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Toyota Ends Camry Production at Indiana

TM GM FUJHY F

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Toyota Motor Corporation’s (TM - Analyst Report) Camry will stop being assembled at Fuji Heavy Industries Ltd.’s (FUJHY) Lafayette, Indiana plant from 2017. Fuji will use the resultant free capacity at its plant to increase the production of its Subaru vehicles. The company wants to expand the production capacity of the plant to 300,000 Subaru vehicles per annum.

The Indiana plant produces 100,000 Camry and 170,000 Subaru vehicles annually. Camry production was started in the plant in 2007.

Camry is also produced in Toyota’s plant in Georgetown, Kentucky. Toyota, one of the top share holders of Fuji Heavy Industries, commands a 16.5% stake in the company.

Fuji intends to build Impreza models in the Lafayette facility. This additional product will prevent the loss of employment of workers involved in Camry production. The company expects sales of the Subaru Forester to increase by 25% to 420,000 vehicles this year

Toyota posted earnings per share of ¥138.26 ($1.40) in second-quarter fiscal 2014 (ending Sep 30, 2013), reflecting a strong 69.8% year-over-year rise. The company gained heavily from higher revenues, favorable currency translation and strong cost-controlling measures.

Consolidated revenues in the quarter climbed 16.2% year over year to ¥6,282.2 billion ($63.5 billion) despite a 0.5% year-over-year drop in the Automotive unit sales.

Toyota plays a pivotal role in shaping the global automobile industry. The automaker dominates the hybrid market with its Toyota and Lexus offerings as well as the Prius hybrids. Moreover, it is the leading automobile company in terms of global sales, beating another automobile giant General Motors Company (GM - Analyst Report).

However, Toyota faces challenges from safety recalls and adverse macroeconomic factors that are detrimental to its brand image and growth prospects.

Ford Motor Co. (F - Analyst Report) carrying a Zacks Rank #1 (Strong Buy) is worth considering in the same industry where Toyota operates.

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