Subaru-Toyota Factory Sharing to End

Fuji Heavy Industries Ltd. says it aims to negotiate an end to sharing its Indiana factory with Toyota Motor Corp. so that it can use the capacity there to hike U.S. production of Subaru models, The Nikkei reports.

The U.S market accounts for half of Fuji Heavy's global sales. The company expects global sales this year to approach 800,000 units.

FHI has said it wanted to double annual production at Lafayette from the current 170,000 units by 2016. Until this week the company had planned to reach that goal entirely by expanding the plant.

Now FHI says it will capture 100,000 units of existing capacity that has been devoted to contract production of Toyota Camry midsize sedans. The company also will invest $400 million to add 100,000 units of new capacity, thus enabling the factory to make 370,000 Subaru vehicles per year.

The two moves will boost Subaru Forester SUV capacity from 170,000 units to 270,000 units, according to The Nikkei. FHI reportedly will add production of at least one more model, the Impreza small sedan.

About 70% of Subaru's global production occurs in Japan, the highest ratio for any major Japanese carmaker. Increasing production in the U.S. would reduce FHI's exposure to currency fluctuations and could shorten delivery times.

Toyota's exit from the Lafayette plant is not expected to affect its collaboration with Subaru to produce a hybrid SUV for each brand by 2017. Last year the two companies rolled out co-developed sports cars: the Toyota 86 and Subaru BRZ.