Toyota, Subaru to co-develop sports car

Toyota and Subaru are finalizing plans to co-develop a sports car sold under the Toyota name-plate for the Japanese market. This will be the first time the two companies have worked together since Toyota acquired 8.7% of Subaru's parent company, Fuji Heavy Industries Ltd., in 2005. The car will be aimed at young, urban buyers and will use a 2 liter engine and Subaru's all-wheel drive. The target price is 2 million Yen, or about $17,000 U.S., and the car should be ready for a 2010 launch.

Also in the deal, Toyota's subcompact subsidiary Daihatsu will supply Subaru with the Coo compact. For sale in Japan only, Subaru could sell the re-badged Coo as early as next summer and expects sales to hit 6,000 a year according to Asahi. Daihatsu and Subaru already have a similar venutre in Europe where a re-badged Daihatsu, to be named the Subaru Justy, is set to hit the European market this fall. Here in the U.S., Subaru's Indiana factory has been making the Toyota Camry since April of this year.