"We've obviously had a good run with Subaru this year and they're happy with what we've been doing," said Paddon.
"As a result we were able to speak to some of the Japanese when they were over for Rally Scotland a few weeks ago and they were really interested in trying to keep us on board."
Paddon and Kennard wrapped up the PWRC championship in Australia at the beginning of September.
The R4 is the next step in the current Group N production Subaru evolution towards making it competitive with the S2000 cars and bridging the gap to the Ford Fiestas and Skoda Fabias already competing.
It is a move towards a purpose-built race car as opposed to the Group N Subaru that is much more aligned with a showroom car.
The new car will be 80kg lighter with high-tech body panels, fabricated sub-frames and suspension arms to give the car better geometry and therefore handling.
It will also have more adjustment in the suspension, enabling better fine tuning for various road conditions.
"The S2000 cars are a much lighter car and are more nimble and change direction very quickly," said Paddon.
"They are a bit like a go-kart on gravel and need very little input at the steering wheel and react very quickly. They're magic to drive.
"That's what they're trying to do with the R4 and it's more like a race car rather than a production-based car, to make it better and faster to drive," said Paddon.
He gets his hands on the R4 car this weekend and is looking forward to getting some miles under his belt in it before pitting it against the more established S2000 cars the following weekend in Wales.
While it's generally accepted the R4 cars will have the chassis, suspension and weight to compete with the S2000 version, there is some concern that there may be a bit of a power imbalance.
Says Paddon: "At the moment that's the only problem with the R4 class and they are still trying to get the FIA to allow the cars to go faster.
"At the moment the engines are exactly the same as a Group N car, and to close the gap to the S2000s they need to have a bigger turbo restrictor."