SUBARU - Company History

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Financial history 1957–2026 — revenue, cost structure, balance sheet, cash flow and key ratios, year by year →

Founded 1917
Founder Nakajima Chikuhei
Founding location 群馬県太田市
Core business at founding The design and manufacture of aircraft
Listed 1966
President & CEO Osaki Atsushi President & CEO since 2023 (age 64, as of 2026)
Current priority New product development · Alliances SUVs for the North American market and the joint development of battery electric vehicles with Toyota
Founding
In December 1917 Nakajima Chikuhei founded an aeroplane research laboratory in the town of Ota, Gunma prefecture. In December 1931 it was renamed Nakajima Aircraft; after the defeat, in August 1945, it was renamed again as Fuji Sangyo and turned to civilian goods, and in July 1950 occupation policy split it into twelve companies. In July 1953 five companies of the former Nakajima group — Fuji Kogyo, Fuji Jidosha Kogyo, Omiya Fuji Kogyo, Utsunomiya Sharyo and Tokyo Fuji Sangyo — jointly subscribed the capital to establish Fuji Heavy Industries and restart the production and repair of aircraft, and in April 1955 the five were absorbed by merger. In the Subaru 360 light car of 1958 the aircraft way of building, riveting thin duralumin sheet, was applied to a monocoque body. The shares were listed in 1966, and the corporate name was changed to SUBARU in April 2017.
The Decision
It took, ahead of everyone else, the segments the majors judged unprofitable. It entered four-wheel drive in 1972, when the market was no more than a few per cent of the whole, and with the revised Leone of 1979 it won the demand of snow country and the mountains, taking a 38.5 per cent share of the domestic 4WD market in the 1980 financial year to stand first. Because on its own it did not have the volume to make a plant pay, in 1987 it set up Subaru of Indiana Automotive as a 51-49 joint venture with Isuzu, a company of a different group. When losses at its North American sales company tipped it into operating loss in 1990, Kawai Isamu, brought in as president from Nissan, gave up the pursuit of volume and returned the parent company to profit in five years. Not chasing scale, and pushing the products into a narrow segment, is what left it a settled following in North America even while it could not match anyone on units.
Today
Close to eight-tenths of revenue sits in North America, and Japan accounts for only a little over one-tenth. Of revenue of $30.3B (¥4.79tn) in the year to March 2026, North America was $23.9B (¥3.78tn) and Japan $4.4B (¥700bn). The business is two things, automobiles at $29.3B (¥4.64tn) and aerospace at $895.9M (¥142bn), the latter being contract work on aircraft for the Ministry of Defense and on airframe structures for Boeing. Since concentrating management resources on North America in 2005 and putting crossover SUVs in earnest, it has leaned its products towards North America with Subaru of Indiana Automotive as the production base. Operating profit in the year to March 2026, however, fell from $2.7B (¥405bn) the previous year to $253.5M (¥40bn), and the margin dropped below 1 per cent at the same time as revenue set a record. Concentrating sales on a single market left a structure that passes that market’s conditions straight through to results.
Competition
SUBARU has already stepped away from the places where volume is contested at home. It took a 20 per cent investment from General Motors in 1999, and after GM’s exit in 2005 it accepted Toyota’s holding up to 16.5 per cent; as of March 2026 Toyota’s stake had reached 21.46 per cent. Where Mitsubishi Motors, under Nissan, leaned its products towards South-East Asia, SUBARU has entrusted its capital alone while keeping North America and the horizontally-opposed engine. In battery electric vehicles, which use no engine, its own technology does not tell: four models following the Solterra of 2022 are being developed jointly with Toyota, and the first came off the line at the Yajima plant in February 2026. Leaving the distinctiveness of its powertrain in place while sharing the development of electrification with another company is the condition on which it goes on putting out products of its own in North America as a mid-sized maker.

