Fuji Heavy Industries delaying decision on Subaru expansion in the U.S. image

Fuji Heavy Industries, the parent company of Subaru, said it delayed a decision on expanding the capacity in the U.S.

The reason for this is slumping demand in China and Europe, which gave Subaru more room to ship vehicles to the United States. Fuji Heavy Industries will make a decision on the matter by the end of the fiscal year ending March, instead of the end of December as it originally planned. FHI president Yasuyuki Yoshinaga said the company will probably choose an “incremental” expansion in U.S. manufacturing rather than building a new factory.

FHI’s decision shows how the slump in Chinese demand for Japanese products is affecting global strategies. Yoshinaga said the company dealed with sales declines in China and Europe by diverting shipments to the U.S. and Japan, where sales are on the rise. Fuji Heavy Industries aims to sell 348,800 cars during the current fiscal year in the U.S., its largest market. The Japanese carmaker hopes demand for the Legacy and Forester will drive growth next year.

Other models, such as the Tribeca SUV, aren’t doing well. Subaru is considering the discontinuation of the Tribeca, of which only 2,800 units were sold last year in the U.S.