TOKYO -- Subaru, the only major Japanese brand not manufacturing in China, is in talks with partners in that country about a joint venture and will decide by year end whether to build cars there, a newspaper report said.
Ikuo Mori, president of the Subaru brand's parent company, Fuji Heavy Industries Ltd., told Japan's Nikkei business daily that locally produced cars have slimmer profit margins than those imported from Japan. But setting up local production in China is essential to future growth in the world's biggest auto market, he said.
“We are now in talks with several local makers as possible candidates for a joint venture partner,” Mori said. “We are going to decide how to advance there by the end of the year.”
Mori said he doesn't expect the China venture to be profitable in the first two years.
Subaru would be a late-comer to China. Most Japanese automakers have been manufacturing there for years. Subaru began selling full-sized vehicles there in 2004. The brand sold 35,000 vehicles in China last year and is targeting 50,000 this year.
Mori said Subaru's longer-term sales goal is 100,000 annually, but he gave no time frame.
Subaru spokesman Masashi Uemura declined to name the companies that Fuji Heavy Industries was talking with. But a Chinese business Web site reported last month that one negotiating partner was Shanghai Automotive Industry Corp.