Japan's biggest auto maker Toyota Motor Corp. will supply Fuji Heavy Industries with small cars for the Subaru-brand car maker to sell in Europe.Toyota, which owns 8.7% of Fuji Heavy Industries, the maker of Subaru cars will begin producing small cars for the Japanese car company.

 

A Japanese newspaper report has confirmed that Toyota, which is Fuji Heavy's largest shareholder, is looking at providing cars based on its Yaris model and on another model sold only in Europe under an original equipment manufacturing deal from as early as 2008.

 

Toyota subsidiary Diahatsu may build the Passo hatchback for Subaru, in its factory in Western Japan.The car is also known as the Boon in Japan, or the Sirion in Europe.

The move would help Fuji Heavy, which lacks a strong small car model in a market where cars must meet new tighter emission standards. It would also help Toyota cut costs by boosting volume sales.

Subaru’s version will be slightly modified from the other variations, and deal is expected to be for between 5,000-10,000 units per year. Toyota recently bought a stake in Fuji Heavy Industries and it’s likely the two Japanese carmakers will work together in the future to share technology and models.

Last year they aim to redefine themeselves as a premium car maker with upmarket models such as the B9 Tribeca SUV but has failed to achieve sufficient sales.

This year Fuji Heavy  Toyota will be collaborating with Fuji Heavy to produce Camry’s at its Indiana Plant.As part of their cooperation Fuji would develop gasoline-electric vehicles using Toyota's hybrid technology.