Toyota plans to stop using partner Subaru to help it meet demand for the Camry.
The manufacturing alliance between Japanese giant Toyota and little Subaru is apparently coming to an end.
Toyota has notified its partner that it will stop producing its long-popular Camry model at the assembly plant Subaru operates in Lafayette, Indiana once their five-year contract expires in late 2016. The move is not expected to end other joint ventures, however, such as the one that led to the development of the sports car sold in the U.S. as both the Scion FR-S and Subaru BRZ.
And Subaru officials are saying they’re optimistic the Indiana plant not only will be able to maintain but even increase its current staffing levels.
“Based on changes in Toyota’s production plans, they have decided that the award-winning Camry production contract will not be renewed,” said Tom Easterday, executive vice president at Subaru of Indiana.
The plant was originally opened in 1989 as part of an earlier joint venture pairing Subaru and Isuzu. The latter maker abandoned the venture in 2001 and subsequently pulled out of the American market, leaving the facility entirely to Subaru.
Despite early concerns that the carmaker wouldn’t be able to maintain the factory on its own – which led to the Camry production contract – Subaru appears to be betting that it will more than survive the latest setback.
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In May, the Japanese maker announced plans to invest $400 million into SIA and to boost the current employment of 3,600 by another 900 jobs. That was intended to allow Subaru to start building its little Impreza model – and possibly some other products – on the line.
The facility currently assembles the Legacy, Outback and Tribeca models – however, the slow-selling Tribeca is going to be dropped at the end of the 2014 model-year. And that, several analysts suggest, could actually be Subaru of Indiana’s salvation.
The Tribeca has been the rare exception for a brand that continued to grow sales and market share even during the deepest trough of the recent economic collapse. Subaru is expected to reveal a replacement for the crossover-utility vehicle in the coming months and if it goes into Indiana it might be able to pick up some of the slack from the loss of the Camry model.
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Indeed, SIA’s Easterday promised, “There will be no loss of jobs at SIA as a result of this,” adding that, “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.”
As to why it has decided to pull out of Indiana, Toyota issued a statement saying only, “We are not in a position to talk about future production plans at this time.”
There are no indications pulling out of Indiana would affect Toyota’s relationship with its smaller partner – Toyota currently holds a 16.5% stake in Subaru’s parent Fuji Heavy Industries. The two are, if anything, looking for ways to boost demand for their small sports – which is also sold in other markets through the Toyota brand. And there are other possible vehicle programs that have been reported in the media over the past year.
(Subaru snuffs out the Tribeca. Click Here to find out why.)