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Toyota has announced plans to establish an internal company – together with its fully-owned subsidiary Daihatsu – to develop compact vehicles for emerging markets. It said that the new entity, which will comprise elements from both Toyota and Daihatsu, will be established in January next year.

The division will develop and launch competitive compact vehicles based on Daihatsu’s approach to manufacturing affordable, high-quality products for emerging markets, in which the potential for growth is high but in which competition is intensifying.

In terms of outline, Daihatsu will take the lead in the new company, and will be responsible for unified development, procurement and production preparation for compact vehicles for emerging markets based on “DNGA,” a Daihatsu vehicle architecture now being defined.

Toyota, meanwhile, will support these efforts by providing knowledge and resources. Both companies will jointly formulate and share product and business plans. The new company, which essentially provides a bridge between both automakers, will be positioned differently from the so-called “companies” of the product-based, in-house company system Toyota introduced to innovate its work processes in April this year.