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4 August 2017
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| Japan Toyota Mazda (The Total Investment & Insurance Solutions) |
Japanese automakers Toyota Motor Corp. and Mazda Motor Corp. plan to
spend $1.6 billion to build a joint-venture auto manufacturing plant in the
U.S. — a move that will create up to 4,000 jobs, both sides said Friday. The Total Investment & Insurance
Solutions
The plant will have an annual production capacity of about 300,000
vehicles, and will produce Toyota Corollas for the North American market. Mazda
will make cross-over models there that it plans to introduce to that market,
the companies said.
Toyota and Mazda are forming a capital alliance and splitting the cost
for the plant equally. It is due to begin operations by 2021. The Total Investment & Insurance
Solutions
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. The Total Investment & Insurance
Solutions
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.
Toyoda denied that Trump's views influenced his decision.
"We have been reviewing the best production strategy for our
business," he told reporters at a Tokyo hotel, after shaking hands with
Mazda's president.
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. The Total Investment & Insurance
Solutions
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 Total Investment & Insurance
Solutions
"It has also sparked Toyota's competitive spirit, increasing our
sense of not wanting to be bested by Mazda. This is a partnership in which
those who are passionate about cars will work together to make ever-better
cars," he said. The Total
Investment & Insurance Solutions
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.
Politics are another incentive.
The Total Investment & Insurance Solutions
"The new presidential administration has made it clear investments
in the U.S. are a top priority, and this plant may be another nod to that
mindset," Anand said.
Mazda President Masamichi Kogai said he hoped that the partnership will
help energize the industry.
Toyota is vying for the spot of No. 1 automaker in global vehicle sales
against Nissan-Renault and Volkswagen AG of Germany, as the industry gradually
consolidates.
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 Total Investment &
Insurance Solutions
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. The Total
Investment & Insurance Solutions
Also Friday, Toyota reported its April-June profit was 613.0 billion yen
($5.6 billion), up 11 percent from 552.4 billion yen a year earlier. Quarterly
sales rose 7 percent to 7.05 trillion yen ($64 billion), as vehicle sales
improved around the world, including in the U.S., Europe and Japan.
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