Fuji Heavy reportedly approached Daihatsu’s parent Toyota about the OEM deal. Toyota also has a 8.7% stake in Fuji Heavy, and the mutual supply deal would strengthen ties between firms associated with Toyota.

First, Daihatsu will produce subcompacts with 1- to 1.5-liter engines for Fuji Heavy, which has withdrawn from that market. With output beginning as early as mid-2008, some 5,000 to 6,000 subcompacts are expected to be rolled out each year. Daihatsu would then supply minivehicles to Fuji, which is gradually curbing output of the gas-sipping cars.

In return, Daihatsu will procure 2-liter-engine passenger vehicles from Fuji Heavy in a bid to expand its own lineup.