Fuji Heavy puts Chinese production plans on ice

TOKYO (Nikkei)--Fuji Heavy Industries Ltd. (7270) has decided to shelve plans to start making passenger vehicles at a joint venture plant in China next year because it has yet to receive government approval, company sources said Friday.

Under midterm business plans to fiscal 2015 that it announced in July 2011, the Subaru-brand carmaker was to build a factory with Chery Automobile Co. in Dalian, Liaoning Province. Production was to begin in 2013, starting with an annual output of 50,000 vehicles and expanding to 150,000 in fiscal 2015. Last summer, it sought government approval for joint production.

But to eliminate excess capacity, the Chinese government has been increasingly stringent in screening foreign automakers setting up shop and boosting output. Since it had yet to win approval for the production plan, Fuji Heavy concluded that there would not be enough time to begin operations as scheduled next year.

The Japanese carmaker will continue to cooperate with Chery and negotiate with the Chinese government for its blessing of local production.

Fuji Heavy currently exports assembled autos from Japan to China. To offset the latest setback, it will increase production capacity in Japan and the U.S. by 50,000 units annually as a way of expanding exports to China and other markets. Yet it may have to review its plans for selling 180,000 cars in China by fiscal 2015 because of the delayed start to local production.

(The Nikkei, April 21 morning edition)

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