Toyota, Mazda enter business and capital alliance

06 August, 2017, 01:39 | Author: Rolando Keller
  • The automakers will discuss building a plant together in the southern U.S

Toyota Motor said Friday it will invest an additional 10.5 billion yen ($94.7 million) in a Tokyo artificial intelligence development venture, purchasing new shares through a private placement.

The two Japanese auto manufacturers Toyota and Mazda will be partnering for the development of a new $1.6 billion assembly plant in the USA, as well as for the development of electric vehicle technologies. Toyota also has plants in Indiana, Kentucky and Texas. The company will continue to cut costs to avoid the two-year downturn, said Toyota Senior Managing Officer Tetsuya Otake. Though speculatively a potential product for the new USA factory, its bodystyle is similar to niche models like the BMW X4 and Mercedes-Benz GLC Coupe. The companies hope to open the plant in 2021.

Midwestern states such as OH or MI can counter those strengths with incentives such as tax breaks or publicly funded worker training programs. Other states are expected to follow suit.

This means, starting from the beginning of October, Toyota will own 5.05 per cent of Mazda's common stock, while Mazda will have a 0.25 per cent stake in Toyota.

Still, Finley cautioned that the knock-on economic benefits of the new auto plant may be limited as much of the value of vehicles built there will likely still come from parts made in Mexico or Asia. Toyota originally planned to move Corolla production to Guanajuato, thus freeing up Blue Springs for Tacoma production.

Mazda said it would make crossover models at the plant for sale in North America.

Toyoda denied that Trump's views influenced his decision.

The two Japanese automakers, which had been contemplating a possible business alliance, judged it necessary to strengthen their partnership. "Pressure from the White House would be the wrong word".

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Taken together, the plans are likely to be trumpeted as a victory for President Trump's push to manufacture more locally sold vehicles in the U.S. He had threatened Toyota and other auto companies for selling cars to American customers that were built elsewhere. "This is the fastest way for me to get more pickup truck production to my dealers".

The Corolla will be located at the new factory in the US, which will be established as a joint venture between Toyota and Mazda and will open by 2021. Currently, 100% of Mazda cars sold in the USA are made in other countries, according to Barclays.

States will be competing to add a plant in a market that is already awash with production capacity and experiencing a slowdown in domestic auto sales. Mazda does not now have any factories in the U.S. But since then US automaking capacity has grown.

President Donald Trump had criticized Toyota and other automakers for taking auto production and jobs to Mexico, saying vehicles for the USA market should be built by US workers.

According to Friday's announcement by the two automakers, they have agreed to explore setting up a joint venture plant in the United States for which the two sides would contribute equal funding.

A new USA assembly plant would likely become the prize in a fierce competition among Midwestern and Southern states eager to expand manufacturing jobs. Overall U.S. capacity is expected to grow by almost 11 percent between 2016 and 2023, from about 12.5 million to just over 14 million, according to LMC Automotive.

Indeed, the plant reached 500,000 cars faster than any other plant in Toyota history, and past year it won a coveted J.D. Power Initial Quality award.

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