Subaru Business Update (November 1, 2024)
Key Points of the Update
While demand for BEVs currently seen to be leveling off, we still view them as a promising solution for
achieving carbon neutrality. However, the speed of that transition is unpredictable, and we expect that
a certain level of demand for ICE and hybrid products will continue.
In order to adapt flexibly to unforeseeable changes, we must innovate and change our existing approaches
and methods. On August 2, 2023, as part of the "New Management
Policy," we announced our commitment to pursuing profound transformations, driven by our shift
toward BEVs.
At the same time, the choice ultimately rests with our customers. Our flexibility is about offering a
wide range of options that include not only BEVs but also ICE and hybrid products. To achieve this, we
remain committed to the vision we outlined when announcing our policy, aiming to become the world's
leading company in Monozukuri Innovation and Value Creation.
One of the ways we intend to do this is by starting with steering our focus toward BEVs, which will
involve building production facilities from the ground up and completely redesigning our development
methods and processes. Through this approach, we pursue our Monozukuri Innovation and Value Creation,
and the fruits of these initiatives will then be applied to ICE and hybrid products. Ensuring the
flexibility to adapt to market changes through this strategy is the key point of our policy.
Regarding the new Oizumi Plant, we are currently considering a phased launch that takes into account
trends in environmental regulations and customers' vehicle preferences. Specifically, our plan is to
begin with a dedicated BEV line in the initial phase, followed by the introduction of a mixed production
line that enables the production of both BEVs and other electrified vehicles.
Additionally, in collaboration with Panasonic Energy, we plan to construct a battery production plant
very close to the new Oizumi Plant.
By leveraging the advantages of having factories located in close proximity, centered around Ota City in
Gunma, we aim to further enhance the efficiency of our supply chain, including our suppliers and parts
logistics.
This new endeavor of manufacturing products at the new Oizumi Plant will be executed through phased
launches while utilizing location advantages with strategically concentrated facilities.
Through this approach, we will ensure flexible execution of rational production and appropriate
investments that align with changing times.
Monozukuri Innovation
As times have changed, the scope of our business has expanded due to diversifying customer needs and
vehicles becoming increasingly complex. This led to rapid specialization and functional segmentation
across development, production, and business partners, including outsourcing.
As a result, we have established a segmented style of monozukuri, where each function waits for the
previous process to be completed before passing on the work, like a relay.
We view this approach as the rational result of responding, as efficiently and effectively as we could,
to the constraints that arose as we grew and adapted to the times.
As an example of how our monozukuri will take shape going forward, we will introduce some of the initiatives centered on the New Oizumi Plant.
The structure of BEVs differs significantly from conventional vehicles. In planning and developing these
new products, and then producing them in a new plant built from the ground up, we identify an
opportunity to profoundly transform our monozukuri approach and processes.
Building on this opportunity, we will advance and pursue rational, closely synchronized, and highly
efficient monozukuri.
Currently, we are actively advancing the goal of "Becoming One Subaru" through our Obeya activities*,
where employees and business partners gather to discuss development, production, and various matters in
a collaborative environment. This initiative promotes cross-functional alignment and enables agile
development by integrating the "supply chain," which represents the flow of materials and logistics,
with the "engineering chain," encompassing the development process.
Our new plant will enable the modularization of production lines and the construction of flexible
sub-lines while further evolving a highly efficient mixed production method based on our long-cultivated
approach to variable short-run production that we at Subaru have honed over many years for small-scale
facilities.
We will also fully leverage the flexibility that comes with building an all-new plant from the ground
up, maximizing site utilization and optimizing building spaces to enhance overall productivity.
At the same time, for new products such as BEVs that will be produced on these lines, we will
significantly reduce the number of parts by optimizing vehicle structures and specifications during the
development stage, including planning and design, which will drive us toward achieving a 50% reduction
in production processes.
In addition to our initiatives at the new plant, we will maximize the location advantages of our
strategically concentrated manufacturing facilities, including the Kitamoto Plant in Saitama, which
manufactures transaxles for our next-generation hybrid vehicles. By enhancing logistics efficiency to
its fullest extent, we aim to significantly shorten lead times.
By continuously evolving these initiatives, we aim to deliver products that better meet customer needs,
more efficiently than ever before.