Timeline

1917–1989From Nakajima Aircraft to Fuji Heavy Industries, and into the small car

  1. 1917Nakajima Chikuhei founds an aeroplane research laboratory at Ota, Gunma
  2. 1931The business is reorganised as Nakajima Aircraft
  3. 1945Renamed Fuji Sangyo on GHQ order; converted from war work to civilian goods
  4. 1950The Enterprise Reconstruction Law breaks Fuji Sangyo into twelve companies
  5. 1953Five of the twelve reassemble as Fuji Heavy Industries
  6. 1955The five predecessor companies are absorbed by merger
  7. 1958The Subaru 360 light passenger car is launched
  8. 1960The Gunma works is opened in the former Nakajima Ota plant
  9. 1966The Subaru 1000 introduces the horizontally-opposed engine
  10. 1968A business tie-up with Nissan Motor is concluded
  11. 1969The Yajima plant at Gunma starts production
  12. 1972The Leone brings four-wheel drive to a production passenger car
  13. 1979The revised four-wheel-drive Leone goes on sale
  14. 1987Subaru of Indiana Automotive founded as a joint venture with Isuzu
  15. 1989The Legacy is launched; the Indiana plant begins production

1990–2005Three principal shareholders in twelve years, and independence reaffirmed

  1. 1990The company falls into operating loss and begins a rebuild
  2. 1990The US distributor Subaru of America is acquired
  3. 1993One of the largest post-war operating losses to that date is posted
  4. 1995The Saitama works is opened
  5. 1996Kawai Isamu comes from Nissan as president
  6. 1999A capital tie-up with General Motors is concluded; GM takes 20 per cent
  7. 2003The company withdraws from rolling stock and bus bodies
  8. 2005The B9 Tribeca SUV is announced, opening the North American SUV business in earnest
  9. 2005GM sells its entire holding; the alliance is dissolved

2006–2023Toyota, EyeSight, and one bet on the North American SUV

  1. 2006A business tie-up with Toyota Motor is concluded
  2. 2008Toyota raises its holding to 16.5 per cent
  3. 2008The EyeSight driver-assistance system is developed
  4. 2012The wind-power generation business is sold to Hitachi
  5. 2014The second generation of EyeSight reaches the market
  6. 2017The company is renamed SUBARU
  7. 2017The Subaru Global Platform debuts on the new Impreza
  8. 2017The company withdraws from general-purpose engines and generators
  9. 2019A capital and business alliance with Toyota Motor is agreed
  10. 2023Operating profit recovers to ¥267.5bn as the new Crosstrek and Forester land

Founding Story

1917–1989From Nakajima Aircraft to Fuji Heavy Industries, and into the small car

SUBARU begins not with a car but with an aircraft maker, and with that maker being taken apart. Nakajima Aircraft built more airframes than any firm in Japan and more engines than all but Mitsubishi; the occupation stripped it of aviation and the 1950 reconstruction law split it into twelve companies. Five of those fragments came back together in 1953 as Fuji Heavy Industries — a company with no founder of its own, only the engineers and the plants a lost industry had left behind. What those engineers knew was how to make a structure light and strong, and they spent the next three decades aiming that at small cars: the Subaru 360 in 1958, the horizontally-opposed engine in 1966, and in 1972 the first four-wheel-drive passenger car anyone had put on sale.

The break-up of an aircraft maker, and the turn to cars

In May 1917, having left the Imperial Japanese Navy as a reserve lieutenant[1], Nakajima Chikuhei (中島知久平) founded a private aeroplane research laboratory in the town of Ota, Gunma prefecture[2]. His premise was that the defence of a country as economically poor as ours ought to be built around aircraft, and that if we are to catch up with the state of aviation in the world we must raise up a private aircraft industry[3] — so he began from a privately run laboratory rather than a state arsenal. In 1931 the business was reorganised as Nakajima Aircraft Works and its scale expanded[4], taking on the design and volume production of front-line types: the Army’s Type 97 fighter, the engine for the Navy’s Zero carrier fighter, and others. At its peak between 1941 and 1945 its share of Japanese aircraft production ran to 28 per cent of airframes (Mitsubishi second at 17.9 per cent) and 31.3 per cent of engines (Mitsubishi first at 35.6 per cent). Together with Mitsubishi Heavy Industries it accounted for the largest output in the country — the two of them quite literally divided the industry between them.

