Toyota and Mazda Agree to Hybrid System Technology License

This is a really good news, Toyota Motor and Mazda Motor announced a deal under which Japan's top automaker will supply its hybrid technology under licence to Mazda, in the latest link-up within the fast-evolving auto industry.

Japan's No.1 and No.5 carmakers have been discussing the possibility behind the scenes since last spring as the popularity of gasoline-electric cars surged in Japan with the help of generous government subsidies.

Hybrid cars, which improve fuel efficiency by twinning internal combustion engines with electric motors, are seen as crucial for automakers to boost sales in coming years as governments introduce stricter environmental regulations.

Gasoline-electric cars have enjoyed a burst of demand especially in Japan over the last year as the government introduced an exemption on certain taxes on gasoline-electric and other next-generation vehicles for a three-year period.

"Hybrids are spreading fast in Japan, and launching a model in the domestic market has become an urgent task," Mazda Executive Vice President Masaharu Yamaki told a joint news conference in Tokyo.

"That is one of the reasons that we decided to seek this agreement with Toyota," he said.

Mazda aims to begin selling a vehicle that combines Toyota's hybrid system with its own next-generation gasoline engine in Japan by 2013.

The agreement underscores the growing need for smaller carmakers to find partners to fill the technology gap without draining their limited resources. Among others, archrivals Daimler AG and BMW AG are also working together on hybrid development.