Value Creation
Recently, Subaru was ranked second for two consecutive years among over 3,000 brands in the U.S. on
Forbes' "Companies with the Best Social Impact" list. This recognition reflects not just our products,
but a comprehensive evaluation of Subaru's philosophy and initiatives.
We believe that at the core of this achievement lies our relentless pursuit of technology to deliver
Enjoyment and Peace of Mind. This is precisely why we stated in last year's new management policy
announcement that we will pursue technology to achieve world-leading Value Creation rooted in Enjoyment
and Peace of Mind.
For example, our driver assist system, EyeSight, has continued through over 30 years of development to
enhance “peace of mind,” the value we pursue to deliver to our customers. We will continue to strive for
ultimate safety, ensuring that our customers feel absolute peace of mind in all driving environments. To
achieve this, we will accelerate the evolution of our technology, especially focusing on areas where we
excel.
We’d like to introduce two key points in our efforts toward such technological advancements.
The first key factor is “collaboration” with our technology partners. Particularly in the area of BEVs,
we need to create value in new domains. In these areas, it is crucial to deepen our collaborative
relationships beyond existing partnerships, and we are actively working toward this goal.
The second key factor is “intelligence.” While enhancing Enjoyment and Peace of Mind, we will also add
new value unique to BEVs, such as a “seamless and stress-free” experience, with a view to applying to
these technological innovations to our ICE and hybrid products as well.
Since 2023 and continuing into 2024, we have announced several key collaborations with important
partners who share our vision and will jointly develop crucial technologies from the planning stages of
our future vehicles.
We announced the joint development of lightweight, compact e-Axles with Aisin. As partners in
electrification, this collaboration extends beyond mere joint development into procurement and
production, leveraging the strengths of both companies to create competitive e-Axles.
With Panasonic Energy, a company with over a century of manufacturing history like Subaru, we are
advancing a partnership in battery supply under the grand vision of combining our technologies and
expertise to shape the next 100 years. As mentioned earlier, we plan to enhance our competitiveness by
leveraging the locational advantages of our new battery plant and utilizing the combined expertise of
both companies.
We have announced a collaboration with AMD, a leading semiconductor manufacturer, aimed at achieving our
goal of “zero fatal traffic accidents in 2030.” While this partnership aims to realize the integration
of EyeSight and AI inference, the optimized System-on-Chip (SoC) resulting from this collaboration will
also serve as a critical component of the integrated Electronic Control Unit (ECU), which controls not
only Advanced Driver Assistance Systems (ADAS) but also vehicle dynamics.
Through these collaborations, we aim to achieve world-leading “Enjoyment and Peace of Mind.”
The integrated ECU will be developed in-house, focusing on Subaru's strengths in safety and driving
performance.
With this strengths-focused, in-house development approach, we aim for cost competitiveness while
achieving advanced intelligence, with the integrated ECU acting as the vehicle’s “brain.”
We will accumulate the expertise in control systems using such integrated ECU and the knowledge gained
from developing BEVs, while further enhancing the speed of our in-house development, which is one of our
core strengths.
At the same time, we will deepen our exploration of applying this expertise in our ICE and hybrid
products.
Through these efforts, we will continue to deliver value to a wider audience by providing attractive
products that embody the Subaru Difference and meet the needs of each era.
Invest Plans and Capital Policy
As we anticipate various changes in the business environment, it is crucial to ensure that the
initiatives we have outlined are carried out reliably and with optimal timing. To achieve this, we
believe that our core priority is securing financial soundness and stability, which forms the foundation
of our management.
Additionally, we will continue to allocate capital appropriately toward both shareholder returns and
growth investments aimed at achieving world-leading Monozukuri Innovation and Value Creation.
Our commitment to this approach remains consistent with our previous announcements.
Regarding growth investments, our planned total investment of 1.5 trillion yen by approximately 2030 remains unchanged, despite the impact of rising market conditions. However, we will make flexible and rational investments in response to changing times.
We are currently in what’s referred to as a once-in-a-century period of profound transformation;
however, through our efforts in Monozukuri Innovation and Value Creation, we are committed to maximizing
the value experienced by our customers by thoroughly pursuing efficiency and productivity across all
business activities, including development and production processes, while enhancing product
competitiveness and ensuring the affordability of Subaru products for our customers.
By achieving these goals as we move toward 2030, we aim to maintain industry-leading profitability and
continue to thrive in a competitive landscape.
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