Detroit’s fat cats didn’t even notice the launch of Subaru of America. Perhaps they were too busy counting their money and enjoying their dominating market share.
When the news hit the ears of GM President Ed Cole, you have to wonder if he even looked up from his glass of scotch. Perhaps John Z. DeLorean, father of the Pontiac GTO and Firebird, simply lit another Cuban with a C-note and brushed the fallen ash from his fine Italian suit. Henry Ford II, CEO of the family empire, was probably too busy giving Enzo his annual agita at LeMans.
That was 50 years ago. February 15, 1968.
On that day, Subaru of America was founded by two young American businessmen, Malcolm Bricklin and Harvey Lamm. With one product to sell, a tiny coupe with suicide doors, the two rented a small office in Balboa Park, California. They quickly relocated to new “headquarters” to Bala Cynwyd, Pennsylvania, close to the Lamm family furniture store in Philadelphia, where Harvey had been working and set out to sign up dealers.
Subaru began producing cars in 1954. Subaru means “unite” in Japanese, and the company logo features the six stars recognized by Japan in the constellation Pleiades. The Subaru 360 proved popular in Japan, where about 400,000 units had moved since 1958, but in America the two-stroke-powered city car was a tough sell in the heart of the first muscle car era.
With an air-cooled, two-cylinder 356cc engine, a 0–60 mph time of 37 seconds, and a 60-mph top speed, the Subaru 360 wasn’t going to keep Zora Arkus-Duntov up at night. Each cylinder in the Corvette’s 427-cubic-inch big-block packed more displacement than the Subaru’s entire engine.
Worse, the 360 looked like the demonic amalgamation of a Volkswagen Beetle, a Fiat 500, and a beached Mackerel—plus it weighed 1000 pounds and folded like a paper crane when hit by a 5000-pound, full-framed Pontiac Bonneville. Lamm and Bricklin were hoping America’s hippie youth were too stoned to notice.
With a price tag of $1290 and a quirky ad campaign with the tagline, “Cheap and Ugly Does It,” the Subaru 360 was a complete failure. In an era of cheap and plentiful petrol, the 360’s claim of 66 mpg fell on deaf ears. An “unacceptable” rating from Consumer Reports sealed its fate. Only about 330 were sold the first year, and as far as we can tell not a single Subaru 360 hauled misspent youth to Woodstock.
By 1970, at the height of Detroit’s horsepower wars—a time when Chevy would sell you a 450-hp, two-door coupe with 454 cubic inches and a curb weight approaching 4000 pounds—it was clear that Subaru of America needed a larger car and a radical shift in the market. In 1973, it got both.
The larger Subaru FF-1, which had been a hit in Japan since it debuted in 1970, arrived in America as the Subaru DL and GL—just in time for the 1973 oil embargo. Almost overnight, Americans tired of waiting in gas lines to feed their thirsty Impalas and Thunderbirds finally decided that small, fuel-efficient cars made sense. Subaru, along with Honda, Toyota, and Nissan/Datsun (which had entered the U.S. market in the late 1950s), seized the opportunity and gained many points of market share that they would never relinquish.
The Subaru GL distinguished itself from the flood of small Japanese sedans with a horizontally-opposed engine, a design first patented by Karl Benz in 1896 and first used by Subaru in 1966. The Boxer engine, which had also been in Porsches since the 1940s and remains in the 911 sports car today, is smooth and compact with flat architecture that lowers the car’s center of gravity, compared with inline or V-shaped engines. The Boxer continues to power every Subaru sold.
More importantly, the GL offered an optional “On-Demand” all-wheel-drive system starting in 1975, a technology originally developed for the Japanese forestry service. The unique feature would quickly establish the brand’s popularity in northern states and become Subaru’s signature differentiator over the next five decades.
Bricklin and Lamm, who had fought Japan to get the AWD version after seeing skiers in Vermont sliding on the roads, knew they were onto something. In 1976, they launched an ad campaign that claimed the Subaru 4-Wheel Drive Wagon “climbs like a goat, works like a horse, and eats like a bird.”
