Fuji Heavy Industries, which makes Subaru cars, plans to shed 5% of its work force by March in an effort to reduce costs after a tie-up with Toyota, a news report said on Monday, according to The Associated Press (AP).

But Tokyo-based Fuji Heavy told the news agency nothing has been decided and declined to comment.

AP said the report in the Nihon Keizai newspaper, which did not give a source, said the company will target 700 job cuts through a voluntary retirement programme starting in November – the cuts are expected to save the automaker JPY5bn (US$43.5 million; EUR36.2 million) a year.

AP noted that Toyota last month agreed to buy an 8.7% stake in Fuji Heavy from General Motors for about US$315m. GM plans to sell its remaining 11.4% stake in Fuji Heavy and dissolve its alliance with the company, leaving Toyota the top shareholder in Fuji Heavy.

At the time, Fuji Heavy also cut its profit outlook for the year ending March 31, 2006, to JPY12bn from an earlier forecast of JPY15 bn, citing slumping sales, The Associated Press added.