Toyota to Build Vehicles at Fuji Heavy's U.S. Factory (Update1) Nov. 28 (Bloomberg) -- Toyota Motor Corp., the world's second-largest carmaker, may make vehicles at Fuji Heavy Industries Ltd.'s U.S. factory, raising annual North American capacity by about 6 percent by 2008, said three officials familiar with the plan.
Toyota may build between 100,000 and 120,000 units of either the Camry sedan or the Highlander sports-utility vehicle at Fuji Heavy's Lafayette, Indiana factory starting in 2007, said the officials, declining to be named. The presidents of Toyota and Fuji Heavy may discuss the plan next week, the officials said.
The plan will give Toyota, which bought 8.7 percent of Fuji Heavy last month from General Motors Corp., capacity to build 1.93 million vehicles in the U.S. without having to increase capital spending. The carmaker, based in central Japan's Aichi Prefecture, is forecasting a fourth year of record profit by March 2006, challenging GM as the world's largest carmaker. ``It's a faster way for Toyota to expand its production capacity instead of building a new factory,'' said Hitoshi Yamamoto, who manages $1 billion of Japanese equities as president of Commerz International Capital Management (Japan) Ltd. in Tokyo. Toyota's spokesman Hideki Fujii and Fuji Heavy's spokesman Masaru Shoji declined to comment on the two carmakers' plan.
Toyota shares, which gained 41.5 percent this year, rose
2 percent to a record intraday price of 5,950 yen at the 11 a.m. trading pause in Tokyo. Fuji Heavy shares rose 1.3 percent to a 32-day high of 613 yen.Toyota's Strategy
GM is cutting its North American production capacity by 30 percent over six years to 4.2 million units in 2008, part of Chairman Rick Wagoner's plan to shutter
12 production sites and cut 30,000 jobs to reduce costs. Toyota, aiming to increase its global market share to 15 percent in the next decade from the current 12 percent, gets about 60 percent of its fiscal 2004 operating income from U.S. sales.The carmaker, which makes vehicles and components in more than 60 factories in 27 countries and regions, is expanding abroad, part of President Katsuaki Watanabe's strategy to shield Toyota's earnings from a fluctuating yen and deliver vehicles faster to customers.
Fuji Heavy Alliance
Toyota bought 8.7 percent of Fuji Heavy in October for about $315 million cash, buying the stake from Detroit-based GM. Toyota and Fuji Heavy plan to cooperate in ``vehicle development and production,'' Toyota Executive Vice President Mitsuo Kinoshita said on Oct. 5 in Tokyo.
The two companies also plan to exchange technologies and engineers in advanced technology, including gasoline-electric hybrid systems and Toyota may hire some of the 700 workers Fuji Heavy plans to retrench. ``We are focusing on development and production now'' and the companies have no plans for joint procurement or sales at the moment, Toyota's president Watanabe said on Nov. 14, without giving more details.
Fuji Heavy uses less than half of its production capacity at the Indiana plant, set up in 1987. The carmaker expects to build 120,430 Subaru vehicles this year at the factory, out of a total capacity of 262,000 cars and trucks a year on two lines.
Toyota, which may surpass GM as the world's biggest automaker as early as next year, boosted capital expenditure by 12 percent to a record 1.4 trillion y en ($11.7 billion) as it expands existing factories and sets up news ones in Asia, Eastern Europe and North America.