Subaru mulls expanding its Lafayette assembly plant in Indiana

Article by Anita Panait, on December 6, 2012

Fuji Heavy Industries Ltd.'s Subaru unit is considering expanding its assembly plant in Lafayette, Indiana, as it seeks to increase its production in the United States to limit its currency losses and at the same time cater to growing demand for its models. Subaru and Fuji Heavy are currently holding discussions over the proposed expansion, according to Tom Doll, Subaru’s executive vice president and chief operating officer for the United States.

In an interview with Bloomberg Radio, Doll said that a decision whether the Indian plant will add assembly of Impreza cars or Forester crossovers has yet to be made.

Doll said that the mishmash of high Japanese yen and expensive shipping costs made it more difficult with production in Japan to import those vehicles into the US. He added that a decision could be reached soon on whether to bring further production to the US.

Fuji Heavy is the latest Japanese carmaker aside from Toyota, Honda, Nissan and Mazda to seek an increase in their output capacity in North America in order to curb losses related to the strong yen. The US dollar has seen its value drop around 25 percent against the yen in the past five years, eating way the value of increasing sales in the US.

Ashvin Chotai, managing director of Intelligence Automotive Asia, remarked that with strong exposure to the US market, Subaru sales have benefited not only from the healthy recovery in the US market but also the market share gains supported by new models.

He added that the current rate of Subaru’s growth justifies an aggressive capacity expansion plan for North America. Demand for the brand’s all-wheel-drive cars and light trucks has soared 29 percent this year to 299,788 units, highlighted by a 60-percent sales jump in November.

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