With the defeat of August 1945, an order from the General Headquarters of the Supreme Commander for the Allied Powers turned Nakajima Aircraft into Fuji Sangyo Co., Ltd.[5], and the company was forced to convert its business under the severe constraint of an occupation policy that banned aircraft manufacture outright. Under the Enterprise Reconstruction and Reorganisation Law of 1950 Fuji Sangyo was broken into twelve companies[6], and what had been one of the largest aircraft makers in Japan was, as an organisation, dismantled. Five of those twelve — Fuji Kogyo, Fuji Jidosha Kogyo, Omiya Fuji Kogyo, Utsunomiya Sharyo and Tokyo Fuji Sangyo[7] — jointly subscribed paid-in capital of $138,889 (¥50m)[8] and reassembled themselves in July 1953 as Fuji Heavy Industries Co., Ltd.[9]; in April 1955 the new company absorbed all five by merger and settled its scale at capital of $2.3M (¥831m)[10]. This is the point at which the body of engineers formed in the Nakajima Aircraft years regathered in the post-war motor industry. The reality of an occupation policy that dismantled an aircraft maker had, ironically, pushed the same people into becoming a car maker — and that ironic outcome defined the identity of the later SUBARU.

The Subaru 360 as a people’s car, and the boxer-AWD signature

In May 1958 Fuji Heavy Industries put the Subaru 360, a light passenger car, on the market[11]. Momose Shinroku (百瀬晋六), an aircraft designer by training, led the work, developing a technical package advanced for its day: a monocoque body of the company’s own design and a rear-engine layout. At the same time the trade press was voicing its impatience with the passenger cars then available — cameras and shipbuilding have both reached world standard, and only the passenger car still cannot stand on its own feet, and the Datsun was a thing whose engine and chassis alike are a twenty-year-old antique body given a slight coat of whitewash[12] — and demand for a genuine people’s car was rising. Known affectionately as the ladybird (てんとう虫), the Subaru 360 stayed in production for more than a decade, and by 1961 the company could report that in 1958 we entered light four-wheeled passenger cars and launched the Subaru 360. Sales of it have lately grown rapidly and are contributing to the improvement in our results[13]. The Gunma works that carried this volume was itself an inheritance: in October 1960 the company took over the former Nakajima Aircraft Ota works, requisitioned after the war and used as a US Army camp[14], and refitted it[15]. The production base of the aircraft years was reused, as it stood, as Subaru’s capacity for a growing model.

By the late 1960s excess capacity had become a serious problem across the motor industry, and in 1965 Diamond was reporting the mood for consolidation: in 1959 and 1960, when demand was forecast to surge, every company planned large expansions and put up new plants one after another, and then, which companies are the ones that will disappear?[16]. When in 1968 Fuji Heavy Industries examined and then withdrew from a tie-up with Nissan Motor[17], the same magazine observed that F is itself a maker that cannot possibly survive alone and that a merger of equals, one to one, has become a pipe dream[18]. Yet with the first-generation Subaru 1000 of 1966 the company adopted the combination of a horizontally-opposed engine and front-wheel drive, and in 1972 it put the first-generation Leone on sale — the first four-wheel-drive system offered on a production passenger car anywhere in the world. The proprietary package of boxer engine plus all-wheel drive was established, and in 1985 a joint venture with Isuzu Motors set up Subaru of Indiana Automotive in the United States, which began operating in 1989.

1990–2005Three principal shareholders in twelve years, and independence reaffirmed

For the whole of this period the company was somebody else’s shareholding, and for the whole of it the cars stayed its own. Revenue stood at $8.2B (¥1.04tn) in the year to March 1992 and reached $13.1B (¥1.45tn) by the year to March 2005, while the register above it changed hands three times — a president sent in from Nissan, twenty per cent of the equity held by General Motors, and then Toyota. What none of the three could move was the technical package underneath, and that is why a mid-sized maker that could not have survived a merger of equals survived three owners instead.

