Toyota Motor Corp announced that it was going to buy out the remaining part of Daihatsu Motor Co, the deal being valued at $ 3.2 billion, taking into account current market prices.
The company also denied information that it was negotiating a partnership with Daihatsu rival - Suzuki Motor Corp.
Full control on Daihatsu will allow Toyota to better manage the brand and reduce the cost of logistics for Daihatsu, while communication with Suzuki will help the world's largest automaker a foothold in India, where Suzuki accounts for about half of the total passenger car market.
"We are always thinking about a number of opportunities associated with Daihatsu, such as a partnership or business restructuring, including the transformation of the company into a full branch," - said Toyota in a statement, noting that no action had been taken.
Toyota owns a 51.2 % stake in Daihatsu, which, like Suzuki, specializes in the production of vehicles 660cc, typical for Japan segment, as well as compact cars.
Some analysts point out that greater control over Daihatsu may diverge from the probable cooperation of Toyota and Suzuki, given that these two automaker's minivans are competitors who are fighting for the same customers.
"One can easily imagine that Daihatsu brand is used in the same way as the VW uses Skoda or Renault uses Dacia, and Nissan uses Datsun - as a budget line, a brand in relation to the main," - said a senior analyst at CLSA, Christopher Richter.
"This could be a very effective weapon against Suzuki in places like India. If I had been in place of Suzuki, co-operation with Toyota would mean a risk" - the analyst said.
However, other experts pointed out that the likely partnership Toyota-Suzuki could be beneficial for both manufacturers.
Suzuki, which controls Maruti Suzuki India Ltd, has an extensive distribution network in India, which could be extremely beneficial to Toyota.