Fuji Heavy aims to revive sales with new Impreza

Fuji Heavy Industries Ltd., the maker of Subaru cars, unveiled its remodeled Impreza hatchback today, calling it the first proof of its renewed strategy of focusing more on customer needs to jump-start lackluster sales.

Subaru, whose core models such as the Legacy and Forester have a firm following in the northern snowbelt of the United States, has failed in recent years to inspire a sales rise due to what executives blamed on a neglect of what drivers were looking for.

Since taking the helm a year ago, Chief Executive Ikuo Mori has vowed to reverse that tradition while simultaneously reining in development costs that had been squandered in a company where free-spending engineers famously had the final word.

Mori said the third-generation Impreza -- fully remodeled after nearly seven years -- paid more attention to packaging, offering a roomier interior and design that would attract more women and Japan's growing population of retirees.

"We had been drifting away from customers," he said at the model's launch in Tokyo. "But this car is different, and we have big expectations for it."

A Fuji Heavy official said the new Impreza achieved a 30 percent reduction in development costs and around 100,000 yen ($820) of other cost cuts per unit as targeted for all subsequent models under a business plan announced earlier this year.

Fuji Heavy is aiming to sell an average 120,000 units a year of the Impreza globally throughout the life of the model. About 45 percent would be sold in the United States, a quarter in Japan and a fifth in Europe, Mori said.

After Japan, the new Impreza will hit showrooms in the United States in August and in autumn in Europe.

A diesel version -- a first for Subaru -- will most likely debut in Europe early next year, Mori said. He added that the diesel engine could be fitted on all of Subaru's models and the powertrain would eventually be offered across its line-up.

Mori was tight-lipped about whether or when Subaru would offer a gasoline-electric hybrid car, saying the company was still in discussions with part-owner Toyota Motor Corp. about how to proceed.

But he said diesels were a better fit for Subaru's signature symmetrical all-wheel-drive drivetrain, and that any hybrid would come after diesel engines.

Mori repeated that Subaru would fully remodel its cars at a pace of one a year going forward as it drives towards its goal of selling 683,000 vehicles globally in the year to March 2011.

While acknowledging there was little hope for a significant recovery in domestic demand, Mori said expectations were high for the U.S. market, which will get a major facelift of Subaru's B9 Tribeca SUV next month ahead of the Impreza's roll-out.

Subaru's U.S. sales are down an adjusted 6.5 percent in the year to date, but Mori said he expected an improvement after a facelifted version of the flagship Legacy went on sale this month.

Under the new business plan, Fuji Heavy has said it is placing greater importance on the United States to help boost its operating profit by 60 percent in four years.