Subaru Increasing Japanese Production Despite Exchange Rate Fears
Rather than expand production in North America, Subaru is taking a contrarian route and expanding their manufacturing in Japan – even as everyone is scrambling to get out.
According to Automotive News
“A large-scale expansion in the U.S., where we build new factory buildings and such, will cost a lot,” Chief Financial Officer Mitsuru Takahashi said in a May 18 interview in Tokyo. “We’re not like Toyota, Honda or Nissan, so it’s not appropriate for us to make sudden, big investments.”
The move comes with a planned 28 percent boost in Japanese output by March, 2013 while cutting U.S. output by 1 percent. Subaru is betting that a weakening yen will help increase profitability – Takahashi’s own outlook is of a drop in the yen over the next decade – but as of now, Japanese automakers can’t build North American factories fast enough.
Subaru recently lost a bid to begin a joint venture with Chery in China, and will now be forced to import cars and face a 25 percent duty on each one. That resulted in Subaru shifting their focus to American, where the brand has seen strong growth. Although Subaru has a U.S. manufacturing presence (and Subaru decided that, even with the strong yen, it’s more cost-effective to expand in Japan) an erratic yen could wreak havoc on Subaru’s profitability, ala Mazda – but by the same token, Subaru’s bet on a weaker yen could also pay off handsomely. The nature of the auto business in today’s world is that long-term decisions must be made in a world where events like last year’s tsunami can turn one’s world upside down in a very short time frame. We’ll just have to sit tight and watch how Subaru’s bet pans out.
I suspect their choice is renovating existing facilities, their own, Toyota's, or their parent company's, versus a brand new plant in the U.S. Exchange rate risk can probably be managed by importing parts from China, Thailand, or the U.S./Mexico. It's not like they don't have empty ships crossing the Pacific westbound.
I've been in car museums where some of the cars are up on jackstands to unweight the suspensions, but those were a bit older and rarer than a Subaru 360. It's rather remarkable how some museums go out of their way to make it hard to take nice photos of their cars.
a lot of them probably are on loan.
"Rather than expand production in North America, Subaru is taking a contrarian route and expanding their manufacturing in Japan . . . " Subaru is expanding NA production, announcing just two weeks ago that they were investing $75 million in the Lafayette, IN facility, adding 100 jobs etc. to allow 24,000 more vehicles to be built annually. Even Gov. Mitch Daniels attended the announcement. Business Week: http://www.businessweek.com/ap/2012-05/D9UPV9M00.htm Indianapolis Star: http://www.indystar.com/article/20120516/BUSINESS/205160339/Subaru-add-100-jobs-Lafayette?odyssey=mod%7Cnewswell%7Ctext%7CIndyStar.com%7Cs