Toyota to Build at Subaru Plant

Toyota Motor Corp., the world’s second-largest automaker, will build Camry sedans at a Subaru plant in Indiana, as the company rushes to add capacity to meet rising sales in the biggest auto market.

Toyota plans to make as many as 100,000 Camrys annually at the Lafayette, Ind., factory, with production to begin in 2007, Toyota President Katsuaki Watanabe said Monday. Subaru’s parent firm, Fuji Heavy Industries, plans to hire 1,000 workers and invest $230 million to upgrade the factory, which makes Subaru-brand vehicles.

The project will give Toyota, which bought 8.7% of Fuji Heavy from General Motors Corp. in October, the capacity to make nearly 2 million vehicles at eight North American assembly plants by 2008. Toyota expects to report a fourth year of record profit for fiscal 2006, which ends this month, and has global auto sales and production targets for this year approaching the volume of GM, the world’s largest carmaker.

“Toyota is saving time and money by using Fuji Heavy’s factory,” said Makoto Kikuchi, who manages the equivalent of $723 million as chief executive at Myojo Asset Management Japan Co. in Tokyo. “It’s also good for Fuji Heavy because it will make use of its idle line.”

The companies expect to produce as many as 40,000 Camrys in 2007 at the plant.

Fuji uses less than half of its 262,000-unit capacity at the Indiana plant, set up in 1987. The carmaker built 119,011 Subarus last year at the factory, including B9 Tribeca sport utility vehicles and Legacy station wagons. It plans to make 125,628 units this year.

The two carmakers will cooperate in joint purchasing in the U.S. and Japan and will co-develop vehicles, said Watanabe.

Toyota’s Camry in 2005 was the bestselling U.S. car for the fourth year in a row and eighth time in the last nine years. Sales of the Camry rose 1.4% to 431,703 units in 2005.

“Outsourcing your core model is certainly a significant risk,” said auto analyst Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor, Mich. “What will likely happen is Toyota is going to take a very active role in sending people into that plant, both to oversee production of Toyota models and overall operations.”

Camrys are built mainly at Toyota’s Georgetown, Ky., plant, about a three-hour drive from Lafayette. Production of the sedan in Indiana will help the company reduce imports of the model from Japan, said Gary Convis, president of the Georgetown plant.

Toyota has forecast U.S. sales to rise as much as 10% in 2006.

Shares of Toyota gained 22 cents Monday to $106.90.