December 25, 2014 / 4:47 AM / 3 years ago

Subaru scraps plan to shift Crosstrek production to U.S.: source

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A Subaru sign is pictured at a car lot in Carlsbad, California November 5, 2014.Mike Blake

TOKYO (Reuters) - Fuji Heavy Industries (7270.T), the maker of Subaru brand cars and SUVs, has scrapped a plan to shift production of the new XV Crosstrek to its U.S. plant and will instead make the SUV in Japan, a source familiar with the company's production plans said.

Fuji Heavy, which has a policy of making cars in markets where they are sold, decided to make the new vehicle in Japan because of capacity constraints in Indiana and the relatively high sales price of the crossover SUV, which makes domestic production more viable, the source said.

Pricing for the Crosstrek starts at just under $25,000 for the limited edition and just under $30,000 for the hybrid version.

The company had originally planned to make about 65,000 XV Crosstrek vehicles a year in Lafayette, Indiana, but will instead assemble them at its plant in Gunma prefecture, northwest of Tokyo, according to production plans reviewed by Reuters and a person with knowledge of the situation, who asked not to be named.

The automaker has achieved record-breaking sales in the United States, with a 21 percent surge in the year through November compared with a year earlier.

A Fuji Heavy spokesman said he could not comment on production plans for individual vehicles but said there was no change to the company's overall strategy of localizing production.

Fuji Heavy's decision to keep Crosstrek production in Japan follows moves by other Japanese automakers to shift some production back home as the yen weakens.

Since mid-October, the yen has lost about 11 percent against the U.S. dollar and now trades above 120 per dollar, its lowest since 2007.

Fuji Heavy is planning to begin manufacturing the Crosstrek in Japan around April 2017, the source said.

Toyota Motor Corp (7203.T) announced in late 2013 that it would end its arrangement with Fuji Heavy for producing Camry sedans at the Indiana plant, freeing up capacity for Subaru models.

Toyota is considering moving production of some new Camrys from its Kentucky plant to Japan, sources familiar with the situation told Reuters this week.

Nissan Motor Co (7201.T) CEO Carlos Ghosn told reporters last week that the automaker would take advantage of the weakened yen to return production of its popular Rogue SUV to a Japanese plant for export to the United States.

Writing by Mari Saito and Kevin Krolicki; Editing by Edmund Klamann

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