TOKYO -- Toyota Motor and Panasonic will merge their housing businesses into a joint venture next year to develop connected homes and services for next-generation vehicles, the companies announced on Thursday.
Both companies see opportunity in the internet of things, or IoT, which connects home appliances, vehicles and other devices via the internet.
A joint statement released today noted: "A rapid change is expected in this business due to the accelerated deployment of IoT technologies in home appliances, household equipment, etc., as well as in the evolution in mobility."
During a joint news conference, Toyota Operating Officer Masayoshi Shirayanagi said, "It will be necessary to create cities with many partners," adding that "With the development of various mobility services, we want to enhance convenience."
Panasonic Senior Managing Executive Officer Makoto Kitano also noted that merging businesses "will create unparalleled value in cities."
The new company, Prime Life Technologies Corporation, will comprise Toyota and Panasonic's housing units. Panasonic will transfer all shares -- its own and those of its subsidiaries -- in Panasonic Homes and two other units to Prime Life. Toyota will transfer all shares in Toyota Housing, as well as those in Toyota Housing's subsidiary Misawa Home.
The shares will be transferred through a joint share transaction.
Panasonic and Toyota will hold equal shares in Prime Life. Property developer Mitsui & Co. Ltd. is also considering an equity stake.
Prime Life is expected to be established in January 2020 at a capitalization yet to be determined.
"Toyota has been leading the mobility field, and Panasonic has long been serving lifestyle needs of people," said Pansonic President Kazuhiro Tsuga in a statement. "We will put our respective strengths together to offer new value in everyday life."
Akio Toyoda, president of Toyota, also expressed his thoughts: "I want to take on the challenge of providing a new kind of lifestyle."
He added that he wanted to combine "the strengths of Toyota, with its vehicle business and connected business, and Panasonic, with its home appliance business, battery business, and IoT business" to enhance competitiveness.
The partnership comes as Japan's population is in rapid decline. Merging their housing businesses will give the companies opportunity to expand in a shrinking market and improve competitiveness.
Toyota entered the housing business in 1975, establishing Toyota Housing in 2003 and acquiring Misawa Home in 2017.
In recent years Toyota has been speeding up development of connected cars, as well as expanding into the ride-hailing business with investments in companies like Grab. The automaker, together with SoftBank Group, has also announced plans to develop an autonomous vehicle, the e-Palette, by 2020. The vehicle will be used as taxis and autonomous delivery vehicles, as well as for services like ride-hailing.
These technologies can also be used in creating "smart cities."
Panasonic Homes became a wholly owned subsidiary in 2017. The company has a reputation for advanced lighting and air conditioning systems. Last year it unveiled Home x, a smart home control panel that connects home appliances and other devices to the internet.
Prime Life follows another joint venture set up earlier this year by the companies to develop batteries for electric vehicles, further deepening ties between the iconic brands.