Toyota Purchases Bigger Stake in Subaru

Since General Motors sold its shares of Fuji Heavy Industry (also known as

the purveyor of Subaru automobiles) to Toyota, the Japanese brands have teamed up in some strategic product alliances. Toyota made use of Subaru's underutilized Lafayette, Indiana assembly plant to construct more Camrys, and since that time, rumors have surfaced that the two are working on a new, affordable sports car featuring Subaru's legendary boxer engine layout that is to be sold under both brands.

When Toyota purchased its first stake in Subaru on the 5th of October, 2005, it bought 8.7-percent of the company, a fairly large portion of the 20.1-percent which was owned by GM at the time. Down the road, GM sold off another 11.4-percent of the brand (but, not to Toyota). Late last week, Toyota announced that it would be purchasing 61 million additional shares of Fuji

Heavy Industries, bumping its stake in the brand up to 16.5-percent. Toyota paid 510 yen per share, for a total cost of $309.8 million dollars.

Aside from the gained capital it received from the sale of shares, which will be invested into future technologies and R&D, Subaru will also benefit from freeing up production space at its Gunma, Japan assembly plant. It will cease to produce domestically-marketed Kei cars at this facility in preparation to build the new, aforementioned sports car. The next generation of its tiny, city-sized vehicles, set to launch in 2010, will be badge-engineered products built by Daihatsu, a small car specialist of which Toyota owns a controlling stake.