Toyota Motor Corporation said it will raise its stake in Subaru Corp to 20 per cent from 16.8 per cent to boost the companies’ joint development of advanced technology for autonomous and electric vehicles.

The increased stake will make Toyota’s 14-year-old partner into its equity-method affiliate, meaning the Japanese auto giant will see Subaru’s earnings incorporated into its consolidated financial statements.

Under a deal struck by the two automakers, Subaru also plans to acquire a stake in Toyota worth 80 billion yen ($741 million), equivalent to the largest Japanese automaker’s additional investment in the smaller partner.

They will buy each other’s shares through the stock market or direct transactions between them as soon as approval is secured from competition authorities.

Toyota has been stepping up efforts to consolidate its ties with smaller rivals and tech giants such as SoftBank Group Corp to respond to a shift in consumer demand for electric, connected and self-driving vehicles.

Toyota agreed in late August with Suzuki Motor Corp on a capital tie-up to jointly work on autonomous vehicles.

Toyota formed an alliance with Subaru, formerly known as Fuji Heavy Industries Ltd, in 2005 after purchasing shares from General Motors Co.

Toyota and Subaru have since cooperated in vehicle development, production and sales. Toyota is already the largest shareholder in Subaru.

As part of their cooperation, they began selling their jointly developed sports car, branded by Toyota as the 86 and Subaru the BRX, in 2012.

In June, the carmakers said they will jointly develop an electric sports utility vehicle to be sold under each company’s name by the mid-2020s in the United States.

Subaru is also among major Japanese automakers that have invested in a self-driving technology startup Monet Technologies Inc, jointly established by Toyota and SoftBank Corp.