TOKYO -- Subaru is on a tear. It is poised to notch its seventh-straight year of record sales in North America, reaching the company's sales target five years ahead of schedule.
Meanwhile, parent company Fuji Heavy Industries forecasts another fiscal year of across-the-board records: for vehicle sales, revenue, operating profit and net income. The biggest challenge facing CEO Yasuyuki Yoshinaga, 61, is making enough cars to meet demand. Yoshinaga spoke through an interpreter with Asia Editor Hans Greimel this month at Fuji Heavy's global headquarters here about expanding capacity to meet sales growth, autonomous driving and new vehicles under development.
Q: How sustainable is Subaru's rampant sales growth?
A: We are currently expecting to reach sales of 953,000 units [globally] this [fiscal] year. If we can reach 1.1 million units ahead of our original plan [in the fiscal year ending March 31, 2021], I would be very pleased.
I'm excited about the increasing sales, but at the same time, I have to deliver the vehicles to customers without any delay.
Our original goal for North America was 600,000 units [in the fiscal year ending March 31, 2021], but we expect to reach this target this year. Therefore, we have to revise our target a little bit upward.
How does Subaru balance growth with brand identity?
Our business model is not just about setting higher and higher targets and seeking higher and higher volume. But that does not mean we will cap production at a certain point. If there is demand, we will fulfill it.
But if we ever adopt a business model that blindly seeks volume, it would hurt Subaru's distinctive characteristics which our customers value.
We need to protect the business model in which customers value Subaru's distinctive characteristics. That includes safety performance that's highly rated by testing bodies and valued by customers, and incentives that are kept low and great ownership experiences.
When will Subaru revise its outlook?
Last year, we announced our Prominence 2020 midyear business plan. In Japan especially, people from the outside want to see some kind of numbers. So, I outlined some: target numbers for unit sales and three-year profit and expense numbers from 2014 through 2016, operating profit, capital expenditure and also r&d expenses.
By the end of this fiscal year, we will have achieved some of these targets. So, when we announce the next full fiscal-year results in May, we will announce revised target numbers for the next three fiscal years: 2016, 2017 and 2018.
Can you preview the new targets?
The next sales target in America is still under discussion between Subaru of America and the Japan side.
From the U.S. point of view, there is strong demand in the U.S. market. From the Japan side, we have announced that production capacity of Subaru of Indiana Automotive Inc. will be expanded to 394,000 by the end of next year. And also, we decided to pull ahead part of that expansion to next summer.
In Japan, we are studying how to increase production, even if it squeezes out just one more unit. But the first priority is the U.S. We are squeezing a dry towel. And even though we've wringed it, we are trying to wring more.
How much room is there to expand capacity in Indiana?
If we want, there is room to increase.
If we use the current lines, we can increase capacity a little. But if we build a new line, we can increase even more. But there are environmental and [volatile organic compound] considerations when expanding capacity.
What is the maximum capacity potential?
If we build a new assembly line, we can have huge capacity. But another issue is how we can hire all the employees for a new assembly line. And it's also an issue for our suppliers. They also have to expand their facilities and hire a new work force. So it's not that easy.
If you need more capacity, where would it be? The U.S., Japan or possibly a new factory, say, in Mexico?
If we have to increase production capacity, it will be in the U.S. because that is where the demand is. There are so many customers and retailers there. The U.S. is the most important market for Subaru.