Subaru plans more fuel-efficient cars

Fuji Heavy, part owned by Toyota after struggling US giant General Motors exited the group last year, has suffered from disappointing sales of all-wheel drive vehicles.

But it swung to profit in the quarter to June on growing sales in Europe and the United States, despite a sagging performance in Japan.

Ikuo Mori, president of Fuji Heavy Industries, said the company planned new fuel-effient vehicles in Europe to meet stricter exhaust gas rules.

"We need to add fuel-efficient compact models to our lineup" in Europe, Mori told the Nihon Keizai Shimbun business newspaper.

"We're pursuing all avenues, including developing our own models or procuring them from other companies," he said.

Mori said the company was shifting resources to the US and European markets from Japan, expanding its US dealership network and introducing new car models in Europe.

"Investment returns are bigger in Europe and the US than in the domestic market, where demand remains stagnant," Mori said.

Fuel-efficient cars have been hot-sellers for Japanese automakers, particularly in the United States whose own struggling car giants were slower to catch on to changing tastes in an era of high oil prices.

Toyota last month outpaced Ford Motor Co. as the second top-selling automaker in the United States and is on track to take GM's crown as the world's top carmaker in output.

Toyota and Fuji Heavy have been jointly developing a new hybrid vehicle.