Toyota will provide hybrid technology used in its best-selling Prius vehicle to its rival and compatriot Mazda Motor, the companies said on March 29.
Mazda plans to roll out hybrids in Japan by 2013 as it looks to catch up with other makers in the market for fuel efficient vehicles.
The two Japanese automakers have been in talks over the supply of Toyota's gasoline-electric powered system to Mazda since last year.
"I'm confident that this accord will be a step taken by both Toyota and Mazda toward providing good environmental technology and products for more customers," said Toyota vice president Takeshi Uchiyamada.
During the conference, Mazda vice president Masaharu Yamaki said the deal with Toyota wouldn't affect its current ties with shareholder Ford Motors, saying: "Our strategic relationship with Ford won't be shaken."
Yamaki also denied having any plans to form a capital tie-up with Toyota.
The agreement comes as major automakers rush to develop more fuel-efficient cars as emission regulations become stricter in key markets. However the costs of doing so can be prohibitive, especially in an industry emerging from a deep slump after the global financial crisis.
Copyright Agence France-Presse, 2010