Subaru maker to invest $400 million to expand U.S. plant

TOKYO Wed May 8, 2013 11:41am EDT

TOKYO (Reuters) - Fuji Heavy Industries Ltd (7270.T), the maker of Subaru cars, plans to invest $400 million to expand production capacity at its sole U.S. plant in Indiana by around 100,000 vehicles, the Japanese automaker said on Wednesday.

The company, which exports nearly 70 percent of its Japan-made production, wants to make more vehicles in its biggest market, the United States, to limit the impact of currency moves.

Along with the expansion, which will utilize an existing line, Fuji Heavy is set to hire about 900 employees at the Subaru of Indiana factory, CEO Yasuyuki Yoshinaga told reporters.

"We continue to see strong sales in the United States, and we were seeing a situation in which there was a lack of car supply," Yoshinaga said. "We think this will contribute to the regional economy of Indiana."

The plant will start to produce the Impreza compact car using the added capacity, he said, the first time the Impreza will be produced outside of Japan.

The carmaker currently produces Outback, Legacy and Tribeca at its plant in Indiana, as well as Toyota Motor Corp's (7203.T) Camry. Toyota owns 16.47 percent of Fuji Heavy shares.

The plant currently has an annual capacity of 270,000 vehicles, of which 100,000 is devoted to the Camry. The capacity for Toyota's Camry will stay at 100,000 vehicles, Yoshinaga said.

The $400 million investment will boost total capacity to 400,000 vehicles by end-2016.

Fuji Heavy, Japan's smallest carmaker by volume, booked on Wednesday a record annual operating profit of 120.4 billion yen ($1.22 billion) for the financial year ended March, more than double the 44 billion yen it booked in the previous year, on strong sales in the United States, aided by the yen's depreciation versus the dollar.

(Reporting by Yoko Kubota; Editing by Daniel Magnowski and Chris Reese)

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