Subaru’s top Japanese executives are returning portions of their salary, and up to 30 percent of their performance-linked compensation for the 2019-2020 Fiscal Year as the Japanese carmaker braces for the economic impact of the coronavirus pandemic.
Having only minimal exposure to China, and delaying its plant closure to just days before the closure of its fiscal year, Subaru saw its operating profits jump more than double in the last quarter. That being said, the all-wheel drive specialist withheld its earnings forecasts for Fiscal Year 2020-2021. The carmaker will feel the full brunt of the pandemic as the U.S., which accounts for 70 percent of their sales, closed their dealerships starting in April.
Subaru CEO Tomomi Nakamura said profits were bolstered by aggressive cost cutting, increased sales volume, and a better mix of higher-margin profit. Subaru also reduced incentives from the previous year.
Looking ahead, however, Subaru will not be able to escape a hit from COVID-19. Subaru’s assembly plant in Japan and its factory in Indiana both came back online May 11. But the Japan plant lost 19 days of production, and the U.S. operation lost 34 days of output due to suspensions.
Currently, the Gunma plant in Japan is operating only at half capacity, while its plant in Indiana will only return to normal outputs by June.
The pandemic has also caused some delay in product planning with suppliers, but Nakamura said he sees no major disruptions and/or big changes to their development plans.