Subaru's Back Orders Have Reached A New Extreme

[AVANTI R5]

US inventory is very low. Here's what's being done about it.
Subaru is currently experiencing a two-year sales decline, a situation that hasn't happened since the mid-1990s. This fall from grace is a direct result of the semiconductor chip shortage crisis. Subaru can't sell inventory it doesn't have. Without those crucial chips, its lineup, led by the best-selling Outback, cannot complete the final assembly in either Japan or in Lafayette, Indiana.
Let's put it like this: the Japanese automaker currently has a backorder figure of 45,000 vehicles. Over 36,000 Subarus were sold in the US for all of October 2021. Dealers only have a five-day supply. Normally, it's 45 days. But normality is long gone in these challenging times.

Automotive News asked Subaru CEO Tomomi Nakamura what's being done to resolve this crisis and how long this recovery might take. "We still have uncertainty in front of us, considering the semiconductors situation," Nakamura said. "So it might be difficult to recover that in December or January. So we are seeing a gradual increase of inventories and gradual recovery of supplies. And that is going to take about a year."

The key to that recovery is acquiring a sufficient supply of chips. The good news on that front is that chip producers have increased their output in recent months and it's expected to continue climbing. But the downside is that Subaru is competing with automakers to get those chips first.

Subaru, one of Japan's smallest automakers, must fight against larger OEMs such as GM, VW Group, and Stellantis. "We're not exactly sure at this point how much supply that we can get," Nakamura admitted.

Next year will be a recovery year for everyone but there's still uncertainty whether "semiconductor suppliers are going to be able to answer to every one of those orders." Fortunately, the pandemic did teach Subaru some valuable lessons, such as how to better manage dealer inventory and sales efficiency, the latter now ranked at the top of the industry. Still, pre-Covid, Subaru had a 2020 sales forecast of 730,000 vehicles. The final figure came to 611,942. This year, it's expected to dip below 600,000.

Link for Video At Autonews.com

https://www.autonews.com/video/first...ive-day-supply

First Shift: Subaru's order backlog grows as inventory dips to five-day supply

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[AVANTI R5]

SUBARU'S TOMOMI NAKAMURA: Navigating shortages, EV transition
Hans Greimel

CEO Tomomi Nakamura says Subaru has the potential to quickly regain its record U.S. sales pace. But first, the brand must put the supply chain shortages in the rearview mirror.

Speaking through an interpreter, Nakamura, 62, met with Asia Editor Hans Greimel last month to discuss Subaru's sales outlook, its response to the chip crisis and its strategy for the coming EV era.

A: We'll have to consider orders after the Thanksgiving holiday, but we're looking at a little more difficult situation than in previous months. Of course, that's caused by the semiconductor situation. Considering that, for the calendar year, we're expecting a number that is below 600,000.

For 2022, there is still uncertainty surrounding the semiconductor situation. So we don't really have a firm target at this point. But industry demand will be around 15.5 million or 16 million [in the U.S.]. Considering that, we are looking at a number around 650,000 units.

The current inventory level is extremely low — like 5,000 to 6,000 units. That's basically about a five-day supply for the U.S. market. Next year, we're going to have to rebuild this inventory to the normal levels. And we think that's going to take about a year, through gradual buildup.

What is an ideal inventory level next year?
Previously, our comfortable level was about a 45-day supply. But due to the COVID-19 situation, our sales efficiency improved quite a bit and we learned a lot. The system to sell from the inventory pipeline has been strengthened. We think we've improved our management of low-inventory situations. So we think a 30-day supply is a comfortable level, and next year, we'll work on building up to a 30-day supply.

Generally speaking, the situation around the semiconductor supply shortage is improving. So for next year, we're not expecting situations like sudden plant shutdowns.

Why does Subaru seem to be impacted by the shortage more severely than rivals?
Compared with the other manufacturers, Subaru didn't have a lot of inventory to start with. Also, we have a smaller model lineup than other mass-market manufacturers. So we are not able to multisource parts from a lot of suppliers because our overall volume is not that big.

Despite the low inventory, our sales efficiency — the amount of inventory versus the number of sales at the end of the month — is extremely high, at the top of the industry. And the model turn rate — how fast those vehicles sell — is also at the top of the industry. So that's the good side.

When the industry ramps up, will low- volume Subaru be able to secure the chips it needs?
We're not exactly sure at this point how much supply we can get from the semiconductor suppliers. Next year, every auto manufacturer is going to be recovering, and they're going to try to build inventories back to normal. All those orders will be going into the suppliers.