Restructuring under a president sent from Nissan, and independence kept

In the first half of the 1990s Fuji Heavy Industries took a double headwind — the maturing of the domestic passenger-car market and intensifying competition in North America — and its results deteriorated, posting in the year to March 1993 an operating loss that was among the largest in its post-war history at the time. Requests for support came at once from the Industrial Bank of Japan, its main bank, and from Nissan Motor, its largest shareholder, and in 1996 Nissan’s executive vice-president Kawai Isamu (川合勇) was sent in as president of Fuji Heavy Industries. Through the second half of the 1990s the restructuring was carried out under Nissan’s lead. It was a period in which management was confronted with a choice: hold to the independent maker’s own line, or go under the wing of one of the majors. What Diamond had foreseen in 1968 — that the company will end up rolling into Nissan Motor, of the same Industrial Bank group[19] — had come true, in an altered form.

Under Kawai the company pushed forward in parallel with a reorganisation of the domestic sales network, selection and concentration in its overseas business, a deepening of the aerospace business and a rise in the motor business’s dependence on North America, and over the five years from 1997 it laid the base for a recovery in results. The aerospace business carried over from the Nakajima Aircraft years grew as well: supplying centre wing sections to Boeing and developing trainer aircraft for the Self-Defence Forces made it a source of earnings alongside cars, and it supported the independence of the business structure as a whole. A restructuring that had begun in the unusual form of a president seconded from Nissan came to be judged, in later years, as a realist’s decision — take in outside management knowledge while keeping the independence of an independent maker. Having thrown back the merger-of-equals argument of 1968 and held its own line by accepting people alone, the company laid the ground on which it would not lose its distinctiveness through the changes of ownership that followed.

Nissan to GM to Toyota: three changes of principal shareholder in twelve years

In October 1999, immediately after concluding its own capital tie-up with Renault, Nissan Motor decided to sell the shares it held in Fuji Heavy Industries, and in its place General Motors of the United States acquired 20 per cent of Fuji Heavy Industries’ issued shares to become the new principal shareholder. GM positioned Fuji Heavy Industries as one corner of the Asia-Pacific strategy it was then pursuing, and planned to share small-car platforms and to develop environmental technologies jointly. But with the deterioration of GM’s own North American business the collaboration did not proceed as planned, and in October 2005 GM sold its entire holding of Fuji Heavy Industries shares on the market. The capital relationship had been dissolved in a mere six years. The collaboration left a certain groundwork in the product planning of North American SUVs, but the shared small-car platform that was the object of the capital tie-up itself came to nothing.

In parallel with GM’s sale, Toyota Motor acquired 8.7 per cent of Fuji Heavy Industries’ issued shares to become a new major shareholder, and by 2008 had raised its holding to 16.5 per cent, taking the position of largest shareholder in substance. In the twelve years from the Nissan-seconded president of 1996, through GM’s withdrawal in 2005, to Toyota becoming largest shareholder in 2008, the company went through three changes of principal shareholder — Nissan, GM and Toyota. Even in the history of the Japanese motor industry this was an unusual sequence of ownership. Ironically, that very run of changes stands as proof, by contradiction, of SUBARU’s independence: in none of those periods did it bend its own line. The proprietary technical package built around the boxer engine and all-wheel drive worked as an asset that belonged to the company and that no owner could move.

2006–2023Toyota, EyeSight, and one bet on the North American SUV

From here the company stops hedging. With Toyota above it on the register and a stereo camera on the windscreen, it aimed almost everything at one segment in one country, and for four years running from the year to March 2015 it earned more than ¥300bn of operating profit a year on that bet. The name went with the strategy: in 2017 Fuji Heavy Industries became SUBARU, and what had been an aircraft maker with a car division finished the journey into a car maker with an aerospace division.

EyeSight, the car that does not crash, and 70 per cent dependence on North America

From 2008, with the collaboration with Toyota as its base, Fuji Heavy Industries pursued a strategy of concentration on the North American passenger-car market, launching a run of products centred on the SUV segment. In 2014 it brought out the second generation of EyeSight, its own driver-assistance system. Built around stereo-camera forward recognition, its autonomous emergency braking was early even by world standards at the time of launch, and the advertising line — the car that does not crash — took hold in the market. The company built a distinctive brand position in driver assistance, and technical superiority in safety performance became the weapon of a mid-sized independent maker in North America, forming a devoted customer base among middle-income families.

