Toyota Motor said it would buy out the rest of the Daihatsu unit as part of its strategy to strengthen its push into compact cars for emerging markets.

Toyota said early last week it was considering a buyout offer for its minicar Daihatsu Motor division. Shortly following this expression of intention, the world’s largest automaker announced it has reached an agreement whereby Daihatsu will become a wholly-owned subsidiary of Toyota by way of a share exchange, a deal expected to be completed in August 2016. Toyota is looking to strengthen its place as the world’s top-selling automaker for the fifth year in a row, by consolidating its market share in its homeland and on the emerging markets as well. The two companies intend to develop Daihatsu into a global brand as they focus on growing markets especially for compact cars, where there is a very strong demand for such segment due to environmental and traffic concerns.

Both companies will share the development of new technologies from the initial conceptual stages, with Toyota to focus on technologies related to the environment, safety, user experience, and comfort, while Daihatsu will continue to leverage its aptitude for turning technologies into packages for vehicles, as well as developing cost- and fuel-efficient technologies. Daihatsu will also contribute to the development of next-generation technologies from the perspective of cost-efficiency and miniaturization. Toyota currently owns 51.2 percent of Daihatshu and buying the rest of the share will make a deal worth about 3 billion dollars.

The minicar subsidiary, which was the weakest link in the world’s top-selling automaker sales figures last year falling 13.3 percent in 2015, has a fierce competition with Suzuki Motor in Japan, where both carmakers each hold about 30 percent of the minivehicle market. The Japanese Nikkei business newspaper reported last week that Toyota was also in talks with Suzuki for a possible partnership, but both sides denied the rumors.


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