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When it comes to Toyota and Subaru brands, I believe many people think whether the two companies have a very similar relationship, as can be seen from Toyota 86 and Subaru BRZ, which are very similar in shape. In fact, Toyota is Subaru's largest shareholder, holding 16.82%, the two companies are related companies, there is a cooperative relationship.

A few days ago, there were overseas media reports that Toyota plans to transform Subaru into an equity company, hoping to increase its stake in Subaru from the current 17% to more than 20%, and expand their partnership.

The move could cost more than 70 billion yen ($650 million), according to Subaru's stock market capitalization. Subaru said it would buy less than 1 per cent of Toyota for the same amount. But a Toyota representative said the report was not announced by the company.

In fact, as early as 2005, GM broke off the partnership of Subaru, then known as Fuji Heavy Industries, and sold a majority stake in the company to Toyota, becoming Subaru's largest controlling shareholder, but there was no intention of a full acquisition. It has been 14 years since then.

After reaching the cooperation agreement, the two sides plan to deepen cooperation in research and development, production, sales and other areas, such as the sale of jointly developed rear-wheel drive Toyota and Subaru BRZ in 2012, and in March this year, Subaru and Toyota plan to jointly develop a new electric vehicle, with hair expected to be sold on the market in 2021.

In the face of the current environment of the continuous decline of the automobile market, the automobile industry has a huge investment in the future, and changing the direction of technology requires more research costs. And small-scale car companies are unable to afford the expensive R & D costs. Previously, Subaru froze its own electric vehicle development project. Subaru believes that electric vehicle development projects need to bear huge costs, based on which he decided to work with Toyota and gain Toyota's previous work experience.

In the face of the market downturn, instead of spending time with competitors like many automakers, Toyota is keen to expand by investing in smaller domestic carmakers, such as at the end of August this year. Toyota announced a capital alliance with Suzuki to buy a 5% stake in the latter.

If Toyota uses Subaru as an equity company, its net profit will be reflected in Toyota's consolidated earnings, essentially bringing Subaru into the Toyota Group. For Subaru, Toyota provides cost-cutting know-how and a business philosophy for continuous improvement, while Subaru also provides production and technical support for Toyota.

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