Toyota and Mazda announced the formation of a new alliance that includes establishing a new factory in the US for building compact Toyotas and Mazda SUVs. No specifics have been shared yet, but the two hope that whatever systems result will support more rapid deployment in new markets, as well as be more nimble as regulations evolve.
The Japanese automakers said in a statement Friday that the facility would be operational by 2021, but did not specify where it would be built.
The deal marks a symbolically significant shift for Toyota after the company faced withering criticism from President Trump for its plans to locate Corolla production at a new $1 billion factory under construction in the state of Guanajuato in Central Mexico. The move has been well-received by investors as it reduces the risks involved for both companies - important amid falling automotive sales both in the US and overseas.
The plant, something of a surprise at a time of overcapacity in the U.S. market, will be a boost to U.S. President Donald Trump, who campaigned on promises to increase manufacturing and expand employment for American autoworkers. Toyota now sells a version of the Mazda 2 rebranded as the Yaris iA in North America, and under the new deal, Toyota will supply a box truck to Mazda for the Japanese market.
France and Britain have both said they will end sales of petrol and diesel vehicles by 2040.
It, along with other Japanese rivals, also lacks the funds to develop electric cars on its own.
The auto manufacturers, which also agreed to buy a stake in each other, also announced that they will jointly develop technologies for electric vehicles that they hope will allow them "to respond quickly to regulations and market trends in each country". Forbes reports Mazda also faced scrutiny because it had no plant in the United States, importing its cars from Mexico and Japan.
Looking ahead, for fiscal year ending March 31, 2018, Toyota now forecasts consolidated net revenue of 28.5 trillion yen, operating income of 1.85 trillion yen, and net income of 1.75 trillion yen.
Meanwhile, Mazda, which has developed its original fuel-saving technology, has been behind in the field of electric vehicles. The stock would be worth an equivalent amount in cash, but because Toyota is much larger than Mazda, Mazda's stake in Toyota would work out to 0.25 percent.
Expenses for marketing and investments in cost cutting efforts weighed on Toyota's quarterly profits, said the company's senior managing officer, Tetsuya Otake. With the sense of crisis, Mazda made a decision to approach Toyota. At the time, the automaker was considering making cars for the US market in Mexico.
Economy, Trade and Industry Minister Hiroshige Seko said at a press conference on Friday: "The vehicle industry is facing a major tuning point". And it has been discussing a new partnership with Suzuki.