Toyota Motor Corporation and its subsidiary Daihatsu Motor Co., Ltd. have reached an agreement whereby the latter will become a wholly-owned subsidiary of Toyota by a way of share exchange. This news was confirmed through an official statement released by Toyota.

In line with this, Toyota will acquire the remaining shares in Daihatsu and the agreement is expected to be completed in August 2016.

According to Toyota, the purpose of the agreement is to develop “ever-better cars by adopting a unified strategy for the small car segment.” The two Japanese automakers believed that this strategy would help them achieve sustainable growth.

Under a joint strategy, Toyota and Daihatsu said that they intend to “combine their bases of operations in addition to sharing their respective areas of proficiency and technical expertise.”

The said car brands will also work hand in hand with the following areas of strategic collaboration: small cars, technology and operations.

Toyota President Akio Toyoda said that the agreement is the key to achieving and sustaining global competitiveness.

"This is an opportunity for us both to stop feeling that we need to go it alone, and trust each other to take full advantage of our respective strengths. In other words, we can now focus on our core competencies. That, I believe, is the key to achieving and sustaining global competitiveness," said Toyoda.

On the other hand, Daihatsu President, Masanori Mitsui, commented, "I believe we have now found a course of action that will enable us to continue our growth for the next 100 years. We see this as the perfect opportunity to cement our relationship with Toyota...and to elevate the Daihatsu brand to a global standard."

As previously reported, Toyota wants to buy Daihatsu in order to have more control of the decision-making within the company and strengthen its reach in emerging markets where small cars and affordable off-road trucks are in high demand. The world's largest automaker, Toyota, currently owns 51.2-percent of Daihatsu.