#SubaruOfIndianaAutomotive

Today’s update on the global semiconductor shortage involves Subaru, which recently announced that it would be suspending production at its plant in Indiana. Lafayette’s Subaru of Indiana Automotive (SIA) will be idled through the end of April while the automaker waits for suppliers to catch up. It’s a situation we’ve seen numerous manufacturers forced into this year, with Ford arguably being the most relevant for the North American market.

In an effort to build more things where they’re needed, Subaru of Indiana Automotive will spend $158 million expanding its Lafayette plant. Construction begins this summer.

The cash covers a standalone service parts facility and an add-on to the existing plant, home to the Ascent, Outback, Legacy, and Impreza. That addition will see the automaker’s only non-Japanese facility build the transmissions needed to serve a growing market.

As you’ve read here, Subaru expects to spend 2020 selling.

Subaru was one of the few automakers experiencing growth going into the Great Recession. When the financial crisis struck in earnest, Subaru’s volume briefly dipped to pre-recession levels before resuming its climb. Thanks largely to an enviable public image and desirable lineup, Subaru’s annual deliveries tripled between 2009 and 2018 inside the United States.

However Subaru’s quality rankings have lapsed in its quest to meet elevated demand. There has been a surge in recalls for the brand and some unsavory claims coming from the factory. According to internal documents seen by Automotive News, one of the primary reasons for this was due to rampant supply chain issues. The papers indicate that nearly half of Subaru’s suppliers were recently operating at quality levels below the company’s internal targets. Subaru is currently overhauling its own production processes and working with suppliers to improve quality and avoid developing a poor reputation with customers.

Subaru says it will invest $140 million into its production facility in Lafayette, Indiana, to ensure assembly of the 2019 Ascent goes off without a hitch. The cash will go toward helping the automaker meet the growing demand for SUVs in North America and provide 200 additional jobs for the region.

Subaru of Indiana Automotive (SIA) currently produces the Impreza, Legacy, and Outback. But it’s scheduled to add the Ascent early next year. The investment covers a factory expansion, new equipment, and tooling to support higher production volume.

Subaru reported in September 2017 the brand’s 70th consecutive month of year-over-year growth. The growth rate is not modest. Five years ago, Subaru had never reported more than 336,000 U.S. sales in a calendar year. Yet with one-fourth of 2017 remaining, Subaru has already reported 478,848 U.S. sales in 2017 and is on track to sell more than 650,000 vehicles by the end of the year.

Subaru is not, however, without challenges. The rate of sales improvement has not been matched by a commensurate improvement in the dealer network’s ability to service vehicles, for example.

Another issue? Subaru needs to create space for production of its next new vehicle, the three-row Ascent SUV, in Lafayette, Indiana. Subaru already builds its best seller, the Outback, in Indiana, and with the latest generation of the Impreza, the brand’s compact car joined the midsize Legacy as an Indiana-built model, as well.

For the Ascent, which Subaru confirmed is set to begin rolling out of the Indiana plant in the second-quarter of 2018, Subaru has received the necessary permits to increase production by 66 percent compared with the original joint Toyota/Subaru facility.

Sales of new vehicles declined by nearly 4 percent in the United States in August 2016, a year-over-year drop which followed flatlining sales over the previous three months. Bucking the trend to no small degree in August was capacity-constrained Subaru, which earned 4 percent of the market by selling more than 60,000 new vehicles for the first time in the company’s history.

Making Subaru’s achievements even more impressive: according to TrueCar, discounts in Subaru showrooms in August were 78-percent below the industry average.

The Tribeca having driven into the sunset, Subaru will build its replacement in Lafayette, Ind. beginning in 2018 as its fourth model assembled in the U.S.

2007 Photo, Toyota Camry being assembled at Lafayette, Indiana Subaru factory.

Media reports citing Subaru of Indiana Automotive Inc. executive vice president, Tom Easterday say that Toyota will stop having Subaru build Camrys for sale in North America at SIA’s Lafayette, Indiana assembly plant when the current five year contract expires in 2017. “Based on changes in Toyota’s production plans, they have decided that the award-winning Camry production contract will not be renewed,” the Louisville Journal & Courier quoted Easterday as saying. Toyota declined comment. Subaru’s parent company Fuji said no decisions have been made and that it had nothing official to announce. Subaru has been building Camrys for Toyota in Indiana since 2005.