Subaru Observes Speed Limit on Production Growth

TOKYO—The maker of Subaru cars said Wednesday it doesn't plan to ramp up production for U.S. consumers quickly, despite tight inventory, because it would rather have shortages than overproduction.

"We don't wish to increase dealer inventory excessively and hope to keep it at a level where there is a slight shortage," said Yasuyuki Yoshinaga, chief executive of Subaru maker Fuji Heavy Industries Ltd.

He said other manufacturers would typically try to maximize production in such cases, and "I think we are unusual for being cautious."

Consumers in the U.S. have flocked to Subaru's vehicles, creating shortages at many dealers. Subaru said its inventory for the Subaru WRX STI sedan and Crosstrek sport-utility vehicle stood at less than 15 days of sales.

The company released results for the half-year ending Sept. 30 and said it sold 512,000 vehicles globally during the period, up 8.4% compared with a year earlier. Net profit fell 15% to ¥ 164 billion ($1.57 billion) for the period. The high yen reduces the value in yen terms of the dollars Subaru earns in the U.S. and hurts the competitiveness of Subaru parts manufactured in Japan.

Subaru's U.S. sales have consistently grown for the past eight years, and the U.S. now accounts for about 60% of its global sales.

To address the shortage of vehicles at U.S. dealers and reduce the risk from foreign-exchange fluctuations, Subaru said it would expand annual production capacity at its plant in Lafayette, Ind., to 436,000 vehicles by March 2019, double the level in the year ending in March 2016.

The plant started to manufacture the new Subaru Impreza in November in addition to the Legacy and Outback models. But the company said it wouldn't press the factory to crank out every possible car in this period of shortage, fearing overstocked lots later. For the year ending March 2017, it reduced its U.S. production target to 336,000 vehicles from an earlier target, set in August, of 341,000 vehicles.

Write to Chieko Tsuneoka at [e-mail]

(END) Dow Jones Newswires

November 02, 2016 08:15 ET (12:15 GMT)

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