Toyota Motor Corp is boosting its stake in Subaru Corp to about a fifth of the smaller automaker, as Japan’s No. 1 car company adds more heft to face a future of self-driving vehicles, electrification and evolving transport services.
The maker of Forester and Outback wagons is also taking a stake in Toyota, strengthening their capital ties and collaboration, according to a statement from the companies.
Toyota, which is increasing its holding to about 20 percent from 17 percent at a cost of about ￥75 billion (US$700 million) at yesterday’s closing price, plans to make Subaru an equity affiliate, bringing sales and profit from the automaker onto its income statements.
Photo: Bloomberg
Toyota, which first took a stake in Subaru in 2005, is spreading its bets.
The Japanese automaker, Volks-wagen AG and other vehicle companies have been forging partnerships as they face an uncertain future, with new technologies and business models disrupting the US$2.23 trillion global auto industry.
Toyota is investing in electric and autonomous vehicles, fuel-cell and hybrid cars, as data-intensive connected cars.
“This is part of Toyota’s recent efforts to find allies,” Bloomberg Intelligence auto analyst Tatsuo Yoshida said. “They’re getting ready for the next era that includes self-driving technology. Toyota is taking a 360-degree view.”
The two companies have jointly developed automobiles since striking up their partnership. Toyota is by far the larger manufacturer, with 10.6 million cars and trucks produced last year. Subaru made about 1 million vehicles last year, a decline of 5 percent and the first drop in seven years.
Toyota also owns stakes of less than 10 percent in both Suzuki Motor Corp and Mazda Motor Corp.
As part of their pact, Toyota and Subaru are to jointly develop all-wheel drive vehicles — a traditional Subaru strength. They are also to work together on the new Toyota 86 and Subaru BRZ sports cars.
“For Toyota, this alliance brings not just technologies, such as Subaru’s i-Sight, all-wheel-drive and flat engines, but also safety and security know-how,” Yoshida said. “It brings in elements that Toyota doesn’t have.”
By consolidating Subaru to its accounts, Toyota would add about ￥50 billion to annual profit, Macquarie Capital analyst Janet Lewis said.
The deal benefits both companies, as Subaru also gets access to technology it would not be able to develop itself, she said in a note.
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