Subaru to stop building Toyota Camrys in Indiana

Subaru needs more capacity to keep up with demand for its own products.

Subaru and Toyota will not renew a contract to build the Japanese giant's Toyota Camry sedans at Subaru's Lafayette, Indiana, assembly plant, the automakers said today.

Speaking with the USA Today, Subaru of Indiana executive vice president Tom Easterday said that the move is based on "Toyota's production plans."

No mention was made of Subaru's desire to expand production in Indiana. The automaker is planning to hire more workers in Lafayette, but the newspaper indicates that such a move could be delayed slightly by Toyota's decision to pull out.

Easterday did indicate that Subaru will not let go of any workers when Toyota departs.

For the last several years, Subaru has been building Camrys under contract alongside its Legacy and Outback models at the assembly plant located between Indianapolis and Chicago. However, if the reports are accurate, that deal could end in 2017.

Subaru is in the midst of expanding the plant to keep pace with demand for its own vehicles. The Japanese automaker, which is controlled by Fuji Heavy Industries, is planning to begin building its Impreza compact car range in Lafayette in the next couple of years. Notably, Toyota owns about 16.5 percent of Fuji Heavy Industries.

When Subaru and Toyota part ways in Indiana, the move could give Subaru capacity for up to 400,000 of its own vehicles annually, something it desperately needs if it intends to keep pace with current vehicle demand. Subaru is on a roll; this year, it is poised to outsell Volkswagen in the United States.

Read more!