The 2015 Subaru Legacy Concept: Will This Stunning New Car Ever Make it to the Road?
By now, most car enthusiasts know that Subaru's new Legacy concept, which it debuted at the Los Angeles Auto Show, is a stunner.
But Subaru -- the automotive arm of the Japanese Fuji Heavy Industries -- is infamous for turning jazzy concepts into subdued production versions.
A concept car is exactly what the name suggests: a concept or framework for the future models that the auto maker would build. Very rarely do exact replicas of concepts go into production. Take, for example, the WRX production version that Subaru launched beside the Legacy concept on the same dais at the LA showing. It's nothing like the beauty that we saw at the New York Auto show in March.
As the market experts make up their minds whether to get floored by the Legacy concept's new look, or remain sceptical until the car actually arrives at dealer lots, I want to tell you about a few mostly overlooked facts that will decide Legacy's fate, and explain why this car's success is crucial for investors in Fuji Heavy Industries.
For an investment in Fuji Heavy to be successful the company needs to see the new Legacy succeed in three areas: safety rating, mileage, and price differential.
Legacy's top safety rating scores a big point. The 2014 Legacy has "five-star" crash test ratings in front, side, and roll-over tests from the National Highway Traffic Safety Administration, and also earned the Insurance Institute for Highway Safety's 'Top Safety Pick+' rating.
If the 2015 Legacy retains these safety ratings, they could prove a big competitive advantage. America's most popular mid-size sedan, Toyota Camry, has recently gotten into trouble with its safety metrics, losing Consumer Reports' recommendation as one of the most reliable cars. The Camry sedan is still ruling the sales charts, but its future sales may be affected if it doesn't take action. Other segment leaders like Honda Accord and Ford Fusion all have top safety ratings .
Legacy's mileage has been its sore point so far. Even with constant variable transmission (CVT) and 2.5-litre flat-four engine, the sedan provides 24 miles per gallon (mpg) in the city and 32 mpg on the highway. It's no match for Camry's 25/35 mpg or Accord's 26/34 mpg on city and highway respectively, even with similar engines and transmissions. So any improvement on that front will be good for sales.
Finally, the Legacy's affordability has worked in its favour. The 2014 model's manual transmission version costs $21,000, and the automatic $22,000, according to Kelley Blue Book. Even with the car's all-wheel-drive (AWD), its price is on the lower side when compared to other mid-size sedans with front-wheel drives. The 2014 Camry and 2014 Accord sedans both start at more than $22,000, while the Fusion with an optional AWD comes for nothing less than $33,000 .
Design is the wild card
Let me put this straight -- the new Legacy concept is a visual delight. It oozes style and glamour. When Subaru unveiled the car, you could almost hear the crowd draw a collective breath, and the applause from the normally stoic journalists said it all. The car had a sleek four-door-coupé design, with sharp angles and huge 21-inch wheels. The signature hexagonal three-bar grille sat on the car front, and the angular headlights were accentuated with inset halos.
It's a great design, but I would agree with the experts that we'll need to see what the real production car looks like. Legacy has been around for the last quarter of a century, and it has never been known for its looks. Its fan following has mostly come from its functionality and its AWD, which makes it an excellent choice for winters. Any improvement on the design front could make a definite impact on sales. But, for now it's mostly a wildcard.
Putting it in perspective
In all our excitement over the Legacy concept's design, let us not forget the fundamental question: How good an investment is Fuji Heavy, and how much should the Legacy sway any investment decision about the company?
Fuji Heavy is earning big returns for its investors. The stock has gained 157% in the last one year and business has never been better. Fuji Heavy owes its success to Subaru's roaring U.S. business. Subaru contributes nearly 93% to Fuji Heavy's total sales, and generates over half of it from the U.S. Subaru's U.S. sales have increased 28.3% year-over-year through November .
Now, more than 10% of Subaru's U.S. sales come from Legacy -- hence the attention that it's receiving. In 2013, Legacy sales have been tepid, slipping 8% through November . Subaru is hoping to change that and generate more momentum. The stunning Legacy concept is a teaser to stir some real excitement before the 2015 model hits the market early next year.
Now that the company has successfully captured the market's attention and set the stage for the upcoming launch, watch out how the Legacy fares in terms of its true differentiators -- safety rating, mileage, and price differential -- with anything on the styling front as a bonus. I do not think you will be disappointed.
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The article The 2015 Subaru Legacy Concept: Will This Stunning New Car Ever Make it to the Road? originally appeared on Fool.com.Gaurav Basu has no position in any stocks mentioned. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.