Subaru parent will delay decision on U.S. expansion
Yasuyuki Yoshinaga: Subaru will probably choose an “incremental” expansion in the U.S. rather than build a new factory.
TOKYO (Bloomberg) -- The head of Subaru's parent company said the company delayed making a decision on its U.S. capacity expansion as slumping demand in China and Europe gave it more room to ship vehicles to America.
Fuji Heavy Industries will decide on the matter by the end of the fiscal year ending March, instead of the previous plan to do so by the end of December, President Yasuyuki Yoshinaga said in an interview at the company's Tokyo headquarters today. Fuji Heavy will probably choose an "incremental" expansion in U.S. manufacturing rather than building a new factory, he said.
The comments illustrate how the slump in Chinese demand for Japanese products -- fueled by a diplomatic dispute between the two countries that flared in September -- is interfering with global strategies.
Auto-parts makers from Koito Manufacturing Co. to Sumitomo Electric Industries Ltd. have said they're considering stepping up their expansion in regions such as Southeast Asia to counter the risk of conducting business in China.
Yoshinaga, 58, said the company coped with declines in China and Europe by diverting shipments to the U.S. and Japan, where sales have been rising. He ruled out Fuji Heavy, which allocates some of its U.S. capacity to make Camry sedans for Toyota, would scale back those ties in the company's next expansion plans.
Fuji Heavy expects to sell 348,800 cars in the U.S., its largest market, during the current fiscal year. The company is counting on demand of the Legacy and Forester sport utility vehicles to drive growth next year.
Fuji Heavy may sell 400,000 vehicles in the U.S. in the fiscal year ending March 2016, exceeding an earlier forecast for 380,000, Takeshi Tachimori, chief of Fuji Heavy's U.S. unit, said in June.
Not all models are doing well. The carmaker is considering discontinuing production of the Tribeca SUV, Yoshinaga said.
Subaru sold only 2,800 units of Tribeca last year in the U.S., compared with 146,000 units of the Legacy SUV.
Through November, Subaru sold nearly 300,000 vehicles in the United States, a 29 percent gain over the same period last year in an overall market that has risen 14 percent.
In Japan, the company has said it will increase production at its main domestic plant in Gunma Prefecture by 20 percent to 180,000 vehicles by the summer of next year. Government subsidies helped boost domestic sales by 30 percent to 47,528 vehicles for the six months ended September, led by the Legacy and Impreza, according to the company.
In China, Fuji Heavy saw sales through the end of November tumble 27 percent to 39,602 units, resulting in the company piling up as much as six months' worth of inventory. Inventory will return to normal levels by March, Yoshinaga said.
Still, the company -- the only major Japanese automaker not to have received approval to manufacture vehicles in China -- isn't giving up on the country yet, Yoshinaga said.Contact Automotive News