Subaru defends massive price cuts

Subaru has cut the prices of its new 2015 Liberty and Outback models by up to 25 per cent, in the case of the flagship Liberty 3.6R lopping $14,000 from the price.

Accordingly, it expects to double the sales of both models in 2015, but this won't be of much comfort to owners who have previously forked over significantly more cash for what are less sophisticated vehicles with fewer features.

Current Liberty and Outback owners can also expect to see reductions in resale values as the new models reach dealerships, but Subaru Australia Managing Director, Nick Senior, says the chance to 'reposition' the vehicles was too good an opportunity to ignore.

Asked if the previous models were too expensive, he responded: "There's various factors that are now in play that weren't in play then. We're taking the opportunity."

He explained that the massive price cuts on the two Subaru models had been confirmed for some time and that "…we've known for a little while."

"It's a process that's locked into negotiations with factories and hedging and that sort of thing," he said, but wouldn't be drawn on what it will mean for current owners.

Instead he listed the reasons the for dramatic drop in price for the two mid-sizers: "Most notably the exchange rate, the Japanese free-trade agreement and more efficient manufacturing [are] driving reduced costs."

"Currency is always going to have the biggest impact on imported goods. It is clear that the Yen-Australian dollar equation has moved into a more favourable range for us," said Senior, adding that although Australia-Japan FTA was not legislated, it was still factored in to the equations and said it was "prudent to act now".

If the exchange rate with the Japanese Yen continues to favour Australia, will Subaru prices drop even further? It's doubtful, said the Subaru Australia boss, but he wouldn't rule it out.

"One of the greatest factors on imported goods is currency and we're in a favourable situation at the moment and we're taking advantage of it. It may change in future and we'll look at it."

He cautioned the need to maintain sustainable price points and noted that while other models in the Subaru range hadn't been cut by such margins, some models such as Forester had gained more features, thereby improving value.

However, Subaru Australia says its biggest problem with the new Liberty and Outback, which feature considerably more equipment as well as being more affordable, is supply from Japan.

Senior says that he expects to reach around 40,000 new car sales in this country in 2014, with sales of 37,071 to the end of the November – but will probably only exceed that mark by 1000 units in 2015.

"Our biggest challenge is getting production," he said. "We can probably get an extra 1000 or 1500 cars [in 2015]. It's going to be small sustainable growth, and it should be too."