Through the 2010s the North American market sustained a boom in mid-size and D-segment SUVs, and the core products — Forester, Outback, Legacy and Impreza — all grew their unit sales in the United States. From the year to March 2015 through the year to March 2018 the company posted operating profit above $2.7B (¥300bn) every year, the peak of its results. Dependence on the North American market passed 70 per cent, and a business structure hardened in which the whole earnings profile turned on North American demand, through exports from Japan and local production in the United States alike. The management line of not chasing scale, but digging deep into a niche with its own strengths, was held to. Half a century after the founding of Fuji Heavy Industries in 1953, a management that kept the independent maker’s posture even while receiving Toyota as a principal shareholder held together coherently, because there was a clear field of battle in the North American SUV market.

The renaming to SUBARU, and a business model back in cycle

In April 2017, by resolution of the general meeting of shareholders, Fuji Heavy Industries changed its corporate name to SUBARU, unifying the company name long used since the war with SUBARU, the name of the car brand. Sixty-four years after the establishment of Fuji Heavy Industries in 1953, the renaming declared to the world inside and outside the company a policy of bringing the centre of gravity of management together with the motor business and the SUBARU brand, while maintaining the aerospace business. In 2017 the new Impreza introduced the Subaru Global Platform, a new-generation architecture rolled out to strengthen the products and improve driving performance. A century counting from Nakajima Aircraft, and sixty-four years from the founding of Fuji Heavy Industries, the unification of the name marked the point at which the shift of the business’s centre from aircraft to cars was complete. The aerospace company survives as one division of SUBARU, but at a level that leaves its share of revenue in the single digits.

Between 2019 and 2021 SUBARU took two headwinds — the spread of COVID-19 and production constraints from the chip shortage in the North American market — and its results dipped for a time. But the successive launches through 2022 and 2023 of the new Crosstrek strong hybrid and the new Forester put it back on a recovery path. Operating profit for the year to March 2023 recovered to $1.9B (¥268bn), and the virtuous circle of what the company calls its own business model — low inventory, low incentives, high residual values — was turning again. Deepening collaboration with Toyota carried forward in parallel the development of new battery electric vehicles and the joint rollout of next-generation driver assistance, and the base for growth over the coming decade was in place. The independent maker that had been cornered by the merger-of-equals argument in 1968 had, by the 2020s, settled in as a mid-sized company with a profitable constitution of its own.

Read the full history in Japanese →

Notes

  1. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  2. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  3. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  4. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  5. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  6. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  7. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  8. 企業の歴史 : 明治百年 (Corporate Histories: A Century of Meiji, Keizai Shunju-sha, 1968)↩
  9. SUBARU Corporation, securities report for the 94th term (FYE March 2025), corporate history section↩
  10. 企業の歴史 : 明治百年 (Corporate Histories: A Century of Meiji, Keizai Shunju-sha, 1968)↩
  11. SUBARU Corporation, securities report, corporate history section↩
  12. Diamond, 21 March 1955, Who will build the people’s car?↩
  13. Keizai Tenbo, 1 March 1961, Fuji Heavy Industries enters a period of advance↩
  14. 企業の歴史 : 明治百年 (Corporate Histories: A Century of Meiji, Keizai Shunju-sha, 1968)↩
  15. 企業の歴史 : 明治百年 (Corporate Histories: A Century of Meiji, Keizai Shunju-sha, 1968)↩
  16. Diamond, 26 April 1965, Cutting across the questions piling up in the motor industry↩
  17. SUBARU Corporation, securities report, corporate history section↩
  18. Diamond, 27 May 1968↩
  19. Diamond, 27 May 1968↩

References & sources

  1. SUBARU Corporation (formerly Fuji Heavy Industries) (annual securities reports), including the corporate-history section, and company announcements on the 2017 renaming and the Toyota alliance.
  2. Diamond (Diamond, Inc.): 21 March 1955, Who will build the people’s car?; 26 April 1965, Cutting across the questions piling up in the motor industry; 27 May 1968.
  3. Keizai Tenbo, 1 March 1961, Fuji Heavy Industries enters a period of advance.
  4. Shukan Noda Keizai, December 1963, Running a car for the people, by the people.
  5. Corporate Histories: A Century of Meiji, Keizai Shunju-sha (1968), the SUBARU entry.

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