome/coca_801.asp. I didn’t bother hunting for the UN info directly, but quickly came across this. The first thing we notice in that chart (of the first 15 ranked) is that there aren’t any poor countries listed, so I really don’t know what you’re talking about there. The second thing we notice is that as well as what you mentioned, the ranking is also based on “national income”, so I think you’ve got your UN rankings mixed up. The third thing we notice is that here in 2004, Canada is in 4th while the US is in 8th, and also that Canada was number 1 “for seven consecutive years, from 1994 to 2000”.

Remember it was YOU who stated that “yes, Canadians have always lived below the standard of Americans”. The UN ranking pretty much debunks that remark. However, if you’d like to state your particular definition of “standard of living” I’d love to hear it. Of coarse the UN ranking includes more than just after tax income, as there are other things that contribute enormously to the “standard of living”. This has been my point the entire time! It’s not that Canadians don’t have enough money to spend on Subarus, it’s that we have different priorities. Those priorities are (in no particular order); health care, home care, child care ($7 per day in Quebec), education, solid infrastructure, vacation time, security, balanced budgets and reduced national debt and many others. I’m not saying these things aren’t important in the US, it’s just that Canadians are willing to build it into their taxes. If you’re going to have a fair comparison of how much Canadians have to spend, you have to consider these all these living costs. Because the actual bottom line is the “after tax disposable income” minus living costs. If someone in the US wants to eat dry pasta every day, put off getting health care coverage (which is MUCH more expensive if you buy it later in life), not get a post secondary education, not save for retirement, and live an average of two years less…just to buy an STI, well that’s freedom I suppose. But…it is not a fair comparison.

True; I went to U of Waterloo and got an excellent education. The universities are heavily subsidized, though, which means ultimately paid for largely out of taxes.

"free" right Nothing is free, you just pay for it in your taxes. (where do you think that HUGE amount of money comes from?)
Mike, you are proving my point for me! Of course these things aren’t free, but they are calculated BEFORE tax in Canada, and AFTER tax in the US. The “after-tax disposable income for middle income earners” data does not take this into account. If you’re going to argue the numbers in that data are absolute, then health care and educational subsidies should be considered as “free”, otherwise your comparison is out to lunch. BTW, I went to UW as well. And my father in law just retired as Dean (I think) of Urban Planning.

When you make something seem to be free, though, you just increase demand and soon you are back to waiting lists and needing even more money. And its not just the wait lists, which cause serious problems for many people; some treatments are not available at all. (Note btw that you have admitted there are unreasonable wait times.)
Of course I agree that wait times are unreasonable, but that’s in the process of being repaired. However the wait times don’t apply for urgent needs. If someone needs a CT scan because a brain tumor is suspected, it gets done right away. The wait times only apply to non-critical items. It’s aggravating, but there are very few instances of wait times ever causing death or permanent injury in Canada. In fact. I’d be willing to bet far more people in the US die from not being able to afford procedures (or medication for that matter) than die in Canada waiting. Why do I know this??? Because my wife is a doctor. If you’d like to list the critical procedures available in the US which aren’t available in Canada, go ahead and try. Because they would almost all be experimental, and Canada has some experimental procedures of its own. And since you brought it up, wouldn’t the fact that Canadians live longer (79.4 yrs vs 77.1 yrs being the last stats I read) indicate that Canada’s health system is doing a pretty good job? Especially if it costs half what the US system does?

One example doesn't prove anything. In general cars are not that much cheaper in Canada. (Neither is food for that matter.)
Hey, what can I say? I’m not about to go hunting for more examples, you can believe what you like. As far as food goes, try hunting for the full 2002 version of the exact study you cited. It’s the year that shows groceries are up to 50% less than in the US.

The reality is that for whatever reason Canadians have less money to spend on cars than Americans.
You keep talking about reality Mike, and yet you haven’t given me one piece of evidence to prove it. Now if you were to modify your statement to “for whatever reason Canadians tend to spend less money cars than Americans” then I would agree with you.

I won’t get into the tax debate because I just don’t have the time or desire. However what I will say is that Canadian taxes are a lot less than what Americans think. There was some talk during our last election that Canadian taxes were the lowest in the G8, but I’ve no idea what that was based on. But Mike, relying on a Reader’s Digest article from 1999 for our current tax situation is shaky at best. I can tell you that both federal and provincial (in some cases anyway) taxes have been reduced since that article. The “brain drain” has been slowing up in recent years and has never affected all professions. Plus the “drain” was based more on currency rates and tax loopholes (for working abroad) than on the actual tax rate. I know lots of nurses who went to work in the southern US when our dollar was lower. Their plan was to live on the skinny and bank money for a few years, taking advantage of the currency situation. In the last few years, many of them have returned saying that it’s just not worth it anymore. It’s also worth noting that Canada is a “brain drain” for other countries. I imagine South Africa isn’t too happy about all the physicians which have moved here (SA has VERY well respected doctors BTW).

I hope no one really thinks this is a Canada vs US thing because it is not. For me it has been a “misconceptions about Canada” thing only. But after thinking about it over the weekend, I’ve come to the conclusion it just doesn’t matter. If people in the US want to think that we somehow live way below their standards, well so be it. Maybe you’ll feel sorry for us and send an aid package. Just don’t tie it to abstinence or we’ll get nasty!

I’m done posting on this, as I think I’ve made my point. Anything else would be pointless, and I really haven’t got the time. Again I’m sorry to have carried things off topic, but as Mike’s comment was relevant to the discussion I felt the need to rebut it. No hard feelings and I look forward to your posts in the future.

Just a few comments so as not to clog this up with more politics:

There's no such thing as a "cross-border warranty." Your warranty comes from the distributor in the country where you bought the car and there is no obligation for dealers in other countries to honor it.

I don't think higher life expectancy in Canada vs. the US has much to do with the health care system. It has more to do with healthier lifestyles in Canada and higher murder rates in the US.

The UN Human Development Index was originally developed to compare poor countries; it was never intended to be used to rank rich countries. It is "a measure of life expectancy, education and national income" Note that income only makes up 1/3 of that.

Yes, health care here is expensive, but you forget that most people have most of it paid by their employers; they don't pay it all themselves. Top private universities are expensive too, but we also have many good cheaper private and state schools.

Some grocery items may be 50% cheaper (I've noticed that too) but it's certainly not 50% overall. (and yes I have been grocery shopping in Canada recently)

The brain drain is still very real. My wife and I are here because of it. She has a scientific research job that simply does not exist in Canada. I am doing similar work as I did in Canada but at double the pay. I have many other Canadian friends and relatives who now work in the US because pay and opportiunities are so much better here.

Don't get me wrong. Canada is a great country and I'd love to move back. But the standard of living there is simply not comparable to the US.

Alot of the Difference in Price of things has to do with the Exchange rate when the vehicle is introduced. This sets the MSRP point and when the exchange changes the MSRP does not. Makes sense when the exchange is low, hence cars get cheaper, but when the exchange rises the prices rise too.