Subaru ManagesTo Dodge The Covid-19 Bullet After Quarterly Profits Double
Subaru has reported a doubling of quarterly operating profits, a rare glimmer of hope in an industry ram-roaded off track by the Covid-19 pandemic. Subaru executives cited minimal exposure in China has reduced risk as opposed to numerous rival manufacturers who have invested heavily in the region to feed off the country’s incessant consumer demand. China, the birth-place of Covid-19, was placed under a severe lockdown to combat the spread of the disease. Chinese authorities claim to have contained the spread of the coronavirus and auto manufacturing and consumer demand is ramping up again to near full capacity.
Subaru’s 4th-quarter March operating profits leaped to $535 million USD, net income doubled to $379 million USD. Worldwide sales increased by 13 percent, U.S. sales improved by 4 percent to 725,00 units sold. Subaru earns a bulk of it’s operating profits in the U.S.A. where the brand is heavily invested. The U.S. accounts for 70 percent of Subaru’s global sales.
However, the quarterly profit success story may be short-lived because Covid-19 is running out of control across America due to an inept response by the Federal Government. Subaru’s strongest sales epi-centers are located in the north-east and north-west, regions that have been hit hard by the coronavirus outbreak.
Subaru did not suspend production at its U.S. factory until March 23, a shut down of its Japan factory occurred on April 11. Japan is currently in a state of emergency until May 31, but Subaru resumed factory operations on May 11. Going forward Subaru executives are expecting to eventually take a hit as mass unemployment sweeps across America.
Subaru’s factory in the U.S state of Indiana has lost 34 days of production due to the coronavirus pandemic. Executives expect minimal supply chain disruptions, but privately expect the pandemic will account for a second-quarter loss.