LAFAYETTE, Ind. (AP) — Subaru announced Monday it plans to spend $140 million to boost vehicle production at an Indiana factory and add up to 1,200 jobs in the next two years.
The Lafayette factory will see its production capacity grow by 100,000 vehicles a year from its current 300,000, the company said.
The production increase comes after Subaru sold a record 52,697 vehicles in the U.S. during August and represents a show of confidence by parent company Fuji Heavy Industries in Subaru's only assembly factory outside Japan, said Tom Easterday, Subaru of Indiana Automotive's executive vice president.
"The substantial increase in our production volume at SIA will also result in new jobs and investment by many of our suppliers across the state of Indiana," Easterday said.
About 3,800 people now work at the factory that currently builds the Subaru Outback SUVs and Legacy sedans. It is expected to start building Impreza sedans by the end of next year under a $400 million investment in new equipment and other improvements that the company announced in 2013.
Subaru's sales have nearly doubled since 2011 as the company was able to squeeze better gas mileage out of its small all-wheel-drive SUVs. The company sold almost 514,000 vehicles in 2014 and its sales are up 12.5 percent so far this year, according to Autodata Corp.
Subaru's decision appears to be a prudent move that shows commitment to the American market since its growth has outpaced other automakers in recent years, said Mike Jackson, the head of North American vehicle forecasting for the consulting firm IHS Automotive.
"They've actually been so constrained in terms of demand over this past 12- to 18-month window that they've probably lost out on some potential for sales," Jackson said.
Easterday said the Lafayette factory has already started hiring for the new positions that it anticipates having fully in place by 2017.
Subaru's decision is a further boost for the Lafayette factory, which saw an expected hiring spree for the Impreza production stall in late 2013 when Toyota decided not to renew a contract for the plant to produce its Camry midsize cars that ends next year.
Indiana Gov. Mike Pence, who joined Subaru and Lafayette-area officials for Monday's announcement, said company executives told him during a trip to Japan last week of the decision to expand the factory that opened in 1989.
Pence called Subaru's investment "an extraordinary statement of confidence, not only in this operation, but in the people of the state of Indiana, and we are truly grateful for this widening partnership."