Subaru to expand in the United States, its biggest market

Article by Anita Panait, on May 16, 2012

After failing to gain approval from the Chinese government to set up a joint venture with Chery Automobile Co, Fuji Heavy Industries Ltd. is now shifting its focus away from China and into its biggest market, the United States. Fuji Heavy Industries, which makes Subaru vehicles, unveiled its overhauled strategy during its earnings press conference on May 8.

The strategy entails increasing its output at its Indiana plant and a possible increase in its North American production capacity by adding a new line or by building a new factory.

The company also hiked its U.S. annual sales target from 350,000 units to 380,000 vehicles by its 2016 fiscal year. The overhauled strategy was in direct response to the company’s failure to create a joint venture with Chery as decided by Chinese authorities. The joint venture would have allowed the company to commence building cars in China by 2016.

Yasuyuki Yoshinaga, president of Fuji Heavy Industries Ltd., however, remains optimistic of the company’s future in China, saying that he still wants to build vehicles in the country, but not anymore by 2016. According to Yoshinaga, Fuji Heavy Industries will prioritize expanding production in America while observing the situation in China. It plans to take action only if developments arise.

Yoshinaga’s mid-term plan had involved selling 180,000 vehicles in China by 2016, with 150,000 of those units built in the country. But due to the failed partnership, the company lowered the target to 100,000 and will sell them through imports.
The company also increased its target sales in North America from 380,000 to 410,000 by fiscal year ending March 31, 2016, to make up for the lost figures caused by the failed Chinese venture. The company also adjusted its target US sales for the same period from 350,000 to 380,000 units.

Subaru is selling its vehicles in the US through Subaru of America, Inc., which was founded by Malcolm Bricklin in 1968 in Bala Cynwyd, Pennsylvania. Subaru of America was fully acquired by Fuji Heavy Industries in 1986.

Subaru is actually the car manufacturing division of Fuji Heavy Industries, a Japanese transportation conglomerate involved in the auto industry as well as in the aerospace sector. Fuji Heavy Industries traces its roots to the Nakajima Aircraft Company, a supplier of airplanes to the Japanese government in World War II. Fuji Heavy Industries was incorporated on July 15, 1953, as formed by the combination of five Japanese companies: Fuji Kogyo, Fuji Jidosha Kogyo, Omiya Fuji Kogyo, Utsunomiya Sharyo and Tokyo Fuji Sangyo.

Fuji Heavy Industries then started a company that would concentrate on auto production. Then chief executive Kenji Kita name the company Subaru, which is the Japanese term for the Pleiades open star cluster, also known as Seven Sisters and Messier 45.

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