Toyota, By Subaru

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TOKYO (Reuters) -- Toyota Motor Corp. said on Monday it would use Fuji Heavy Industries Ltd.'s plant in Indiana to build its popular Camry sedan in a move that gives Toyota cheap access to production capacity and helps Fuji cut losses at an underused plant.

Toyota, Japan's top automaker, and Fuji Heavy, the maker of Subaru cars, had been exploring ways to cooperate in production and development since Toyota became Fuji Heavy's top shareholder in October after Fuji Heavy dissolved its capital alliance with General Motors.

Toyota, which now owns 8.7 percent of Fuji Heavy, said it planned to build about 100,000 Camrys a year at the Lafayette, Ind., plant, which has had excess capacity since the withdrawal of Fuji's former joint venture partner, Isuzu Motors.

Investment in the new production will come to about $230 million and about 1,000 new jobs will be created at full production levels, the companies said.

The Japanese automakers also said they would consider developing a hybrid vehicle for Fuji Heavy, based on Toyota's hybrid system.

That could help Fuji Heavy bring hybrid cars to market sooner than it would have on its own, while helping Toyota, the world leader in hybrid technology and sales, achieve its aim of establishing hybrid cars as the main fuel-efficient alternative for conventional cars.

Toyota needs more capacity to build vehicles for the North American market, where it is carving out a bigger share thanks to the popularity of its cars, including its growing line of hybrids.

Meanwhile, Subaru sales have sputtered in the United States -- Fuji Heavy's most important market -- as the premium B9 Tribeca SUV and remodeled Legacy fell short of expectations, leaving the Indiana plant underused.