Subaru, a car making unit Fuji Heavy Industries Ltd., will increase production capacity at its Lafayette assembly plant in Indiana by around 30 percent by fiscal 2016, according to a report by the Nikkei business daily. The carmaker will invest around JPY20 billion ($230 million) in Subaru of Indiana Automotive Inc. to implement the capacity hike.
According to the Nikkei, Fuji Heavy plans to increase its production capacity by 30,000 vehicles by 2014. Currently, the Lafayette plant can build 170,000 units of Subaru models as well as 100,000 Camry cars for Toyota Motor Corp. However, the US spokesman for Subaru declined to confirm the report.
Fuji Heavy sold almost 330,000 vehicles in the United States in 2012, but had to import half of them from Japan. The strong yen has diluted the profitability of several models built in Japan and had exported, prompting Japanese carmakers Nissan Motor Co., Mazda Motor Corp. and others to start producing vehicles overseas.
According to the Nikkei, Fuji Heavy’s decision to hike its production capacity in the US was prompted by a forecasted increase in North American demand for its Subaru Impreza model. North America accounts for nearly half of Fuji Heavy's total sales, the business daily said. Fuji Heavy said in 2011 that it planned to hike global sales to 1 million vehicles in 10 years, according to the Nikkei.
The newspaper disclosed that currently, Fuji Heavy’s two major production plants in Indiana and in the Gunma Prefecture in Japan has the capacity to produce around 750,000 vehicles annually. Fuji Heavy has mulled constructing a new plant in Mexico, but eventually decided that increasing the capacity at the Lafayette plant was the cheaper option, Nikkei added.