Toyota and Subaru have announced a new “business and capital alliance”, with the aim of “further developing and strengthening” their long-term partnership.

The deal will see Toyota increase its stake in Subaru to at least 20 percent, with Subaru in return to acquire shares to the equivalent to that monetary amount.

Under the agreement, the Japanese firms will jointly develop "all-wheel-drive models" as well as the next-generation Toyota GT86 and Subaru BRZ. In addition, Subaru will expand its use of Toyota’s hybrid system and the two companies will collaborate in “the field of autonomous driving”.

Toyota and Subaru first agreed to a “business collaboration” way back in 2005, before announcing in June 2019 plans to jointly develop both a platform dedicated to battery electric vehicles and a complete electric model.

"I, myself, am a rallyist, and, through my experience of training hard in an Impreza, I have felt in my veins the wonders of Subaru's AWD technologies. Meanwhile, we at Toyota have been going all out to hone our all-wheel-drive technologies by participating in the World Rally Championship, among other activities,” said Toyota president Akio Toyoda.

“Our companies, both of which have long pursued driving enjoyment, now want to pursue the possibilities of making ever-better cars suitable for the CASE [connected, autonomous/automated, shared, and electric] era by bringing together our strengths and by further deepening our relationship."

Subaru president Tomomi Nakamura added the two companies had “deepened” their bonds over the past 14 years.

“By taking our relationship one step further and mutually honing our technologies, we will strengthen our ability to respond to CASE and other demands, and will accelerate our shared aspirations for making ever-better cars. This new step in our alliance with Toyota will lead to enhancing 'Enjoyment and Peace of Mind' that Subaru is committed to deliver; and I am confident that our customers will love what we offer through these efforts," Nakamura said.