TOKYO – Subaru says U.S. inflation is so bad that the automaker has trouble competing on wages with the local McDonald’s outside its Indiana assembly plant.
Those soaring American labor costs, CEO Tomomi Nakamura said, are one reason his company is not thinking of new investments to build electric vehicles Stateside anytime soon.
Speaking at Subaru Corp.’s quarterly earnings announcement on Wednesday, Nakamura said Subaru will stick with its plans to assemble electric vehicles at a new dedicated plant to be built in Japan.
Complying with new U.S. guidelines to win full federal EV tax credits of $7,500 under the Inflation Reduction Act is too difficult right now, Nakamura said. Then there are the high wages.
“In Indiana, part-time workers at McDonald’s earn $20 to $25 per hour, which is in competition with what temporary workers make at our plant,” Nakamura said. “If we were to build a new plant, it would be very difficult to hire new people for that. Labor costs are rising now. It is quite challenging for us to secure workers for our Indiana plant, including those of suppliers.”
U.S. inflation stood at 8.2 percent through September, and rising prices worldwide have stoked the cost of everything from wages to raw materials and fanned concerns of recession.
Nakamura acknowledged the risk of a downturn but said demand for Subaru vehicles remains robust. The company has around 48,000 backorders in the U.S. and is dealing with a 10-day supply of inventory, he said.
Subaru sees U.S. sales climbing 25 percent to 631,000 units this fiscal year.
“Basically, we think there will be strong demand for our cars,” Nakamura said. “But our U.S. retailers told me they feel there could be a recession, so we will be watching the situation closely.”