CHICAGO – Toyota Motor Corp.’s 8.7% stake in Fuji Heavy Industries Ltd., maker of Subaru cars, acquired in 2005, has auto industry insiders speculating as to how Toyota plans to take advantage of some of Subaru’s technologies.

Mark Templin, vice president of Toyota Motor Sales U.S.A. Inc.’s Scion youth brand, admits he has an eye on Subaru’s all-wheel-drive systems.

“It’s one of the things I talk about a lot,” Templin tells Ward’s. “And if you’ve watched the growth of AWD cars in the U.S. for all brands, that’s something we’d be remiss if we didn’t think about.”

After several strong years of growth, Ward’s data shows U.S. factory installation rates for AWD have fallen for both domestically built and imported passenger cars and trucks (all Scion models are imported from Japan).

Installation rates on imported cars fell slightly, from 10.9% to 10.5%, ’05 vs. ’04 model years, Ward’s data shows. Imported light trucks with AWD or 4-wheel drive fell slightly, to 64.4% of ’05 models from 65.4% of ’04 models.

Templin says Subaru is just one element of Toyota’s considerable product and technology portfolio from which Scion is able to draw.

The new ’08 Scion xB, for example, is a North American version of Toyota’s bB cross/utility vehicle, which went on sale in Japan last year.

The bB is based on the same platform as the Coo, from Toyota minivehicle maker Daihatsu Motor Co. Ltd.

The Coo is available in both 2-wheel-drive and 4WD configurations in Japan.

Hybrid engines, although not feasible right now, may “make sense” for Scion in the future due to continuous improvement in the technology, Templin says.

Although Jim Lentz, executive vice president-TMSUSA, recently told Ward’s such an option is too expensive for many of Scion’s younger buyers, Templin believes a certain segment would be willing to pay extra for such a feature, especially if hybrid systems become less costly to produce.

“I think all future versions of hybrids are going to be more cost-effective,” he says. “I think the motors will continue to get smaller, but more powerful. The batteries will get smaller, but more powerful and more cost-effective.”

However, Scion currently is sticking with its 4-cyl. strategy, Templin says, noting auto makers continually are finding ways to squeeze more horsepower and torque out of the humble four.

Toyota, for instance, has added dual variable valve timing to the Scion xD’s 1.8L 4-cyl. mill, making it more powerful but just as fuel-efficient as the outgoing Scion xA’s 1.5L 4-cyl.

Templin says he is happy with Scion’s current lineup, which includes the xB, xD and tC sport coupe for ’08. Nevertheless, the brand could accommodate more models in the future, or possibly variants of existing models.

“I think if we found the right products at the right time in the right segments in the marketplace, we could (sell) four or five (models at one time), and it would be fine.”

This year, Scion again has set a goal of selling 150,000 units annually. The marque blew past the same goal last year, finishing 2006 with 173,034 deliveries, Ward’s data shows.

Templin says if Scion were to increase the size of its lineup, it still could hold sales to 150,000 units annually, while admitting “there is the potential to grow Scion to a larger number.”

“Not because we need to sell more cars,” he says, “but because it will help us strengthen the brand and give our dealers a little bit more volume, which makes them even more profitable” and, therefore, better able to take care of customers.