Toyota Motor Corp. and Suzuki Motor Corp. are strengthening their alliance by taking stakes in one another, seeking to bolster their position as the auto industry shifts further toward electrified and self-driving cars.

Japan’s biggest automaker will acquire about 5 percent of Suzuki shares for about ¥96 billion ($907 million), while Suzuki will get a smaller holding valued at about ¥48 billion in Toyota, the automakers said in statements Wednesday. That is equivalent to 0.2 percent of Toyota’s shares as of Wednesday’s closing price, before the announcement.

The move builds on ties established in 2017 between the two carmakers and is aimed at expanding their collaboration to keep up with technological advances sweeping through the transportation industry, from on-demand rides to cars that are no longer powered by fossil fuels.

For Toyota, the alliance provides access to Suzuki’s expertise in India, which is on track to overtake Japan and become the third-largest vehicle market in the world.

“Toyota is getting Suzuki at an attractive valuation,” said Janet Lewis, an analyst at Macquarie Capital Securities (Japan) Ltd. “It appears to be very similar to the mutual investments made between Toyota and Mazda.”

Toyota will pay ¥4,004 a share, lower than Suzuki’s closing price of ¥4,085 on Wednesday. Suzuki shares are down 27 percent this year, following a 15 percent decline in 2018 as the Indian economy cooled.

The tie-up highlights the challenges for automakers as they fight to keep up with the breakneck growth in the industry.

Suzuki said it will use ¥20 billion of the proceeds on development of new technologies including autonomous driving, and the remainder to replenish its capital.

Suzuki has been seeking to team up with a larger carmaker after an acrimonious split with Volkswagen AG. Toyota has budgeted about seven times more on research and development than Suzuki for this fiscal year, and the smaller automaker has pointed to the soaring cost of making competitive cars as a reason to join forces with a partner.

In February 2017, Toyota and Suzuki agreed to begin “concrete examination” of a partnership in technology and procurement. A year later, they agreed to sell each other’s hybrid cars and other vehicles in India. This March, Toyota further expanded the alliance to supply its hybrid system to Suzuki globally, while Suzuki will sell compact vehicles through Toyota in India and Africa. The carmakers also said they plan to jointly produce electric cars in India in around 2020.

As the industry faces challenges from ride-sharing services to stricter emission targets, smaller Japanese carmakers are increasingly relying on tie-ups with Toyota to help tackle the issues. Toyota also has stakes in Mazda Motor Corp. and Subaru Corp. and works with them on electric cars.

KEYWORDS stocks, Toyota, carmakers, Suzuki