Toyota Outsources Car Redesign to Fuji Heavy

8 November 2005

Nikkei. Wasting no time in forging a tight partnership, Toyota plans to contract out to Subaru-maker Fuji Heavy Industries the full redesign of an existing model, possibly a sporty subcompact, according to a report in the Nihon Keizai Shimbun.

Toyota became a major shareholder in Fuji Heavy by purchasing a stake from GM in October (earlier post), and there has already been much speculation about the synergy between Toyota’s hybrids and Fuji Heavy’s lithium-ion battery systems.

The redesign arrangement will allow Fuji Heavy to make use of excess development capacity created by the termination of its partnership with GM, its previous top shareholder. Fuji Heavy reportedly plans to cut 5% of its work force, or 700 employees, by next March in an effort to improve its financial situation. The cuts would be the first for the company since its founding in 1953.

Toyota, on the other hand, faces a personnel shortage amid rapid business expansion that is propelling the automaker toward the number one position globally.