Toyota, Mazda said to be near deal for $1.6B U.S. plant
Toyota Motor Corp. and Mazda Motor Corp. are nearing a deal to buy stakes in one another and jointly build a $1.6 billion U.S. factory, according to people familiar with the matter.
The plant will have the capacity to produce 300,000 Toyota Corolla compact cars and Mazda crossovers per year, said the people, who asked not to be identified ahead of the companies making an official announcement Friday. The facility will create 4,000 jobs and be operational by 2021, the people said.
Toyota and Mazda both sent stock exchange statements saying their directors will discuss a partnership at board meetings Friday. Toyota spokesman Ryo Sakai declined to comment on the possibility of a capital tie-up. Toyota reports its first-quarter results after the market’s close Friday.
Mazda jumped as much as 5.8 percent to its highest intraday level in more than six months while Toyota declined as much as 0.8 percent.
Mazda lacks any U.S. factories, which exposes one of Japan’s smallest car makers to both trade and currency risk. President Donald Trump threatened to tax auto imports early in his presidency and specifically attacked Toyota’s plan to open a Corolla plant in Mexico. Shifting production of those cars from a plant in Canada enables Toyota to boost output of the RAV4 crossover. American consumers are buying that model in record numbers, while Mazda also is seeing booming demand for its entry in that segment, the CX-5.
A representative from Toyota would not comment beyond saying the two companies were exploring collaboration.
“In May 2015, Toyota and Mazda signed a memorandum of understanding to explore various areas of collaboration,”said Curtis McAllister of Toyota. “We intend to submit a proposal to our board of directors today regarding the partnership with Mazda, however, we would like to refrain from providing further comment at this time.”
A Mazda spokesman declined to comment on the reports.
Trump’s pressure to build more vehicles in the U.S. may have affected the timing of Mazda’s decision to start manufacturing cars in the U.S., as well as Toyota’s decision to boost its presence, said John Shook, chief executive of the Lean Enterprise Institute in Cambridge, Massachusetts. But their close relationship has been in development for many years, he said.
“Mazda has been studying the Toyota Production System, with direct help from Toyota, since the 1970s,” said Shook, a former Toyota engineer. “So this is an easy marriage for both parties.”
Even as auto sales appear to be dipping from record levels of 2016, Trump has said he wants to see new auto jobs in the United States, promising to reduce regulations and taxes. During a roundtable in Ypsilanti Township in March with auto executives, suppliers and United Auto Workers President Dennis Williams, Trump pushed domestic and foreign automakers for more U.S. jobs and said he wants to see them build new plants in Michigan and other states.
At one point during the roundtable, the president turned to Jim Lentz, chief executive of Toyota North America, and said: “You have to build plants here. I know I gave you a hard time but you have to build them here.”
“I understand,” Lentz said. “I understand.”
The deepening ties between Toyota and Mazda also are driven in part by the enormous costs automakers are facing to develop connected, self-driving and battery-powered vehicles. The two companies will do joint work together on electric-car technology so that they’re able to introduce plug-in models once there’s more demand for them in the U.S., the people said.
Toyota has sought to share the costs of developing new technologies — and spread the expense of building traditional vehicles — with a growing set of its Japanese peers in recent years. The company solidified a partnership with Suzuki Motor Corp. in February and already sources compact cars from Mazda’s lone North American assembly plant in Mexico. Until last year, Subaru Corp. built the Camry for Toyota at a factory in Indiana.
“In Japan, there’s a great tradition of Toyota being a big brother’ to other smaller manufacturers,” said Eric Noble, founder of The Carlab, an automotive consultancy in Orange, California. Because of its strong dependence on North American market, Mazda absolutely needs to expand its manufacturing footprint here.”
Toyota may purchase roughly a 5 percent stake in Mazda, which will in turn invest in its Japanese peer, the Nikkei newspaper reported earlier, without saying where it got the information.
Detroit News Staff Writers Melissa Burden and Ian Thibodeau contributed to this report.