Subaru Q1 Operating Profit Plunges 44% Amid Heavy EV Incentive Spending

Tokyo — Hit hard by aggressive marketing incentives for electric vehicles, Subaru reported a 44% year-on-year drop in operating profit for fiscal Q1 2026 (ended June 30), falling to ¥42.6 billion JPY (approx. $263 million), down from ¥76.4 billion JPY ($472 million) a year earlier. The company acknowledged that incentive spending alone on its three EV models — Solterra, Uncharted, and Trailseeker — reached ¥24.9 billion JPY ($154 million) during April–June, accounting for the bulk of the profit decline.

This aggressive strategy marks a sharp departure from Subaru's traditionally conservative cost-control approach. Earlier in May 2026, the company had already warned it would record a $362 million asset impairment charge and delay the domestic production launch of its first in-house fully electric vehicle — the model originally slated for the new Oizumi plant, which remains under construction and is now expected to begin operations around 2028.

Data shows Subaru's average per-vehicle marketing expense in the U.S. rose to $2,698, up 40% year-on-year. Incentive spending on gasoline-powered models — including the BRZ, Outback, and Legacy — increased 27%, while pickup-related incentives surged 49%. Incentives for the three currently sold EVs were especially steep: $9,650 per Solterra unit, $9,155 per Uncharted, and $8,982 per Trailseeker — compared to just $3,036 for the Outback. Although Subaru's overall incentive level remains below the industry average ($3,479), its 40% year-on-year increase far outpaces the industry's average growth rate of 4.4%.

In terms of sales, Subaru's global wholesale deliveries fell 9.4% year-on-year to 220,000 units. The U.S. market saw the steepest decline — at 12% to 150,000 units — while Canada held steady at 19,000 units and Europe edged up 2,000 units to 8,000. Solterra's U.S. sales for H1 totaled 5,137 units, down 21% year-on-year; meanwhile, its sister model TOYOTA bZ sales soared 90% to 17,553 units. Uncharted and Trailseeker posted U.S. sales of 2,488 and 2,422 units respectively — showing stark contrast with Toyota C-HR BEV (3,748 units) and bZ Woodland (554 units).