Toyota May Double Stake In Fuji Heavy Industries
The International Herald Tribune quotes unnamed sources who are "not authorized to comment publicly on the matter" as saying that ToMoCo may double its stake in Fuji Heavy Industries, makers of Subaru vehicles. Toyota currently owns 8.7 percent of Fuji, and would be looking to spend some $295m to raise its stake to 17 percent. "Toyota wants to mitigate the risk of building new plants by utilizing Fuji Heavy's facilities both in Japan and the United States," says Seiji Sugiura, an analyst at HSBC Securities. "Other automakers would also want to reduce risks for each other by boosting ties, even if that wouldn't amount to mergers and acquisitions." According to reports from the Nikkei business daily, Toyota may be looking to subcontract its subcompacts (say that ten times fast) to a Japanese Fuji plant, and jointly develop a sports car and environmentally-friendly technologies. Toyota has said it will not increase its stake in Fuji beyond 20 percent, keeping the relationship with Fuji as a partner rather than a subsidiary.
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The Indiana plant owned by Subaru used to be co-owned by Isuzu. When Isuzu tanked and subcontracted all SUV manufacturing to GM, Subie bought the plant. This meant the plant was vastly underutilized. In fact, Toyota HAS already "taken advantage" of the Indiana Subie plant and either is now, or very soon will be, churning out Camry cars on one line, while the other produces Subies. Unlike Detroit Inc, Japan Inc actually not only knows how to make a reliable car, but they can do so while making a profit - IN AMERICA. Kudos to them.
Subaru's all wheel drive system is inherently at a fuel economy disadvantage when competing with two wheel drive cars. I suspect that with ever tighter fuel economy regulations they are going to have to rethinking their marketing strategy. For many years Subaru offered both FWD and AWD versions of their vehicles. They went all AWD (at least in the US) in order to have a coherent market niche strategy, which worked. Notice that they are still in the hunt while Isuzu is gone, Mitsubishi is nearly gone and Suzuki is reduced to marketing Daewoo products. Mazda and Nissan both needed foreign companies to come in and right the ship. Subaru remains, however, in a precarious position in the US market especially in light of their fuel economy disadvantage. Their other problem is that the small AWD market the Outback serves used to be theirs alone but now is crowded by nearly a dozen vehicles.
Camrys have been built at Subaru's Indiana plant for almost a year now. Access to this plant was one of the main reasons for the tie up in the first place. http://pressroom.toyota.com/Releases/View?id=TYT2007042084663