Toyota and its subsidiary Daihatsu are planning to form a new internal company that will be responsible for compact vehicles sold in emerging markets. The new entity is the result of both companies having agreed on each company’s role in strengthening their compact vehicle operations in emerging markets.

Toyota and Daihatsu will work toward establishing the internal company in January 2017.

Daihatsu is expected to take the lead in the internal company, which will bridge areas of both Daihatsu and Toyota. As such, the internal company will be positioned differently from the so-called “companies” of the product-based in-house company system Toyota introduced to innovate its work processes in April 2016.

Daihatsu is well known for its expertise in compact cars and will be responsible for unified development, procurement and production preparation for compact vehicles for emerging markets based on “DNGA”, a Daihatsu vehicle architecture now being defined.

Toyota will support these efforts by providing knowledge and resources.

Toyota and Daihatsu will jointly formulate and share product and business plans. The two will also “put their existing production bases to mutually effective use”.

Explaining one of the benefits for Toyota of this initiative, Toyota Executive Vice President Shigeki Terashi said: “With the establishment of the internal company, Toyota intends to learn the very fundamentals of Daihatsu’s competitiveness and change the way we work.”

Daihatsu President Masanori Mitsui commented: “We will further advance our knowhow cultivated in the manufacturing of mini-vehicles and be a Toyota Group driving force, not only for mini-vehicles, but also for compact vehicles for emerging markets. For Daihatsu, this initiative represents an important opportunity for enormous and sustainable growth. Separately, both companies confirmed today that Daihatsu will continue to take the lead in the development of the Daihatsu brand.”