We are looking at the inside edge, so it is not a fender cut-down.
I would vote for being run severely underinflated, but it does not show any usual sidewall scuffing that is associated with underinflation and wallowing.
It does look like the inside shoulder is worn away on either side of the groove, possibly indicating a severe misalignment problem such as improper toe. Once the wear got down to the cap belting, it could have allowed a belt separation along the seam.
Still, the groove is so long and even that I'm inclined to believe something cut into it. I'm not familiar with an Impreza suspension setup; is it possible it was rubbing on a suspension component? Is it the correct size rim for the car?
