Subaru to invest $400 million to build Impreza at Indiana plant
Automaker shooting for 500,000 in U.S. sales by 2020
TOKYO -- Subaru, gunning for a fifth year of record U.S. sales, said it will invest $400 million to expand capacity at its Indiana assembly plant by a third and add output of its Impreza compact.
Production of four- and five-door versions of the Impreza will begin in 2016. The plans call for expanding the second of two lines at the Indiana factory and hiring 900 workers.
Overall Subaru capacity at the plant in Lafayette, Ind., will grow to 300,000 vehicles a year, from about 200,000 today, Yasuyuki Yoshinaga, president of Subaru parent Fuji Heavy Industries, said today at the company's quarterly earnings announcement.
Automotive News reported the Impreza plans on Tuesday.
The factory now has two lines, one dedicated to Subaru with capacity of 200,000, and a second building Toyota Camry sedans with a capacity of 100,000.
About $200 million of the investment will go into building a new paint plant and $160 million will extend the line.
Subaru unveiled the expansion plan in January but filled in the details today.
The move comes as Subaru earned record annual results in unit sales, revenue, operating profit and net income for the fiscal year ended March 31. The automaker is focusing on U.S. expansion, as plans to begin production in China remain stymied by failure to win approval from the government in Beijing.
Still, Subaru says it needs the extra capacity in North America to keep up with booming demand for its all-wheel drive vehicles.
"Our U.S. business is advancing at faster than expected," Yoshinaga said. "Sales will reach another record this year."
U.S. sales reached a record 358,000 units in the fiscal year ended March 31. They are expected to climb to 385,000 in the current fiscal year ending March 31, 2014, for a fifth straight year of all-time highs and their sixth straight year of growth.
Indeed, the forecast puts Subaru ahead of its 380,000 target for the fiscal year ended March 31, 2016. Yoshinaga did not update that mid-term goal, despite being poised to eclipse it.
But Executive Vice President Mitsuru Takahashi said U.S. sales will likely surge to 500,000 units by 2020.
By that year, global sales could hit 1 million, he added.
Worldwide sales hit a record 724,000 units in the fiscal year just ended. Subaru sees them rising 4 percent to 752,000 this fiscal year.
Producing more cars in the North America will help Subaru reach that goal, while avoiding currency exchange risk on imports.
It currently makes the Legacy sedan and Outback and Tribeca crossovers in Indiana. But the Impreza small car, Subaru's third best-selling nameplate behind the Outback and Forester, is currently manufactured only in Japan and has to be imported.
The Impreza will be produced on the existing Subaru line, in mixed production with the other models, Yoshinaga said.
The expanded line will absorb spillover production of the Outback, he said. That vehicle is expected to be one of the three full-model changes Subaru plans in the next three years.
Yoshinaga declined to comment on the future of the slow-selling Tribeca, which has sold only 620 units this calendar year.
Brisk U.S. sales helped drive Fuji Heavy to across-the-board record results in the fiscal year ended March 31.
Operating profit more than doubled to a record 120.41 billion yen ($1.28 billion).
Net income more than tripled to a record 119.59 billion yen ($1.27 billion).
Revenue advanced 26 percent to 1.91 trillion yen ($20.32 billion), another all-time high.
For the company's full financial statement, click here.
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