Toyota And Mazda To Build $1.6 Billion Factory In The United States

by Heather Platt | Posted on Tuesday, August 8th, 2017

Toyota and Mazda are teaming up to build a $1.6 billion car factory in the United States, the Japanese automakers announced on Friday.

Toyota And Mazda

The location for the facility has not yet been chosen, but it will have the capacity to produce approximately 300,000 vehicles annually and will create up to 4,000 jobs.

Toyota will build Corolla compact cars at the plant, while Mazda will use it to manufacture a small crossover.

Toyota and Mazda are forming a capital alliance and splitting the cost for the plant equally. It is due to begin operations by 2021.

After reassessing the market, Toyota has changed its plan to make Corollas at a plant in Guanajuato, Mexico, now under construction, and instead will produce Tacoma pickups there, Toyota President Akio Toyoda said.

President Donald Trump had criticized Toyota for taking auto production and jobs to Mexico. With the investment, both automakers can hope to prove their good American corporate citizenship and appease the Trump administration’s concerns about jobs moving overseas.

 

Trump welcomed the announcement in a Tweet: “Toyota & Mazda to build a new $1.6B plant here in the U.S.A. and create 4K new American jobs. A great investment in American manufacturing!”

The companies also plan to work together on various advanced auto technology, such as electric vehicles, safety features and connected cars, as well as products that they could supply each other, they said.

Toyota plans to acquire 31,928,500 shares of common stock newly issued by Mazda through a third-party allotment, which will amount to a 5.05 percent stake in Mazda, valued at 50 billion yen ($455 million).

Mazda, which makes the Miata roadster, will acquire 50 billion yen worth of Toyota shares, the equivalent of a 0.25 percent stake. The investment deal is expected to be final by October, the companies said.

Toyoda noted the growing competition from newcomers in the auto industry like Google, Apple and Amazon, stressing he was worried about autos turning into commodities. He praised Mazda as a great partner in that effort.

The companies said their collaboration will respect their mutual independence and equality. Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, already provides hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.

The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale. Working together on green and other auto technology also makes sense as the segment becomes increasingly competitive due to concerns about global warming, the environment and safety.

“Given the massive level of competition in the industry, partnerships are no longer a surprise,” said Akshay Anand, an executive analyst at Kelley Blue Book.

Japanese rival Nissan Motor Co. is allied with Renault SA of France and Mitsubishi Motors Corp., and is the global leader in electric vehicles. Their alliance led world vehicles sales for the first time in the first half of this year.

The limited tie-up with Mazda marks the latest addition to Toyota’s sprawling empire, which includes Japanese truck maker Hino Motors and minicar maker Daihatsu Motor Co. Toyota also is the top shareholder in Fuji Heavy Industries, the maker of Subaru cars.

In the past, Toyota was not overly bullish on electric vehicles, which have a limited cruise range. But recent breakthroughs in batteries allow for longer travel per charge.

Mazda, based in Hiroshima, Japan, used to have a powerful partner in Dearborn-based Ford Motor Co., which bought 25 percent of Mazda in 1979, and raised it to 33.4 percent in 1996. But Ford began cutting ties in 2008, and has shed its stake in Mazda.

Autostin Logo