Having done a sports car together, Subaru maker Fuji Heavy Industries and Toyota will now jointly develop a hybrid sport utility vehicle and sell it under their respective brands as early as 2017, the Nikkei reported.

Sunaru recently launched a new SUV model built on a proprietary hybrid system for horizontally opposed engines but that vehicle travels just 20km per litre of petrol, lagging behind the fuel economy offered by Toyota and other automakers.

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With the US set to adopt stricter fuel economy requirements over the medium term, Fuji will use Toyota technology to upgrade its hybrid system. It will stick with horizontally opposed engines while working to bring fuel efficiency to the level of Toyota hybrids, the Nikkei said.

Fuji Heavy will save time and money on development and Toyota, which holds a 16.5% stake in the firm, can strengthen its systems business by supplying hybrid technology outside the group.

The hybrid vehicles will likely be manufactured at Fuji Heavy’s Yajima plant in Gunma Prefecture. The two automakers may even develop plug-in hybrids together, sources told the Nikkei.

Fuji Heavy and Toyota formed a business and capital tie-up in 2005. Two years later, Fuji’s Indiana plant began manufacturing some of the Camry sedans Toyota sells in the US.

The sports car project produced the Toyota GT86 and Subaru BRZ.

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