As reported by the Nikkei Asian Review ahead of the official announcement, Toyota Motor Corporation and Mazda Motor Corporation signed an agreement on Friday to enter a business and capital alliance covering several areas which will include a return to Mazda production in the US, again in a joint venture factory.
The companies have agreed to establish a joint venture that produces vehicles in the United States; jointly develop technologies for electric vehicles; jointly develop connected car technology; collaborate on advanced safety technologies and expand complementary products.
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As our earlier report noted, Mazda currently makes a small Toyota car at a plant in Mexico. The Mazda 2 sedan based Scion iA became the Toyota Yaris iA from 2017 model year due to the ending of the Scion brand.
Collaboration in Japan goes back to March 2010 when Mazda announced it would be licensing Toyota’s hybrid technology “by 2013” for a new, Japan-built model. This car turned out to be the Axela [Mazda 3] Hybrid.
Mazda previously built cars in the US with Ford at the then Auto Alliance plant in Flat Rock, Michigan which today makes the Mustang and other Ford models.
“Today’s agreement is a testament to the positive result of two years of collaborative and deliberate discussions between the two companies, and it is a milestone in the journey to further strengthen and accelerate the partnership in a sustainable way,” the automakers said in a joint statement.
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By GlobalDataThe pair have also agreed to a capital alliance arrangement that preserves independence and equality for both companies. Toyota will subscribe for and acquire shares to be newly issued by Mazda through a third party allotment while Mazda will subscribe for and acquire third-party allocation shares of treasury stock disposed of by Toyota in the equivalent amount in value to the Mazda shares. The value of the shares mutually acquired by both companies will be equivalent.
Toyota president Akio Toyoda said: “The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars. 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. It is also the realisation of our desire to never let cars become commodities.”
Mazda president and CEO Masamichi Kogai said: “Nothing would please me more than if, through this alliance, we can help to energise the auto industry and create more car fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders.”
The companies said the auto industry increasingly faces great challenges, including stricter environmental and safety regulations for new vehicles and the entrance of competitors from other industries, as well as the diversification of mobility related businesses.
“With the future of the industry in mind, in addition to leveraging their individual strengths to further improve technologies and reinforce their business foundations, Toyota and Mazda aim to deepen collaboration and achieve sustainable growth through their partnership, rising to face and overcome these pressing challenges.”
The pair in May 2015 entered an agreement to build a continuous partnership that would mutually benefit the companies in such forms as leveraging the resources of both companies and complementing each other’s products and technologies. Since then, they have discussed various areas to explore.
US plant
The joint venture plant in the US with equal funding contributions would have an estimated annual production capacity of approximately 300,000 units and start operations in 2021, pending the usual regulatory processes. It would cost US$1.6bn and create up to 4,000 jobs.
Mazda would build new crossover models for North America while Toyota plans Corolla output. It has previously shared Corolla based models with GM, made in what is now Tesla’s factory in California.
“By producing vehicles in the US, Mazda aims to build a production structure to further grow in North America. These activities will allow the company to more quickly respond to its customers’ needs depending on the region and model,” a joint statement said.
“By further increasing its production capacity in the US, Toyota is to further pursue management that is closer to the region, as a measure to improve its response to the growing North American market. At Toyota’s new plant in Guanajuato, Mexico, which is currently under construction, Toyota plans to produce the Tacoma, instead of the Corolla. There will be no substantial impact on Toyota’s investment and employment plan there,” the statement added.
After the California plant closed, Toyota built Corollas at the then new Blue Springs, Mississippi plant, intially mothballed for a couple of years after the mid 2000s credit crunch and originally planned for Prius. It also builds them in Canada.
EV technology
Toyota and Mazda are to explore joint development of technologies for the basic structure of competitive electric vehicles, mobilising and exchanging expertise freely and actively. These technologies will allow the companies to respond quickly to regulations and market trends in each country. Specific details of the collaboration will be determined as the companies work together.
Advanced safety technologies
The pair will work on technologies for onboard multimedia infotainment systems in preparation for increased use of in-car information technologies and the increasing demand for connected technologies. Toyota will cooperate with Mazda in Toyota’s vehicle-to-vehicle (V2V) and vehicle to infrastructure (V2I) technologies with the ultimate goal of creating a mobile society devoid of accidents.
Expand complementary products
Currently, Mazda is supplying a compact sedan to Toyota in North America. In addition, Toyota is to supply a compact commercial ‘two-box’ van to Mazda in Japan. Beyond this, the companies will further explore the possibilities of other complementary products on a global level.
Autotrader US analyst Michelle Krebs said: “The Toyota-Mazda link for joint vehicle production and technology collaboration is indicative of where the global auto industry is heading. Electric, self-driving and connected vehicles will require significant investment without an immediate return and economies of scale, particularly for a small automaker like Mazda.
“Toyota may benefit from a taste of Mazda’s zoom-zoom flavour and add to its global volume count, but most of the benefit of the link up goes to Mazda, which desperately needs US production in this protectionist era and help with advanced technology development.”
Her colleague Rebecca Lindland added: “I like the Mazda-Toyota tie up a lot. The interesting dynamic here is the difference in the sales volume in the US: Toyota sold eight times what Mazda did in 2016. But both companies are facing a changing mobility landscape and a post-peak market, so seeking out ways to maximise economies of scale, hedge against currency fluctuations, and a side bonus of currying favour from the Trump administration makes a lot of sense.”
Earlier report: Toyota buying stake in Mazda
