TOKYO/SHANGHAI, June 8 (Reuters) - Japan's Daihatsu Motor Co is close to agreeing a gearbox supply deal with Chinese vehicle maker Tianjin FAW Xiali Automobile Co, a Daihatsu spokesman said on Sunday.
Daihatsu, Japan's oldest carmaker and now majority-owned by Toyota Motor Corp, is "near an agreement" to supply Japanese-made automatic transmissions to Tianjin FAW Xiali, said spokesman Naoyuki Wakabayashi.
Tianjin FAW Xiali and parent China FAW Group Corp could not be reached immediately for comment.
The likely move by Daihatsu to supply a key component to Tianjin FAW Xiali is a part of its broader effort to expand businesses outside of Japan such as in China, the world's biggest auto market, and India.
While Daihatsu doesn't rule out selling cars in more emerging markets as population shrinks in Japan, a company executive told Reuters that selling key components, such as transmissions, torque-converters and engines, has become a focus in its overseas strategy.
That in part is because Daihatsu is under pressure not to cannibalise sales of small cars sold by parent Toyota in emerging markets. "That is what we believe is just about the only way for us to survive abroad," the executive said.
Daihatsu and Tianjin FAW Xiali have not decided yet on when Daihatsu will start supplying the automatic transmission units or how many it will supply annually, the company spokesman said.
This is not the first time for Daihatsu to have an interest in China. In 2007 it started to sell the locally-made Xenia minivan in China but after poor sales it dissolved the joint venture with FAW Jilin Automobile Co in 2010. The Xenia ended up competing with Toyota's small cars, sources with knowledge of the matter have said.
Daihatsu has also worked with what was Tianjin Automobile, which later became a part of the FAW Group. Nearly 30 years ago, Tianjin Automobile made the Xiali small car based on Daihatsu's Charade through a licensing agreement. (Reporting by Yoko Kubota in Tokyo and Norihiko Shirouzu and Samuel Shen in Shanghai; Editing by Greg Mahlich)