2008 Subaru Legacy 2.5i Limited Sedan 4-door 2.5l on 2040-cars

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How new car shortages may impact your buying experience

If you want further proof that the auto industry is bouncing back, look no further than the empty lots and forecourts of your local dealership. According to a story by The Wall Street Journal, continued high demand for mainstream cars is overtaxing automakers' ability to produce enough models. Several dealers interviewed for the story are reporting two-week supplies as opposed to the typical two-month allocations.
With sales expected to hit 1.4 million units when August numbers arrive shortly and incentive spending down to its lowest amount since January, these limited supplies are pushing prices even higher. For example, according to the WSJ, the average price of a Ford Fusion is up past $26,000. Unfortunately, it's difficult for manufacturers to increase production quickly. If it invests in its facilities, as many manufacturers have done, it risks wasting cash if growth suddenly slows. At the same time, the momentum gained over the past several years could be short lived if vehicle supplies continue to dwindle. "Manufacturers are in a precarious situation," notes Karl Brauer, a senior director at Kelley Blue Book.
Low interest rates and a wealth of desirable features are also allowing customers to purchase more expensive vehicles while justifying their higher overall price tags, a situation that is compounding supply shortages. Even now, during the annual end-of-summer clearance season, deals on new vehicles are remarkably difficult to come by. According to the report, the Toyota Corolla is in a self-inflicted state of shortage, as Toyota clears out inventory in anticipation of the new 2014 generation arriving in dealers. Ford's supplies should rebound as Fusion production comes on line at its Flat Rock, Michigan factory. The Chevrolet Impala, Honda Odyssey, Civic, and Accord and Subaru Forester are also facing shortages.

Subaru profits fall by half last year among recall maladies

Subaru took a financial beating last year, according to its freshly released earnings report. During the full fiscal year, which ended March 31, the carmaker's operating profits effectively halved. Net income dropped 33% to 147.81 billion yen, or $1.33 billion, and revenue fell 2.2% to 3.16 trillion yen ($28.5 billion). Subaru states that its operating income declined by 48.5% to 195.5 billion yen, or to about $1.78 billion. According to Subaru, this was not only due to a decrease in sales, but also due to recall campaigns. Total production decreased nearly 6% to 989,000 units, and production stoppages at the Gunma plant were partially to blame for that — but Impreza, XV and Levorg sales also sank. The redesigned Forester did start out well in the summer, but sales in the first half of 2018 were more modest with the outgoing generation still in the showrooms. The Gunma manufacturing plant, Subaru's sole factory in Japan, ground to a halt in January 2019 to remedy issues with Forester, Crosstrek and Impreza electric power steering units, and that cost Subaru nearly 10 days of production, corresponding to around 30,000 vehicles. Earlier, there was a 500,000-vehicle recall in Japan due to fraudulent final inspections. Automotive News also lists other recent Subaru maladies, such as a low-fuel warning recall and stop-sale for all U.S-market Outbacks and Legacys, and the earlier, global recall to repair valve springs on the boxer engines of 411,000 vehicles. This particular recall hasn't been problem-free, as there have been cases where subsequent engine failures on BRZ models have been suspected of having been caused by slapdash recall work. There is also a new, large-scale recall in the horizon for Subaru, as a brake light issue on 2008-2017 vehicles necessitates the recall of some 2.3 million vehicles. However, it's not all bleak for Subaru, as U.S. sales are going strong. The carmaker predicts 2019 will be the 11th straight record year, and U.S. retail sales climbed 7.7 percent in April, which was the 89th consecutive month with increased sales. But still, not all Subaru markets are equal: On the North American market, Subaru sold 717,000 vehicles during the past fiscal year, an enormous percentage of its total sales. News Source: Subaru via Automotive News Plants/Manufacturing Recalls Subaru

Japan may aid carmakers facing U.S. tariff threat

TOKYO — Japan is considering giving carmakers fiscal support including tax breaks to offset the impact from trade frictions with the United States and a sales-tax hike planned for next year, government sources told Reuters on Wednesday. Going into a second round of trade talks with the United States on Sept. 21, Japan is hoping to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement that could put it under pressure to open politically sensitive markets, like agriculture. "If the trade talks pile pressure on Japan's car exports, we would need to consider measures to support the auto industry," a ruling party official said on condition of anonymity because of sensitivity of the matter. The auto industry accounts for about 20 percent of Japan's overall output and around 60-70 percent of the country's trade surplus with the United States, making it vulnerable to U.S. action against Japanese exports. Japan's biggest automakers and components suppliers fear they could take a significant hit if Washington follows through on proposals to hike tariffs on autos and auto parts to 25 percent. Policymakers also worry that an increase in the sales tax from 8 percent to 10 percent planned for October 2019, could cause a slump in sales of big-ticket items such as cars and home. Prime Minister Shinzo Abe has twice postponed the tax hike after the last increase from 5 percent in 2014 dealt a blow to private consumption, which accounts for about 60 percent of the economy. To prevent a pullback in demand after the tax hike, the government may consider large fiscal spending later when it draws up its budget for next year, government sources said. "One option may be to greatly reduce or abolish the automobile purchase tax," one of the government sources said. The government is also considering cuts in the automobile tax and automobile weight tax to help car buyers, the source added. Reporting by Izumi Nakagawa and Tetsushi KajimotoRelated Video: Image Credit: Getty Government/Legal Isuzu Mazda Mitsubishi Nissan Subaru Suzuki Toyota Trump Trump tariffs trade