The Rearview Mirror: The Car That Nearly Sunk Subaru of America

The Subaru 360 was among Japan’s first Kei cars. Photo Credit: RM Auctions

Postwar Japan was a country in transition. After being defeated in World War II, the country’s economy was quickly becoming industrialized. With the newfound economic progress came another issue: city streets jammed with traffic and not enough places to park.

Responding to the growing congestion, Japan’s Ministry of International Trade and Industry developed a new regulation in 1955 for a new class of car that would be far friendlier to Japan’s growing urbanization.

The new vehicle class was named Kei-jidosha, meaning light vehicle. Also known as Kei cars, the vehicles must be less than 118.11 inches long, powered by engines that can’t displace more than 360cc. The cars receive special yellow license plates, rather than the white ones used by other cars, allowing them to park on city streets overnight. Unlike Kei cars, drivers of larger vehicles must prove they have a parking space before cars can be registered in Japan. 

The Subaru 360 first reached America in 1968, a decade after its launch.

And it would be the Subaru 360, a car created by Fuji Heavy Industries, that would pioneer this class when it debuted this week in Japan in 1958.

Subaru: born from jets — sort of

While Saab would use the phrase “born from jets” to advertise its vehicles, to some extent, the same could be said of Subaru. 

Fuji Heavy Industries, the company that created the Subaru brand, began life in 1917 when Chikuhei Nakajima established the Aircraft Research Laboratory, later becoming Nakajima Aircraft Co., Ltd. in 1931. It grew to become a major aircraft manufacturer, but switched to production of consumer products in 1945, and reorganized as Fuji Sangyo Co., Ltd.

The Subaru 360 was nicknamed Ladybird in Japan due to its unusual shape. Photo Credit: RM Auctions.

In 1950, with the passage of the Enterprise Reorganization Act, Fuji Sangyo Co. Ltd. split into 12 companies, with five of those companies contributing capital to establish Fuji Heavy Industries in 1953. Fuji acquired and merged those companies two years later.

Fuji established its automotive division, naming it Subaru, the Japanese name for the Pleiades star cluster in Taurus constellation. The name and its symbol symbolizes the six companies that emerged from Nakajima Aircraft that merged to form Fuji Heavy Industries.

The company produced its first car in 1955, the Subaru 1500, a four-door sedan powered by a 1.5-liter water-cooled 4-cylinder engine and featuring unibody construction — a first for a Japanese car. But it was never widely sold, and the company shifted its focus to produce a vehicle to meet Kei car regulations.

Subaru’s first successful model

By the time the Subaru 360 reached America, its engine produced 25 horsepower. Photo Credit: RM Auctions.

What emerged this week in 1958 was the Subaru 360, with room for four, front and rear torsion bar suspension and unibody construction with a fiberglass roof to reduce weight. Power came courtesy of a 356cc air-cooled, inline 2-cylinder two-stroke rear-mounted engine and 3-speed manual transmission that generated 16 horsepower to the rear wheels. Despite its meager power, it could reach 51 mph and return a claimed 75 mpg. 

Its unusual styling led it to be nicknamed Ladybird in Japan, and its line-up expanded to include a mini wagon, and a convertible with a fabric roof rather than a fiberglass one.

How Subaru reached America

The Subaru 360’s interior was fairly basic. Photo Credit: RM Auctions.

Subaru of America’s start came courtesy of entrepreneur Malcolm Bricklin, who would go on to produce the Bricklin SV-1 sports car and later form Yugo of America. But that was still in the future. 

In the mid-1960s, and Bricklin found himself in the motor scooter business after acquiring 25,000 Lambretta scooters in a liquidation. Looking to expand his newfound business, Bricklin sought more scooters to sell by taking on the Fuji’s Rabbit scooter. But the model was discontinued and its tooling sold. Bricklin headed to Japan, looking to acquire the tooling. While there, he saw the Subaru 360 for the first time. 

Subaru’s 1968 ad for the 360 was brutally honest, if nothing else.

At the time, Volkswagen’s Beetle was the best-selling imported car in America, and a number of foreign cars were introduced in its wake. Bricklin pondered the Subaru 360. Sure, the styling was ugly, but so was the Beetle’s. But the 360 was rated for 66 mpg at the time and boasted 25 hp and a 4-speed manual. 

Better yet, importing it was easy; since it weighed less than 1,000 pounds, it didn’t have to be federalized, saving the company money. In February 1968, Bricklin established Subaru of America in Philadelphia with business partner Harry Lamm.

A disaster that nearly sinks Subaru

Advertised as “cheap and ugly” it cost $1,297, or $10,662 adjusted for inflation, the car proved not just cheap and ugly, but incredibly slow, taking 37.5 seconds to reach 50 mph. But it wouldn’t remain a Subaru of America staple for very long after Consumer Reports rated it “not acceptable,” its worst rating.

The 360 would be replaced by the 1970 Subaru FF-1.

“It was a pleasure to squirm out of the Subaru, slam the door and walk away” the magazine wrote.

The fiasco nearly killed the brand in the United States, and only intense lobbying from Bricklin convinced Subaru to allow him to sell the company’s newest car, the front-wheel drive FF-1, the first Subaru with a 4-cylinder horizontally opposed “Boxer” engine. Offered in two- and four-door models, the car produced 61 hp and possessed far more mainstream looks. 

Fuji bought importation rights back from Bricklin and Lamm in 1971, with Bricklin leaving Subaru of America the following year. Lamm stuck with the company through 1990, the same year that Fuji Heavy bought Subaru of America. Fuji Heavy Industries Ltd. would change its name to Subaru Corp. in 2017.

The Detroit Bureau Read More