According to recent reports, the manufacturing partnership between Toyota and Subaru at the Subaru Indiana Automotive (SIA) plant will end by 2017. Currently, Subaru manufactures about 100,000 Toyota Camry models annually at its SIA plant.
According to Tom Easterday, SIA executive Vice President, Toyota will not renew the 5-year Camry production contract that expires in 2016. “Based on changes in Toyota’s production plans, they have decided that the award-winning Camry production contract will not be renewed,” Easterday told the Louisville Journal & Courier.
Toyota spokesman Curt McAllister did not elaborate when reached for comment. “We are not in a position to talk about future production plans at this time,” said McAllister.
Subaru officials also declined to comment on the recent report.
The news is not completely unexpected in light of our previous report in January, which detailed speculation that Subaru might either cut Toyota Camry production or expand its own product line in order to meet the skyrocketing demand for Subaru vehicles in the U.S. It appears Subaru might end up doing both in order to reach its lofty 400,000 unit U.S. manufacturing goal by 2016.
In May, Subaru announced it would expand its manufacturing operations at the Lafayette, Indiana plant. The expansion constitutes a $400 million investment, which would add capacity and a third shift of workers to manufacture as many as 100,000 extra cars annually, including the addition of the Subaru Impreza to the assembly line.
The Impreza is expected to begin production in Indiana come 2016 — the same time that Toyota Camry production expires if no new contract terms are reached. Currently, the Lafayette factory assembles the Subaru Outback and Legacy, and will end production of the Subaru Tribeca in January 2014.
As Subaru races to meet this high demand, it will definitely benefit from the improved capacity at its Lafayette plant. The addition of the Subaru Impreza to the Indiana assembly line will also aid profits, since the currently Japanese-manufactured vehicle is subject to import costs.
The announcement reflects continuing positive results from Subaru, which recently posted that year-to-date sales are up 28 percent to 347,890, with the Subaru Outback leading the charge at 98,195 vehicles sold. Adding more capacity for the Subaru Impreza will only improve how many cars the automaker can sell.