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Subaru, Toyota Discuss Ending Production Of Camry In Indiana : News

Subaru and Toyota are in talks to halt production of the Toyota Camry sedan at Subaru's Indiana assembly plant, likely timed to the introduction of the nameplate's next generation.

Fuji Heavy Industries Ltd., the parent company that makes Subaru vehicles, has been approached by Toyota about discontinuing Camry production at the Lafayette, Ind., plant, Fuji Heavy spokesman Masashi Uemura confirmed today.

"We have received the offer from Toyota and are now considering it," Uemura said, adding that no decisions have been made.

He said Toyota was sounding out Subaru about the plan. Uemura did not give a timeline for when Camry production would end, but said it would likely be timed with the car's next generation.

The current-generation Camry went on sale in the United States in September 2011. The car is typically on a five-year cycle, putting the arrival of the next generation around 2016.

Toyota spokesman Brian Lyons confirmed separately that the two companies were in talks about the future of Camry production at the factory, called Subaru of Indiana Automotive Inc.

He also said no decisions have been made.

Capacity issues

Pulling the Camry out of Indiana could free up much needed capacity for Subaru, which is forecasting its fifth straight year of record U.S. sales this year. Capacity constraints have been the key bottleneck to even faster growth.

Toyota may be willing to shift Camry elsewhere as a gesture to Fuji Heavy. Toyota owns 16.5 percent of the small Japanese automaker, and the companies collaborate on a number of projects, including the Subaru BRZ and the Scion FT-S sporty coupe.

But it poses a big headache for Toyota, which is also strapped for capacity in North America as the market quickly accelerates.

SIA has annual capacity for 100,000 Camrys, and it may be tough for Toyota to absorb that at another North American plant.

Confirmation that the companies are rethinking the Camry comes a day after media in the United States reported that Subaru will stop building the Camry in Indiana by 2017. The company does not plan to renew a five-year contract to build the cars for Toyota, the Journal and Courier of Lafayette, Ind., reported on its Web site, citing Tom Easterday, SIA's executive vice president.

Similar plans were reported separately by WLFI, a local television broadcaster in the area of Lafayette, Ind., where the plant is located. It also cited Easterday.

"Based on changes in Toyota's production plans, they have decided that the award-winning Camry production contract will not be renewed," the Journal and Courier's quoted Easterday as saying.

Looking toward the future

Subaru said earlier this year that it would boost the plant's annual capacity to build Subaru vehicles to 300,000 by the end of 2016, up from 170,000 currently. On top of that, the company has capacity to build 100,000 Camrys a year.

Subaru also said earlier this year it would add production of the Impreza to the factory, its only plant in North America.

The additional capacity Subaru plans to add by 2016 would come from the Toyota line, meaning that Subaru vehicles would be made in mixed production with the Camry on the same line.

Easterday was quoted as saying the Impreza's arrival means no job cuts. The Camry contract ends in 2016, he added.

"There will be no loss of jobs at SIA as a result of this," Easterday was quoted as saying by the Journal and Courier.

"We also know there are future projects that Subaru has in mind for our plant that should add several hundred jobs in the future, possibly by 2018."

Earlier this week, Fuji Heavy President Yasuyuki Yoshinaga said Subaru is planning to introduce a new seven-seat vehicle to replace the Tribeca, which is made at SIA.

He said that vehicle won't debut for at least two years, but declined to say where it would be built.

Subaru needs more capacity, as it aims for annual U.S. sales of 500,000 by 2016. That's up from an estimated 420,000 units expected this year.

Discontinuing the Camry could free up total capacity for 400,000 Subaru-badged vehicles at SIA.

Through October, Subaru's U.S. sales had risen 28 percent to 347,890, in a market that was up 8 percent. That put Subaru's sales for the year ahead of those of the Volkswagen brand, Mercedes-Benz and the Chrysler brand.

The Indiana plant began building Camrys on a dedicated line in April 2007, following Toyota's purchase of an 8.7 percent stake in Fuji Heavy in 2005. Toyota's current 16.5 percent makes it the largest shareholder of Subaru's parent.

The factory originally was a joint venture between Fuji Heavy and Isuzu Motors, known as Subaru Isuzu Automotive Inc., with one line for Subaru's cars and a second for Isuzu's trucks. But Isuzu pulled out because of slack sales. Toyota stepped in, taking advantage of the unused capacity to meet rising demand for the Camry.

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