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Subaru could surpass Hyundai in U.S. with sales of Indiana-made Ascent

November 28, 2017

Subaru Corp. picked an apt time to roll out a new model whose name is synonymous with moving up.

The carmaker is debuting the new Ascent sport utility vehicle at this week’s Los Angeles Auto Show amid a growth spurt that’s been the envy of the auto industry. The SUV will be built at the company's factory in Lafayette, which recently added production of the Impreza sedan.

After stringing together a streak of monthly gains nearing six years, the Japanese company looks on track to surpass Kia Motors Corp. in 2017 and is closing in on South Korea’s larger Hyundai Motor Co. on U.S. sales charts.

On one hand, the Ascent is more of what’s been driving Subaru’s success—another all-wheel drive crossover model that’ll be built at its expanding Indiana assembly plant. But it’s also filling a major void in the company’s lineup: Subaru has lacked a three-row SUV since production of the Tribeca ended almost four years ago.

“With regard to Subaru passing Hyundai, it’s entirely possible,” George Glassman, the owner of a Hyundai, Kia and Subaru dealership in Southfield, Michigan, said by phone. Subaru learned from what “went awry” with the Tribeca, which struggled because of styling and the trouble passengers had getting in and out of the SUV, he said.

Glassman predicted the Ascent will be a “true competitor” against midsize SUVs like the Toyota Highlander, which has logged sales of more than 175,000 units this year in the U.S. Even a fraction of that sort of volume could be enough for Subaru to usurp Hyundai next year.

Subaru trails its South Korean competitor by less than 32,000 vehicles in the U.S. through the first 10 months of 2017. A year ago, Hyundai led by almost 150,000 units.

Hyundai was overdue with its pledge earlier this month to bring eight new or redesigned crossovers or SUVs to the U.S. market by 2020. That includes in early 2018 the Kona compact crossover, which will be shown at the Los Angeles show this week. Nearly two thirds of Hyundai’s U.S. deliveries are still passenger cars—the inverse of other automakers, who’ve shifted their mix toward SUVs and trucks.

“They’re very late to the game,” Kevin Tynan, a Bloomberg Intelligence analyst, said of Hyundai and Kia. “It’s very much a missed opportunity that opened the door to someone like Subaru.”

Subaru said in April when showing a near-production ready concept of the Ascent that it would build the SUV at its factory in Lafayette. The company booted Toyota, its largest shareholder, from the plant in 2016 to make room for manufacturing more of its own Outback crossover and Legacy sedan models. A year ago, Subaru’s Indiana facility added output of the Impreza sedan, the culmination of a four-year, $1.3 billion investment.

While Hyundai has the means to fight back, it’s going to take a big financial commitment and time, said Alan Baum, an independent auto analyst in West Bloomfield, Michigan.

“Subaru can pass Hyundai,” Baum said by phone. “Hyundai has the wherewithal to improve their position in the U.S. with new products and more manufacturing capacity, but that’s not going to happen quickly.”

 

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