Toyota to raise its Subaru stake

Subaru impreza

Toyota Motor is going to raise its stake in Subaru Corp to 20% from around 17%, the two Japanese automakers stated on Friday, as they leverage their scale to better rival in developing new vehicle technologies.

The investment comes one month after Toyota and another smaller Japanese automaker, Suzuki Motor, stated they would take small equity stakes in each other.

Such tie-ups highlight how car manufacturers are scrambling to chase scale, manage costs and boost development needed to develop self-driving cars, electric vehicles and new mobility services which are upending the worldwide auto industry.

“In this once-in-a-century period of profound transformation, by strengthening their bonds and aligning their capabilities, Toyota and Subaru aim … to make ever-better cars,” Toyota stated.

Japan’s biggest automaker whose yearly global vehicle sales are 10 times that of Subaru, stated its investment would amount to up to 80 billion yen ($742 million) based on Subaru’s stock market value. The smaller automaker will reciprocate by purchasing a stake in Toyota of equal value.

Traditional automakers, especially smaller ones including Subaru and Suzuki, are struggling to meet the fast pace of modification in an industry which is moving to a business model of providing transportation services from simply selling vehicles to drivers.

Their deepening partnerships with Toyota, which already oversees a vast, closely knit network of group firms that consist of suppliers, vendors and commercial vehicle makers, has raised speculation that these smaller car manufacturers may be absorbed into the Toyota fabric in the future.

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