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Subaru Shifting Focus Away From China

Maker putting the emphasis back on North America.

by on May.15, 2012

Subaru will downplay China and focus on North America, possibly expanding the Indiana plant building vehicles like the Legacy.

Even as – and perhaps because – much of the rest of the auto industry rapidly ramps up production in China Subaru has decided to scale back its ambitions for the booming Asian market.

With the automotive subsidiary of Fuji Heavy Industries now delaying plans for a Chinese plant it will scale up its presence in the key North American market, reports Automotive News, possibly even with a second assembly plant.

“We will prioritize expanding production in America while we watch the situation in China and consider what to do there when there are some developments,” Fuji President Yasuyuki Yoshinaga told the trade publication.

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Subaru is a relative latecomer to the Chinese market, something that might not have been a problem until recently.  But that country’s automotive market has entered into an unexpected slowdown worsened by an overall cooling of the Chinese economy.  Meanwhile, major automakers, such as General Motors, Volkswagen and Nissan, are already battling it out in China raising concerns about the chances of a newcomer like Subaru.


Is China’s Car Market About to Stall?

Sales to miss government’s already modest expectations; margins also softening.

by on Mar.22, 2012

Mercedes is reportedly slashing prices by as much as 25% in China.

At a time when the world auto industry was ready to collapse, the Chinese market offered a rare and desperately sought beacon of hope.  Even as demand in the U.S. market plunged to its lowest levels in decades, China continued to deliver double-digit growth, propelling the emerging market to global sales leadership.

Ironically, as the U.S. market recovery begins to heat up, China is showing signs of an unexpected slowdown – one that is proving particularly worrisome in the luxury segment, and which could slam manufacturers like Mercedes-Benz, BMW and Audi who have counted on China for a disproportionate share of their profits in recent years.

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For the year-to-date, Chinese light vehicle sales are down a notable 4.4%.  The China Association of Automobile Manufacturers now predicts overall sales will only grow by about 5% for the full year – missing the government’s goal of 7%.  By global standards, that’s nonetheless significant – but put into perspective it’s clearly worrisome when one recalls recent annual growth rates that, at times, approached 100%.