Report: Toyota to build Ractis subcompact for Subaru

Starting this fall, Subaru of Japan will add a subcompact model to its lineup of vehicles courtesy of Toyota. The Nikkei is reporting that Toyota will supply subcompact cars on the OEM level to Fuji Heavy Industries, parent company of Subaru. For Toyota, the decision to supply finished vehicles to a rival Japaneses automaker is a company first. Toyota currently holds a 16.5 percent stake in Subaru and that has undoubtedly impacted its decision to supply vehicles to one of its main competitors.

Information on the Toyota-Subaru subcompact deal is sparse, but the Nikkei writes:

Toyota is expected to supply the Ractis subcompact, which is available with a 1.3- or 1.5-liter engine. It will likely make some slight modifications to the vehicles destined for its partner when the Ractis goes through a full remodeling. About 10,000 units will likely be shipped to Fuji Heavy a year. Subaru decided to receive subcompacts from Toyota on the view that demand for such low-priced, fuel-efficient vehicles will grow. The current Subaru lineup does not include any 1.3- to 1.5-liter models. Plans also call for Toyota to provide technologies for hybrid vehicles.

If the deal pans out, Toyota will benefit from increased sales of its Ractis model, while Subaru will profit from the immediate availability of a fuel-efficient subcompact. In addition, the deal will allow Subaru to focus solely on its highly successful lineup of core vehicles.

[Source: Nikkei -– sub. req. via Green Car Congress]