Fuji Heavy, Chery agree on China Subaru deal -sources

BEIJING, May 24 (Reuters) - Fuji Heavy Industries has agreed in principle to make Subaru vehicles in northeastern China with Chery Automobile, the country's largest independent automaker, two people with knowledge of deal said on Tuesday, marking the latest foreign manufacturing tie-up in the world's biggest auto market.

The Chery deal, if it goes ahead, would give the Japanese automaker a foothold in China, joining the ranks of General Motors and Volkswagen , which had already carved up a major chunk of market where vehicle sales had topped 18 million in 2010. "Chery and Fuji have agreed on the major terms and conditions of making Subarus in the city of Dalian and are now communicating with Chinese regulators to seek their endorsement," one person briefed on the matter told Reuters.


The terms and conditions were similar with what had been previously reported, the person said, declining to elaborate.

The Nikkei business daily reported in late 2010 that the two companies were in advanced talks to build a 30 billion yen ($366 million) China plant, with initial annual capacity of 50,000 units, rising to 150,000 eventually.


New auto manufacturing ventures in China need to be approved by government bodies, including the top economic planner, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, which oversees major industry policies.

Another person close to the companies told Reuters that Fuji Heavy was still occupied with recovery efforts after the devastating March 11 earthquake and tsunami, contributing to a postponement of the announcement of its China tie.

Like all the other Japanese automakers, Fuji Heavy suffered from the disaster. Disruption to the supply chain had snapped its sales momentum, causing a loss of some 15,000 units in car sales in the few weeks remaining in the business year that ended on March 31.  A Fuji Heavy spokesman said the company had no further comment after admitting late last year that Chery was among its potential partners in China.
Chery spokesman Jin Yibo said he had no information on the deal.

A formal announcement of the deal is expected in the coming months. It will make Chery the latest Chinese car maker to have a foreign partner, joining bigger auto groups SAIC Motor Corp , Dongfeng Motor Group , Chongqing Changan Automobile among others.


CHINA TIES
China, which eclipsed the United States as the world's top auto seller in 2009, is too important to miss for most industry players, including top Japanese brands Toyota Motor , Nissan Motor and Honda Motor which formed their local alliances years ago.

Fuji Heavy, has been seeking a tie in China, where only imported Subaru models, such as Legacy, Forester, Impreza and Tribeca are offered via select agents, including Pangda Automobile Trade Co , China's largest publicly traded auto dealer.
The smallest Japanese automaker had previously approached a number of Chinese automakers for a possible tie, including SAIC, a long-time partner of GM and Volkswagen, industry sources said.

Chery Auto, best known for its hot-selling compact car QQ, had explored opportunities to export Chinese-made small cars to developed markets under the Chrysler badge.

But the deal was called off after Chrysler, now controlled by Fiat , reached a similar pact with Nissan Motor . Chrysler's bankruptcy amid of a steep industry downturn in North America was also cited as a reason.
In 2010, Chery sold 682,058 vehicles, up 36.3 percent year-on-year, outpacing a 33.2 percent gain in China's car market as well as Warren Buffett-backed BYD , which sold 519,806 cars, up 15.5 percent.


Geely Automobile , whose parent owns Volvo Cars, sold 415,286 cars last year, up 27.1 percent.
Chery, which started selling cars overseas in 2002, is now China's biggest auto exporter with year-to-date shipments exceeding 500,000 units. It operates 16 assembly plants overseas, including a $400 million facility in Brazil that will eventually be capable of making 150,000 cars per year.

In 2011, Chery aims to ship 120,000 cars overseas, mostly to developing markets in Southeast Asia, the Middle East and South America, up over 30 percent from 2010.

 By Fang Yan and Ken Wills

Subaru dealer sells sumo wrestler-damaged Forester...

Subaru of Canada made the ad I featured in my last blog with sumo wrestlers lounging on the hoods of new Foresters. Funny, but not as much to a customer who bought one of the Foresters and found sumo-related dents after he took it home.


The owner told a Subaru forum that he didn't even know his car had been used as a sumo sofa until he complained, "So I picked up my new 2011 Subaru Forester last weekend. Drove it home, parked in the sun to get a good look, and much to my dismay, noticed small imperfections in the hood... as if someone placed something heavy on the hood. Not really dents... just areas where the light reflections show up shallow imperfections. At first I wasn't going to complain, thinking "it's not noticeable unless you really look..." but every time I looked...there it was."

He continued, "I drove back to the dealer (Don Docksteader in Vancouver), and they said, "no problem, we will take care of that for you... must have happened when we shot the latest Sumo Wrestler Ad...","

The estimates for traditional repair run $2,500, thanks to that magical body-work inflation where one dent ripples across several panels; apparently the dealer had six other vehicles that will need fixing due to the shoot. Maybe Subaru Canada should always try animation first.

Subaru Lampoons Supermodel Ads With Sexy Sumo Wrestlers

 NORTHEND SUBARU — In a hilarious volley that appears to be aimed at Nissan and Lexus, Subaru of Canada has debuted a 2011 Forester ad populated by thong-wearing sumo wrestlers. The ad lampoons the Sports Illustrated swimsuit issue automotive tie-ins featuring supermodels launched earlier this week by Subaru's Japanese competitors.

The Subaru ad is being met with praise by online auto observers. "Unlike the bikini-wearing models in other ads, you're not left wondering where the car is," wrote Motor Authority on Thursday. "If anything, your eyes seek out the Forester, if only for aesthetic relief." It notes that the hood of the Forester appears to be "surprisingly strong," bearing up well under the tremendous weight of the sumo wrestlers.

With "Boys Wanna Be Her" from the 2006 album Impeach My Bush by Peaches pounding in the background, the Subaru ad shows the sumo wrestlers in a variety of seductive poses. They frolic on the hoods of the Foresters, eating ice cream, nibbling on strawberries and assuming the lotus position while the car is parked on a beach.

"Sexy Comes Standard" is the advertisement's tag line.

Earlier this week, Lexus unveiled a much more serious video showing a Lexus LFA facing off against a bikini-clad Dutch supermodel in a tie-in with the Sports Illustrated swimsuit issue. Nissan also partnered with the Sports Illustrated swimsuit issue, debuting a tongue-in-cheek video pitting supermodels wearing heels and bikinis in a comparison test with the Nissan Juke.

Just the Facts:

• Subaru of Canada debuts a 2011 Forester ad populated by sexy sumo wrestlers, lampooning the Sports Illustrated swimsuit issue tie-ins at Nissan and Lexus.
• The sumo wrestlers are shown on the hood of the Forester, seductively eating strawberries and being hosed down with the car at a car wash.
• "Boys Wanna Be Her" from the 2006 album Impeach My Bush by Peaches provides the spicy musical accompaniment to the commercial.