Toyota, Daihatsu and Subaru Join Forces on Product Development, Vehicle Sharing
April 10, 2008

By Michelle Krebs

Japanese automakers Toyota, Daihatsu and Subaru parent, Fuji Heavy Industries, announced they have joined forces to develop new vehicles, including a small rear-drive sports car, and supply each other with cars. As expected, Toyota also doubled its stake in Fuji, a stake that could go even higher.

The agreement unveiled at a press briefing in Tokyo Thursday calls for the following product actions:
· Toyota and Fuji will jointly develop a compact rear-drive sports car to be marketed by both companies;
· Toyota will provide Fuji with a compact car;
· Daihatsu will supply Fuji with minivehicles and a version of the Daihatsu Coo compact car.

The trio's joining forces represents a sign of the times -- further consolidation of the global auto industry and increased cooperation among automakers to cut costs. The arrangement allows the companies to beef up their product portfolios, especially with slim-profit small cars, run assembly plants at full capacity and share development costs so no one company has to go solo on all such costs.

The New Products

The rear-drive sports car "is envisioned to offer a new fun to drive experience" based on an all-new vehicle platform and powered by a horizontally-opposed engine, technology for which Fuji is famous, according to the press release jointly issued by the three companies. The new vehicle is scheduled for introduction by the end of 2011 and will be produced at Fuji’s Gunma Manufacturing Division in Japan’s Gunma Prefecture. Fuji and Toyota will both sell the car.

Toyota will begin providing a compact car that the companies didn’t name to Fuji by the end of 2010 as a way to expand Fuji’s product portfolio, the companies said. Fuji’s product portfolio will be further expanded beginning this October when Daihatsu supplies Fuji with 6,000 units annually of its Coo compact vehicle, produced at Daihatsu’s Head (Ikeda) plant in Osaka.

Daihatsu will supply minivehicles to Fuji, as it already does to Toyota, in the second half of 2009. The arrangement will allow Fuji to focus its resources on research and development as well as production of its main products, the companies said. The arrangement also will help Daihatsu improve its cost competitiveness by increasing its production volume, they said.

In the U.S., Fuji already produces vehicles for Toyota -- the Toyota Carmy -- at its Subaru of Indiana assembly plant. In Europe, Daihatsu produces a compact car sold there by Fuji.

Toyota: Double’s Its Fuji Stake

As had been rumored for the past week, Toyota increased its stake in Fuji. Under the new agreement, Toyota will acquire 61 million Fuji shares for $310 million now owned by Fuji, bringing its total stake in the company to 16.5 percent from 8.7 percent.

Toyota bought its initial interest in Fuji in October 2005 in the wake of Fuji’s hasty divorce from General Motors. Industry observers at the time speculated Toyota would continue to increase its holdings in Fuji.

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