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Toyota to boost its Subaru stake to more than 20%

TOKYO — Toyota Motor Corp plans to raise its stake in Subaru Corp to more than 20% from around 17% now, a deal that would also see the smaller firm invest in Japan's top automaker, two people with direct knowledge of the matter said on Friday. The deal is due to be approved at a Toyota board meeting on Friday, the people said, declining to be identified because the information has not been made public. The investment would come a month after Toyota and another smaller Japanese automaker, Suzuki, said they would take small equity stakes in each other. Such tie-ups highlight how automakers are scrambling to chase scale, manage costs and boost development. Traditional car makers, especially smaller ones like Subaru and Suzuki, are struggling to meet the fast pace of change in an industry being transformed by the rise of electric vehicles, ride hailing and autonomous driving. Toyota's investment is likely to cost more than 70 billion yen ($650 million) based on Subaru's stock market value, said the Nikkei business daily, which first reported the news. Subaru is likely to reciprocate with a stake in Toyota that would roughly equal the value of Toyota's additional investment, one of the people told Reuters. The companies have long worked together on projects such as the Toyota 86 and Subaru BRZ twins. At one time, Subaru built Toyota Camrys in its Indiana plant. Representatives for both Toyota and Subaru said the news was not something that had been announced by their companies. "The plan appears to be to ultimately make Subaru a fully owned subsidiary, to help create a 'mega Toyota.' This is the first step towards that," said Takeshi Miyao, managing director of Carnorama, a consultancy. "It's all about building scale." Subaru is particularly strong in sport-utility vehicles (SUV) and all-wheel-drive technology. The two automakers in June said they planned to jointly develop an electric sport-utility vehicle on a platform produced together, to split costs. Car markers around the world have been joining forces to slash development and manufacturing costs of new technology. Ford Motor Co and Volkswagen AG have said they will spend billions of dollars to jointly develop electric and self-driving vehicles. Toyota seems to be particularly keen to build scale now by investing in smaller, domestic automakers, rather than forging cross-border tie-ups like some of its rivals.

Autoblog Minute: VW Q3 financial woes, 2015 Tokyo Motor Show

Consumer Reports pulls its Tesla recommendation, the U.S. Copyright Office offers a ruling affecting car owners, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. Autoblog senior editor Greg Migliore reports on this edition of Autoblog Minute Weekly Recap. Show full video transcript text [00:00:00] Consumer Reports pulls its Tesla recommendation, the U.S. copyright office offers a ruling that affects car owners and gear heads, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. I'm senior editor Greg Migliore and this is your Autoblog Minute Weekly Recap. After a week away testing vehicles for Autoblog's Tech of the Year award, we're back in the office to recap the week in automotive news. [00:00:30] One of the things you might have missed was Consumer Reports pulling its recommendation of Tesla's Model S sedan. The blemish for Tesla comes after a tally of reviews from customer surveys. The most common problem areas for the Model S as cited by survey takers included: the drivetrain, power equipment, charging equipment, body and sunroof squeaks, rattles, and leaks. So lots of stuff. Though they could not ignore a score of "worse-than-average", Consumer Reports still [00:01:00] highlighted the fact that the Model S was "the best performing car" they've ever tested. Telsa CEO Elon Musk took to social media to defend his sedans saying: "Consumer Reports reliability survey includes a lot of early production cars. Already addressed in new cars." And, "Tesla gets top rating of any company in service. Most important, CR says 97% of owners expect their next car to be a Tesla (the acid test)." In Financial news, Volkswagen took a hit and reported an operating loss of [00:01:30] $3.84 billion. This is the first such loss for VW in 15 years. Toyota reclaimed the crown as the world's largest automaker as well. It's important that it's not all doom and gloom for VW though in Q3. Sales revenues were up and the company's automotive division boasts $30 billion dollars in liquid assets. It's a sizable war chest that will no doubt come in handy, as the company has yet to feel the full brunt of the diesel emissions scandal. Good news for gear heads. The US copyright office [00:02:00] ruled in favor of mechanics and car owners by granting an exception to existing copyright law. The law was originally meant to prevent software pirating and bootlegging of Hollywood movies.

Scion was slain by Toyota, not the Great Recession

Scion didn't have to go down like this. Through the magic of hindsight and hubris, it's easier to see what went wrong. And what might have been. What the industry should understand is this: Scion wasn't a losing proposition from the get-go. Its death is due to negligence and apathy. This is more than just the failure of a sub-brand. It's the failure of a company to deliver new and compelling products over an extended period of time. Toyota will point to the Great Recession as the reason it hedged its bets and withdrew funding for new vehicles, instead of using that as an opportunity to redouble efforts. This was as good as a death warrant, although myopically no one realized it at the time. Sadly, GM's Saturn experiment was a road map for this exact form of failure. No one at Toyota seemed to think the Saturn experience was worth protecting their experimental brand from. Or they weren't heard. Brands live and die on product. Somehow, Scion convinced itself that its real success metric was a youthful demographic of buyers. It seems like this was used to gauge the overall health of the brand. Look at the aging and uncompetitive tC, which Scion proudly noted had a 29-year-old average buyer. That fails to take into account its lack of curb appeal and flagging sales. Who cares if the declining number of people buying your cars are younger? Toyota is going to kill the tC thirteen years [And two indifferent generations ... - Ed.] after it was introduced. In that time, Honda has come out with three entirely new generations of the Civic. Scion wasn't a losing proposition from the get-go. Its death is due to negligence and apathy. At launch, the brand could have gone a few different ways. The xB was plucky, interesting, and useful – a tough mix of ephemeral characteristics – but the xA didn't offer much except a thin veneer of self-consciously applied attitude. That's ok; it was cute. Enter the tC, which managed to combine sporty pretensions with decent cost. It took on the Civic Coupe in the contest for coolness, and usually managed to win. More importantly, an explicit brand value early on was a desire to avoid second generations of any of its models, promising a continually evolving and fresh lineup. At this point, the road splits. Down one lane lies the Scion that could have been. After a short but reasonable product lifecycle, it would have renewed the entire lineup.