Toyota brand minivehicles will be made by 51% owned Daihatsu which has specialised in the type for years

Toyota brand minivehicles will be made by 51% owned Daihatsu which has specialised in the type for years

Toyota is to sell minivehicles under its core brand for the first time though they will be made on an OEM basis by group affiliate Daihatsu which specialises in the type.

In a statement, Toyota said Daihatsu would supply three minivehicle model lines in stages starting in autumn 2011, leading to an expected sales volume of approximately 60,000 a year once all three are on sale.

The cars will be sold through the 'Corolla' and 'Netz' dealer chains nationwide, as well as through 'Toyota' and 'Toyopet' dealers in regions in Japan where minivehicles account for a large percentage of overall vehicle sales.

"Recently in Japan, minivehicle sales have been increasing and TMC customers have been asking for minivehicles," Toyota said in a statement. "Today's announcement is the result of a conclusion to take advantage of the resources of the Toyota group to more quickly respond to consumer demand and to maintain good customer relations.  Even with this development, TMC will continue to mainly focus on full-size vehicles and Daihatsu on minivehicles."

Toyota added that, also to better use group resources, TMC and Daihatsu are to discuss business collaboration in Japan using TMC's environmental technology, such as hybrid and electric vehicle technology, "with concrete products and technologies to be decided on by the end of 2011".

Minivehicles have engine displacements of up to 660cc and are unique to Japan, making up a third of new vehicle sales thanks to preferential tax treatment. They are especially popular in rural areas as a second or third family car.

"The weight of minivehicles in the market has increased, and there were a growing number of our own customers who were shifting to that segment," Toyota executive vice president Yoichiro Ichimaru told a joint news conference, reported by Reuters.

"Our focus will remain on the non-mini segment, but this way we will be able to meet the needs of such customers," he added.

Daihatsu president Koichi Ina said the deal would boost its production volume while bringing even more attention to the minivehicle segment.

Daihatsu and its 51% owner, Toyota, already cooperate broadly, including sharing manufacturing facilities and vehicle platforms. Each has produced vehicles for the other.

Analysts told Reuters the move would have a negligible impact on Toyota's bottom line, resulting from global sales of about 7m vehicles last year.

"It's a very domestic deal, and one that is positive mainly for Daihatsu," an unnamed analyst at a western brokerage said.

In the financial year to March 2010, Daihatsu had the top share of Japan's minivehicle market with 35.1%, followed by Suzuki with 32.7%. Honda, ranked third with 9.3%, has said it aims to beef up its minivehicle operations to stem a sales decline in the shrinking Japanese market.

Daihatsu also supplies three 660cc models to Subaru carmaker Fuji Heavy Industries, also partly owned by Toyota. Nissan Motor sells minivehicles made by Suzuki and Mitsubishi Motors Corp under an original equipment manufacturing (OEM) deal.

The share of minivehicles has declined in the past year as Japanese consumers take advantage of government incentives that favour regular cars but automakers expect the longer term trend to favour minivehicles.

Toyota's entry into the segment, which Honda Motor Co CEO Takanobu Ito has said could eventually account for half the Japanese market, promises to stiffen competition in the already low-margin business, Reuters noted, although analysts said the targeted volume should not pose a major threat to existing players.

Daihatsu's Ina said one of the models to be supplied to Toyota would be a rebadged version of its Move Conte model, another would be based on the Hijet commercial vehicle, and the third is undecided.