Manufacturing News

Subaru gives up on Chinese production plan

Subaru parent company Fuji Heavy Industries Ltd. says it no longer expects to start building cars in China as part of a five-year growth plan that runs until March 2016, and lowered its annual global sales target for that period by 50,000 vehicles.

Last July, the Japanese automaker had announced a plan to boost global sales by 40 percent to 900,000 vehicles by 2016, driven in large part by a tripling in Chinese sales.

The company said Tuesday that it would continue to import cars into China after an unsuccessful bid to obtain Chinese government approval for a joint venture with domestic automaker Chery Automobile Co. to build Subaru cars there.

Foreign automakers are required to partner with a Chinese company to produce cars for the local market, and Beijing recently tightened the approval process to favor ventures that plan to make technologically advanced vehicles such as hybrids and electric cars.

A Chinese tariff of 25 percent on imported cars makes it difficult to sell in large volumes.

"We haven't given up on local production in China," President Yasuyuki Yoshinaga told a news conference. "We'll keep waiting patiently for any progress," he said, conceding that plans to start building in the world's biggest car market next year were no longer realistic.

He did not give a new target time frame for China production.

Yoshinaga will take over as CEO of Fuji Heavy in June, when Ikuo Mori steps down to become an adviser.

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