We don't think the foundries and semiconductor suppliers are going to be able to answer to every one of those orders. So that's why we see a gradual increase of inventories and gradual recovery of supplies. And that is going to take about a year.
We don't think we're going to get hit harder than the other manufacturers. When we talk with semiconductor suppliers, they take into account a fair-allocation policy.
How did Subaru make its retail network more efficient with low inventories?
Subaru of America adopts a sold-order system in which customer orders are logged somewhat like back orders. This system existed from years ago. When we have abundant inventory, we don't really use it. But now, we've put it into action and evolved the system to make it better.

It helps us see inventory. And then we can allocate the right vehicle to the right retailer, so it gets to the customer in a fast manner.

In a normal situation, sold orders are around 5,000 to 6,000 units. It's currently around 45,000 units, which is pretty high. And each month, we're seeing about a 10,000-unit increase of sold orders. We're seeing that momentum, and we're not able to supply vehicles to fill those orders.
When will sold orders top out?
I want it to happen quickly. But we still have uncertainty in front of us, considering the semiconductors situation. So it might be difficult to recover that in December or January.

Will customers wait that long?
Yes, they will wait. Of course, some people who put in sold orders might cancel if they aren't going to be able to get a car quickly. But overall, we think that a lot of customers are OK waiting. When you look into the sold orders, they aren't for the basic models but for the unique or high-end models. Like the Wilderness editions of the Forester and Outback that we launched this year. The customers putting in orders for these vehicles are willing to wait.

After two years of sliding U.S. sales, when might Subaru return to record volumes?
The timing is difficult to say. But if we can get the supply back to normal, we think there's potential to hit a number more than 700,000 units annually. It's just that the situation with vehicle and parts supply is unclear and we can't say at this point when. But we think that the potential is there. Before COVID-19, the annual sales target for this year was supposed to have been more than 700,000 units, and our plan was to keep growing.

Does Subaru see a need to be more aggressive with its electrification rollout plans?
The target of 40 percent electrified vehicles by 2023 was announced two years ago. And of course, there has been a lot of change in the two years since, in terms of customer reaction and market movement. So we know that we have to shift or accelerate this plan.

But will it be 50 percent or 60 percent? We're not really focusing on the number because it's not a competition over who gets the biggest number. It's more a matter of the right mix and the right target for the business. We have the Solterra, our first battery EV, coming to market next year. Based on how it's received by the market, we can plan for what kind of ratios we should target for EVs and hybrids.

What's the bigger risk these days — investing too much or investing too little in EVs?
An all-in investment in EVs is a bit of a risk. Currently, we have joint development with Toyota. And that's the way we made an EV in an efficient way.

That's a better idea.

Too much investment in this area might be a risk in the future. When you look at the market in each country, are EVs really dominating? In the U.S., the market is dominated by Tesla. But do we see other models that are really selling a lot? We're not so sure. We are trying to focus on what customers want and what benefit they need from an EV, and we want to follow our customers' needs.
Of course, the EV era will eventually come. And at that point, it will require investment for developing our own EVs. But we want to know when the market is going to be mature for EVs. We want to be a smart follower in this area and not really on the front line.

When EVs do take off, will Subaru be able to catch up without the advanced investment?

For the Solterra, the development timeline was very short compared with traditional internal combustion engine vehicles. We learned it's possible to build EVs in a shorter development timeline.

Also, when you produce these vehicles, they are not going to mass volume from the start. One idea is multiple models on one line, in mixed production. So we have the plans and we have the knowledge, and we think we can cope with market changes in a timely manner.

Missed some of the End, Autonews Subscription needed

https://www.autonews.com/talk-top/su...-ev-transition

[AVANTI R5]

The semiconductor chip shortage has had an undeniably large impact on automotive production throughout 2021, but as far as when this crisis might actually ease is a topic that’s up for debate. Some believe that we’re nearing the end of the chip shortage, while others believe that it will persist into next year, through the summer of 2022, or longer, up to 2024 to even years later. Now, Ford CEO Jim Farley has given his latest update on when he believes the chip shortage might end, and it leans a bit toward the pessimistic side.

