Subaru of Japan will be adding a subcompact model to their vehicle line-up thanks to Toyota. This comes after the Nikkei reported that Toyota has confirmed supply of subcompact cars to Fuji Heavy Industries, parent company of Subaru, on an OEM basis.

The model in question is the Toyota Ractis which is available either with a 1.3 or 1.5-litre engine. Fuji Heavy will receive about 10,000 units a year from Toyota as demand for low priced, fuel efficient cars within that segment increases.

Toyota owns 16.5 percent of Subaru, so it is not surprising to see this rebadge take place, considering Subaru already has an existing rebadged Toyota model – the Subaru Justy is based on the Toyota Passo, just like our Perodua Myvi. This will allow Subaru to concentrate on its core models while Toyota will benefits from increased Ractis sales.