Subaru to stop making Kei Cars

Last week's announcement that Toyota wants to raise its stake in Subaru's parent company Fuji Heavy Industries looked to have no down side. Subaru gets $300 million with which to build a new factory, Toyota gets greater access to FHI's high tech batteries for hybrids, and both get to build the affordable RWD/AWD coupe that we're all waiting for.

But the bean counters in Toyota City have noticed that Subaru's kei car division spends a fortune on developing quirky micro cars such as the supercharged Vivio that Colin McRae campaigned in his first rally (above), the worlds smallest four-seat convertible (below) and the fabulous R2 D2 . The trouble is, profit margins on such marvels of engineering are wafer thin, and that is not the Toyota way. So, come the next decade, Subaru will only sell OEM kei cars made by another member of the Toyota family, Daihatsu.

Most analysts think this this is a good idea, but this one ain't so sure. Eighteen years ago I bought a rear-engined rear-wheel-drive Subaru Sambar. It was such a hoot to drive that I traded up to a Rex, then an RX-R, then a WRX and I now drive a Forester STI. In all likelyhood, my next car will be an Impreza STI.

Will rebadged Daihatsus garner such brand loyalty from young buyers in 2010?

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