Jim Farley revealed his latest timeline when Automotive News asked if Ford was still considering shipping unfinished vehicles to dealers in response to the chip shortage. “I think we have to remain very open,” Farley said of that topic. “We’re discussing it today still. I think we trust our dealers; they’re one of our biggest advantages. If we had to do that and we did the right quality assurance and process, I wouldn’t hesitate at all. We haven’t been in that situation so far; early on it looked like we would, but I wouldn’t count that out yet. We think this will last through 2023 to some extent, and who knows what next year holds for us?”

Back in July, Ford Authority reported that FoMoCo was thinking about shipping chipless vehicles to Ford dealers in an effort to bolster inventory on lots and free up space where the automaker had been storing tens of thousands of unfinished vehicles for months. Ford dealers would then receive chips for those vehicles when they became available, at which time technicians could install the chips and those vehicles could be sold. However, Ford ultimately decided not to pursue that plan back in August, though it appears to still be in the realm of possibility.

In the meantime, Ford continues to navigate the chip shortage by deleting certain features and even offering special, stripped-down versions of vehicles like the Ford Puma Design and Ford EcoSport Design that come equipped with fewer chips, and as a result, fewer features.

[Sid03SVT]

Well looks like I can continue to ponder a vehicle purchase for the next couple years then.

[SCRAPPYDO]

I am sort of with you. I simply refuse to pay these kinds of inflated prices for any vehicle that was overpriced to begin with.

If I end up needing a vehicle then I need a vehicle, but that seems unlikely. Glad I bought new before all this happened. Both my current vehicles are fairly new.

[WhiteRX09]

I wish these car companies would realize that when you rely too much on computer tech in cars, there can be problems. Not everything needs a touch screen interface.

[Pre]

They bet wrong and lost.

[heavyD]

Originally Posted by WhiteRX09

I wish these car companies would realize that when you rely too much on computer tech in cars, there can be problems. Not everything needs a touch screen interface.

The chips are used everywhere in the car. If all new vehicles shipped with nothing but CD players for infotainment, there would still be major issues for automakers. If anything the screens are making vehicles cheaper and easier to manufacture.

[dwf137]

Originally Posted by SCRAPPYDO

I am sort of with you. I simply refuse to pay these kinds of inflated prices for any vehicle that was overpriced to begin with.

New cars are more expensive, but the value of a trade in has similarly increased.

From a year and a half ago, the trade in value on our Outback has risen almost $7k. So we're going to cash that cow in, and buy a car at MSRP because not all dealers are a-holes. Just need to be patient.

[SCRAPPYDO]

I have come to the same spot. Will not return my lease car on an out of date agreed to price. That is leaving way too much money on the table.

[kayen]

Originally Posted by dwf137

New cars are more expensive, but the value of a trade in has similarly increased.

From a year and a half ago, the trade in value on our Outback has risen almost $7k. So we're going to cash that cow in, and buy a car at MSRP because not all dealers are a-holes. Just need to be patient.

Yeah I just did this with my wife's 2020 Ascent with 11,400 miles on it. We actually got over 47k for it. Bought a new 2022 for MSRP.

[JustyWRC]

Originally Posted by kayen

Yeah I just did this with my wife's 2020 Ascent with 11,400 miles on it. We actually got over 47k for it. Bought a new 2022 for MSRP.

How are you enjoying the rear seat belt reminders?

[kayen]

Originally Posted by JustyWRC

How are you enjoying the rear seat belt reminders?

The 2020 already had the 2nd row reminders. Looks like it added 3rd row as well. But honestly I don't even notice any of them to be honest.

Funny thing though is we only have 50 miles on the vehicle and have owned it for two weeks. The Joy of us both working from home.

[Sid03SVT]

Originally Posted by JustyWRC

How are you enjoying the rear seat belt reminders?

Originally Posted by kayen

The 2020 already had the 2nd row reminders. Looks like it added 3rd row as well. But honestly I don't even notice any of them to be honest.

Funny thing though is we only have 50 miles on the vehicle and have owned it for two weeks. The Joy of us both working from home.

Out of curiosity, can they be disabled? I guess you could just fasten them through kid seats even though the seats are connected by anchors, man we are really dumbing things down... first thing I do is make sure my back passengers are wearing their seatbelts, granted it's typically a 1yo whom I buckle in and my 7yo who insists on buckling himself into his seat, but I still check when I have adult passengers.

