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After the capture of Subaru, the Toyota Group Alliance was formally formed. Subaru news agency recently released that Subaru's main shareholder and Toyota Motor, the largest external shareholder, reached an agreement to increase Toyota's stake in Subaru from 16.8% to 20%. Since then, Subaru has been transformed into an equity company of Toyota, and Subaru's profit and loss results will be included in Toyota's subsequent financial results.

It is understood that Toyota Motor Capital increase Subaru reached a consensus as early as September 2019, which will help the two sides deepen cooperation and invest more effectively in emerging areas and new technologies. The agreement will come into effect on February 6, 2020. Toyota expects to spend 70 billion yen (about 4.47 billion yuan) to increase its stake in Subaru to 20%, while Subaru will pay the same amount for less than 1% of Toyota.

Under the new agreement, the two sides will once again make full use of Subaru's four-wheel drive technology and Toyota's electric technology to jointly develop new models, including electric models produced and sold based on the new EV dedicated platform, while the two sides will cooperate in self-driving and intelligent networking.

The business partnership between Toyota and Subaru began in 2005, when General Motors urgently needed to sell all of Subaru, then known as Fuji heavy Industries, because of a financial crisis. Toyota then bought most of the Subaru shares that were sold.

After the cooperation between the two sides, the joint project between Toyota 86 and Subaru BRZ is the most famous product in the cooperation between the two sides for many years, and it is said that the next generation 86/BRZ will also adopt the model of joint development. In terms of electrification, Toyota and Subaru announced in June 2019 that they planned to develop an electric SUV to be sold separately under the brands of the two companies, which is expected to be launched in 2020. The cooperation statement also said that Subaru's four-wheel drive technology and Toyota's electrification technology would be applied to the new SUV.

It is worth noting that after Toyota's contribution to Subaru increased to 20% and included in the financial report, Subaru officially became a member of the Toyota Group Alliance. Taking into account Subaru's sales, Toyota Group will surpass Volkswagen Group and is expected to win the top spot in global sales.

According to the global sales data of Toyota Group in 2019, including its Toyota, Lexus, Daihatsu and Hino brands, a total of 10.7421 million vehicles were sold worldwide, an increase of 1.4% over the same period last year. Global sales of Subaru rose 4 per cent to 1.042 million in 2019. The new Toyota Group is expected to sell 11.7841 million vehicles in 2019, surpassing Volkswagen's 10.9746 million.

In the latest results, Subaru's operating income fell 2.3 per cent to 888.9 billion yen in the third quarter (October 1, 2019-December 31, 2020); operating profit fell to 57.8 billion yen; and net income fell 42 per cent to 43.4 billion yen (about 2.77 billion yuan). The sharp drop in profits was mainly due to falling sales in the current quarter, higher recall costs and adverse exchange rate losses.

However, Subaru's earnings forecast for the current fiscal year to March 31, 2020 remained unchanged, with operating profit rising 21 per cent to 220 billion yen and net profit rising 15 per cent to 163 billion yen (about 10.4 billion yuan).

With the rapid rise of the new four modernizations and the growing maturity of the business concept of cost control, more and more automakers are seeking capital cooperation. In August 2019, Toyota announced a formal capital alliance with Suzuki to acquire a 5% stake in Suzuki, while Suzuki acquired a 0.2% stake in Toyota, forming cross-shareholdings and starting business cooperation.

In addition, Toyota and Mazda also form cross-shareholdings. Toyota owns about 5% of Mazda and Mazda owns about 0.25% of Toyota, thus strengthening the partnership and planning to jointly develop electric vehicle technology. Mazda Toyota Manufacturing Company was officially established in the United States in March 2018, with 50% of the shares held by both sides. The new plant will first start production of Mazda Cross-border SUV, Toyota Corolla and so on.

In addition, Volkswagen and Ford form a strategic alliance that does not involve cross-shareholdings, working together on commercial and pickup models, and exploring cooperation in self-driving and electric vehicles as well as mobile services. Geely formed a partnership by acquiring stakes in other automakers, including Volvo, Proton, Lutes and Daimler.

More and more automakers are engaged in capital cooperation and forming alliances, which shows that in the pursuit of scale and cost-effectiveness, traditional automakers are working together to cope with the opportunities and challenges of the rise of electrification, intelligence and other new fields.

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