by Mia Hill

Created on: May 14, 2010   Last Updated: May 15, 2010

As competition in the auto industry intensifies and the battle for consumers’ dollars becomes more fierce, car manufacturers are seeking new ways to reduce overhead and increase revenue. For more than a decade, Toyota Motors Inc. and Fuji Heavy Industries Ltd. have engaged in strategic alliances in an effort to keep their prices competitive and to stay abreast of evolving technology. These strategic alliances between Toyota and Fuji have afforded the two companies the ability to offer affordable automobiles and to reaffirm their competitive advantages in the auto industry.

Consumers are becoming increasingly concerned about the carbon emissions of conventional gasoline-powered cars, and the governments in industrialized countries are establishing increasingly stringent gas emission regulations. In response to the new fuel-efficient standards that have been set, Toyota introduced the gas-electric Prius hybrid in 1997. Considered one of the greenest cars on the road, the Prius remained the top-selling hybrid for more than a decade. Toyota decided to capitalize on the successful sales and performance of the Prius by introducing several new models in 2009.

It was first rumored in 2005 that Toyota was interested in a strategic alliance with Fuji, the parent company of Subaru. The two companies have continued to collaborate in several areas of operations since that time. One example of a strategic alliance between Toyota and Fuji is in the research and development of the first Subaru hybrid. In May 2009, Fuji announced its plans to use Toyota’s technology in the manufacturing of its first gas-electric car that was scheduled to be available for sale in 2012. This cooperative agreement combining Toyota Prius’ technology with the skill of Subaru’s human capital promises to be a profitable collaboration for both companies; in the words of Fuji’s President and Chief Executive, Ikuo Mori, “we will take advantage of our alliance with Toyota.” (Hybrid Cars, 2009)

Toyota moved car manufacturing into a new technological era when it introduced the Prius, and an integral part to this technological advancement is in the area of research and development of the hybrid battery pack. One of Subaru’s business-level strategies is to overhaul its Legacy and other models sold in North America by incorporating hybrid technology that is based on Toyota’s Prius model.

There has been little change in the outward appearance of the Prius over its three generations and, as a result, Toyota has been able to reduce production overhead; according to Board Vice Chairman, Kazuo Okamoto, “we reduced costs of hybrid systems for the current Prius by 50 percent from the first generation.” (Niedermeyer, 2008) This cost saving has enabled Toyota to focus on research and development of the battery technology. It is the development of the battery that has given Toyota its competitive advantage in the hybrid industry. The 2010 third-generation Prius is “first and foremost, the quintessential hybrid… the most fuel-efficient mass-production car currently on sale.” (Edmunds, 2009) Likewise, through a strategic alliance with Toyota, Fuji is able to use the same fuel-efficiency and mass-production to make the Subaru hybrid a success. 

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