Fuji Heavy places plan to build Subaru vehicles in China on hold

Article by Andrew Christian, on January 21, 2015

Fuji Heavy Industries Ltd. has suspended plans to build vehicles in China. Akira Mabuchi, executive vice president in charge of Fuji Heavy’s China project, remarked that sales in the country wouldn’t be enough to guarantee profits. He said that the carmaker would have to double its sales in China, since profits are split between the company and its probable Chinese partner.

The China government requires carmakers wanting to set up a production base in the country to form joint ventures with local auto groups. Fuji Heavy remains the only Japanese carmaker without government approval to start a joint venture.

Mabuchi, however, said that Fuji Heavy won’t commence local output even if it gains approval of the government. Likewise, auto sales in China dropped from 14 percent in 2013 to 6.9 percent in 2014. For this year, sales growth in the growth is expected to be at its slowest since 1990.

Sales at Subaru in China dropped 2 percent in 2014, but the carmaker expects a 10-percent surge in deliveries this year to 60,000 vehicles. Japanese carmakers like Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. all experienced sales drops in 2013 in China following a territorial row between the country and Japan prompted a consumer boycott.

Yasuyuki Yoshinaga, president of Fuji Heavy, told Bloomberg in an interview in November, that Subaru is increasing its production in the United States. He addedthat while China is still a potential location for a new plant, that won’t happen until current mid-term plan ends in 2020.

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