[kayen]

Originally Posted by Sid03SVT

Out of curiosity, can they be disabled? I guess you could just fasten them through kid seats even though the seats are connected by anchors, man we are really dumbing things down... first thing I do is make sure my back passengers are wearing their seatbelts, granted it's typically a 1yo whom I buckle in and my 7yo who insists on buckling himself into his seat, but I still check when I have adult passengers.

Yeah I have no idea if it can be disabled.

Yeah I have my 7yr old as well and actually we still buckle him in. As for other kids or adults, we rarely have someone else in the vehicle. So it's a non-issue for us.

[JustyWRC]

Originally Posted by kayen

The 2020 already had the 2nd row reminders. Looks like it added 3rd row as well. But honestly I don't even notice any of them to be honest.

Funny thing though is we only have 50 miles on the vehicle and have owned it for two weeks. The Joy of us both working from home.

Don't forget to participate in the Love Encore Delivery.....if your dealer has a Delivery Specialist. Now that it's been 14 days. Whether you have questions about the car or not, the Delivery Specialist might have some info you were unaware of...or not. But, you get some free gas money for doing it!! But, you have to do it within 60 days of purchase date for the gas card....

Originally Posted by Sid03SVT

Out of curiosity, can they be disabled? I guess you could just fasten them through kid seats even though the seats are connected by anchors, man we are really dumbing things down... first thing I do is make sure my back passengers are wearing their seatbelts, granted it's typically a 1yo whom I buckle in and my 7yo who insists on buckling himself into his seat, but I still check when I have adult passengers.

Just the front seats. There isn't a way to do the back seats. They have seatbelt "deletes" online. That would probably be the easiest. Of course it would surely be safer for the kids seat to have the seatbelt as well as the LATCH connected.

[4S-TURBO]

Local dealer has 5k dealer markup on all models.

https://www.subaruofportland.com/new...tory/index.htm

[thill]

Originally Posted by 4S-TURBO

Local dealer has 5k dealer markup on all models.

https://www.subaruofportland.com/new...tory/index.htm

Share the love (in the form of dealer markups)....

[SCRAPPYDO]

Originally Posted by 4S-TURBO

Local dealer has 5k dealer markup on all models.

https://www.subaruofportland.com/new...tory/index.htm

Its Portland. Most of the cars have been burned in riots and sacrificed to GAIA, so the few remaining have to have markups so they can donate half of the proceeds to the adopt a thug city program.

[4S-TURBO]

Houston we have a Portland.

[Pre]

Originally Posted by SCRAPPYDO

Its Portland. Most of the cars have been burned in riots and sacrificed to GAIA, so the few remaining have to have markups so they can donate half of the proceeds to the adopt a thug city program.

Come on man. Don't you want to maybe go to Seattle instead, live in a tent, and get a $15 an hour McDeez job? Get those huge hole earrings, and some tats? I mean geez, your free $ would just go to getting the latest phone every year so you can upload "content" to all your medias and document tent/McDeez worker life! You'll be an influencer!

[kayen]

Originally Posted by JustyWRC

Don't forget to participate in the Love Encore Delivery.....if your dealer has a Delivery Specialist. Now that it's been 14 days. Whether you have questions about the car or not, the Delivery Specialist might have some info you were unaware of...or not. But, you get some free gas money for doing it!! But, you have to do it within 60 days of purchase date for the gas card....



Just the front seats. There isn't a way to do the back seats. They have seatbelt "deletes" online. That would probably be the easiest. Of course it would surely be safer for the kids seat to have the seatbelt as well as the LATCH connected.

That requires driving back to the dealer right? If so, yeah not worth it for some gas. It's like a 45min drive there for me and they are my closest Subaru dealer haha.

[JustyWRC]

Originally Posted by kayen

That requires driving back to the dealer right? If so, yeah not worth it for some gas. It's like a 45min drive there for me and they are my closest Subaru dealer haha.

You can do it virtually! Call'em up. Ask for the Love Encore Delivery Specialist, set up a time to chat. Have said chat and then they mail you the gas card!

[JP Chestnut]

"Love Encore Delivery Specialist"... Subaru is run by dorks for dorks.

[Pre]

Originally Posted by JustyWRC

You can do it virtually! Call'em up. Ask for the Love Encore Delivery Specialist, set up a time to chat. Have said chat and then they mail you the gas card!

Or tell the stealer that’s a waste of time and money and they don’t need to have this “service”. Instead tell them to offer better deals and just get rid of the Love Encore program altogether as it would save them $ so they could lower their prices. Put the Love Encore program out of business.