Building on its new rugged, go-anywhere image, Subaru introduced its first pickup truck in 1978. The cute and quirky BRAT (Bi-drive Recreational All-terrain Transporter) was tough and affordable, and it featured two rear-facing jump seats in its bed. Despite having only 67 horsepower, it’s the first Subaru that Americans bought because they wanted one, not necessarily because they needed one, and it remained on sale in America for nearly a decade.
The BRAT has also become popular with collectors. According to the Hagerty Valuation Tool, a 1978 BRAT in #1 condition is valued at $13,600, which makes it the second-most valuable classic Subaru, behind a concours-condition 360.
By 1980, Subaru of America was selling 128,000 cars a year, and it got cocky. Lamm decided to create a sports car to glamorize Subaru’s image. The front-wheel-drive Subaru XT—a 2+2 coupe with futuristic wedge styling, pop up headlights, and a digital dash—launched in 1986 with an on-demand, all-wheel drive system. A turbocharged 112-hp 1.8-liter boxer engine was optional. It wasn’t very popular, and production ended in 1991 with the six-cylinder version, called the XT6.
So Subaru created another sexy coupe, the 1992 Subaru SVX. Designed by Giorgetto Giugiaro, who also shaped the Lotus Esprit and DeLorean DMC-12, the SVX was the wildest Subaru ever, with a unique window-within-a-window design and 230-hp 3.3-liter horizontally-opposed six-cylinder engine, automatic transmission, and all-wheel drive. The unpopular four-seater remained in the lineup until 1997 and retains a cult following today.
Performance-car success would elude Subaru of America until the arrival of the turbocharged WRX sports sedan in 2002, the street version of a car that would win multiple World Rally Championship and U.S. rally titles. Today Subaru also markets the lightweight, rear-wheel drive BRZ coupe, which has also become a favorite with young enthusiasts.
But the XT and SVX were no more than distractions. They did little to advance the image of Subaru and caused the company to lose focus on the core American buyer. Despite the successful introduction of the Legacy sedan in 1989 (the first Subaru built in America) and the Legacy wagon in 1992, Subaru of America was on the brink of financial ruin with six consecutive years of declining sales. Meanwhile, Honda and Toyota were becoming dominant with their popular Civic, Accord, Corolla, and Camry models. In addition, SUVs began to establish themselves in the market.
The Subaru Outback saved the company. Despite the high-riding, all-wheel drive AMC Eagle wagons from American Motors, which debuted in 1979, Subaru called its new flagship “The First Sport Utility Wagon” and hired Australian-born Crocodile Dundee actor, Paul Hogan, a huge star at the time, as its pitchman.
First a trim level on the Legacy Wagon, the Outback was immediately recognizable by its two-tone paint, raised roof, and high ground clearance, and when it hit the streets in 1995, it hit big. After much debate, Subaru’s product planners made sure the rugged wagon could swallow a 4-by-8-foot sheet of plywood, a key feature in America, and one that many attribute to its success.
The Outback was so popular that Subaru expanded the concept to its smaller Impreza wagon, which now lives on as the popular Subaru Crosstrek. It was also plagiarized by the creators of the Audi Allroad, Volvo Cross Country, and most recently by the Buick Regal TourX. In 1997, capitalizing on the Outback’s momentum, Subaru announced all-wheel drive would be standard across its lineup.
2002 Subaru WRX STI
Today, five generations of Outback later, the model remains Subaru’s most popular model, along with its fast-selling Forester compact sport utility. And Subaru is one of the most successful auto brands in America. Over the last six years, Subaru of America, which began 50 years ago with an ugly and unsellable microcar, has recorded 73 months of continuous record sales. And it has more than doubled its sales volume, finishing 2017 selling 647,956 cars and SUVs—its most ever.
Surely, that fact hasn’t eluded Detroit’s fat cats.