Feb 21, 2020

Subaru Now Officially a Part of Toyota Motor Corporation

Subaru and Toyota are now officially under one roof, with Subaru leveraging Toyota tech for its electrification agenda.

Back in September last year, renowned Japanese automobile manufacturers Toyota Motor Corporation and Subaru Corporation announced via a press release that they will be teaming up for a business and capital alliance. Such a move is not surprising because the two auto brands have had a long history of collaboration starting in 2005 in which they have been supporting each other in terms of supply and production. Their best-known partnership endeavors were the Subaru BRZ sports car and the Toyota 86, and more collaboration in the future is already an expected, if not a given, scenario.

It seems however that the two automotive companies have bigger plans and have taken their partnership to a new level as Subaru has officially announced it has joined Toyota. Toyota Motor Corporation reportedly augmented its stake in Subaru Corporation from 16.8% to 20%, which makes the latter now formally a part of Toyota Group. Subaru had likewise secured JPY 80 billion (PHP 36.5 billion per latest forex as of this writing) new shares in the form of monetary funds from Toyota.

It is important to note though that this development does not necessarily mean a merger and acquisition, nor does it indicate that Subaru will immediately get absorbed by Toyota as a subsidiary. This is more of an affiliation and a means to reinforce their partnership and leverage each other's strengths. By being part of the Toyota family, Subaru can strengthen its research and development for next-generation technologies as it is obvious that it comes short of its competitors in areas such as electrification and autonomous driving, which are gradually shaping the future of transport.

The alliance with Toyota will ensure a greater chance of success for Subaru's electrification agenda, in which it aims to sell more electric vehicles (EVs) and hybrid electric vehicles (HEVs) by 2030, with a target of 40 percent global sales to come from these vehicle types. Toyota has had a lot of experience in hybrid technology and systems and can propel Subaru to achieve its electrification objectives without much difficulty.

The net earnings of Subaru will be reflected in the consolidated earnings of Toyota, from which both companies will benefit as it will sustain their growth and at the same time increase their corporate value.

With Subaru's electrification program, we can't wait to see what the upcoming, next-generation Outback, Forester and Ascent will be like. It's going to be a decade before we see the fruition of this alliance but from a technological and business standpoint, this is an exciting new development for both brands and for the automotive industry as well.