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Toyota Motor Corp. will raise its stake in Subaru Corp. to 20 percent from around 17 percent, the two Japanese automakers said Friday as they leverage their scale to better compete in developing new technologies.

The investment comes a month after Toyota and another smaller Japanese automaker, Suzuki Motor Corp., said they would take small equity stakes in one another. Such tie-ups highlight how automakers are scrambling to chase scale, manage costs and boost development.

“Our companies … want to pursue the possibilities of making ever-better cars suitable for the CASE (connected, autonomous, shared and electric) era by bringing together our strengths,” Toyota President Akio Toyoda said in a statement.

Traditional carmakers, especially smaller ones like Subaru and Suzuki, are struggling to meet the fast pace of change in an industry being transformed by the rise of electric vehicles, ride hailing and autonomous driving.

In a statement, Toyoda said its investment would amount to up to ¥80 billion ($650 million) based on Subaru’s stock market value. Subaru will reciprocate with a stake in Toyota of equal value, to hold shares in Toyota for the first time.

“The plan appears to be to ultimately make Subaru a fully owned subsidiary, to help create a ‘mega-Toyota’. This is the first step towards that,” said Takeshi Miyao, managing director of Carnorama, a consultancy.

“It’s all about building scale.”

Subaru has particular strengths in sport-utility vehicles (SUV) and all-wheel-drive technology.

As part of their pact, Toyota and Subaru will jointly develop all-wheel drive vehicles. The companies will also work together on the new Toyota 86 and Subaru BRZ sports cars.

By consolidating Subaru to its accounts, Toyota will add about ¥50 billion to annual profit, said Janet Lewis, an analyst at Macquarie Capital. The deal benefits both companies, as Subaru also gets access to technology it wouldn’t be able to develop itself, she wrote in a note.

The two automakers said in June they planned to jointly develop an electric sport-utility vehicle on a platform produced together, to split costs.

Toyota is by far the larger manufacturer, with 10.6 million cars and trucks produced in 2018. Subaru made about 1 million vehicles last year, a decline of 5 percent and the first drop in seven years.

Toyota also owns stakes of less than 10 percent in both Suzuki and Mazda Motor Corp.

Carmakers around the world have been joining forces to slash the development and manufacturing costs of new technology.

Ford Motor Co. and Volkswagen AG have said they will spend billions of dollars to jointly develop electric and self-driving vehicles.

Toyota seems to be particularly keen to build scale now by investing in smaller, domestic automakers, rather than forging cross-border tie-ups like some of its rivals.

It has been building its holding in Subaru since first acquiring a 9.5 percent stake in the smaller automaker, then called Fuji Heavy Industries, in 2005. With nearly 17 percent at the moment, Toyota is already the biggest shareholder in its smaller rival.

Toyota has been looking to expand scale in next-generation technology and said this year it would offer free access to patents for electric vehicle motors and power control units.

Toyota shares ended 0.8 percent lower on Friday, while Subaru stock slipped by roughly the same amount.

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