Subaru to Increase Capacity in Indiana

Fuji Heavy Industry Ltd.'s Subaru unit will spend $75 million over the next two years to expand its factory in Lafayette, Ind.

The plant's annual capacity will rise from 156,000 units now (excluding overtime) to 180,000 vehicles when the project is completed, according to Subaru. It plans to hire 100 employees there by 2014.

The company says the expansion will help it meet growing demand for the Legacy midsize car and Outback crossover vehicle. Analysts suggest FHI also wants to avoid the negative impact of the yen on vehicles imported from Japan.

The Lafayette facility also makes the Camry sedan for Toyota Motor Corp. and the Subaru Tribeca midsize crossover. About half the 294,000 vehicles Subaru sold in North America last year were produced at the Indiana factory.

In the long term, FHI plans to step up production in North America to compensate for its recently scrapped plan to build cars in China, President Yasuyuki Yoshinaga said last week. The company has boosted its U.S. sales forecast for the fiscal year ending in March 2016 by 30,000 to 380,000 units compared with 280,400 units in the just-ended fiscal year.

Automotive News reported earlier this week that the company might eventually add another assembly line or even build a new plant at an unspecified location.