Toyota, Mazda plan partnership, $1.6 billion US plant

Tom Krisher and Yuri Kageyama
Associated Press
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Toyota Motor Corp. and Mazda Motor Corp. plan to spend $1.6 billion to establish a joint-venture assembly manufacturing plant in the U.S. that could open in 2021, creating up to 4,000 jobs.

Toyota President Akio Toyoda, left, Mazda President Masamichi Kogai both said they hoped the partnership would make each company better and help energize the industry as a whole.

But the companies haven’t said where the plant will be built.

Gov. Rick Snyder said in a statement Friday that recent legislation could make Michigan more attractive than other states trying to land the new facility. He and other state officials would not say whether they have spoken to either company about building the plant here.

“We are a national leader for mobility and automotive R&D, as well as providing an exceptionally skilled manufacturing workforce and an outstanding business environment,” Snyder said in an emailed statement. “Any manufacturer looking to locate a plant in the United States will likely be taking a good look at Michigan.”

The Japanese automakers said the plant will have the capacity to produce 300,000 vehicles annually. Toyota said it will make the compact Toyota Corolla for North America at the plant, while Mazda will build crossovers that it plans to introduce in North America, the carmakers said.

The companies will equally split the cost for the plant.

President Donald Trump, both on the campaign trail and in office, has pushed automakers to build new plants in the United States and criticized those who opted to take auto jobs to Mexico. During a roundtable meeting with automakers in March in Ypsilanti Township, Trump 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 answered. “I understand.”

In January, Trump tweeted: “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.” On Friday, Toyota said it changed its plan to build Corollas at a plant in Guanajuato, Mexico, now under construction, and instead will produce Tacoma pickups there.

Akshay Anand, an executive analyst at Kelley Blue Book, said, “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.”

Chinese-owned Volvo Cars Ltd. is building a $500 million assembly plant in Berkeley County, South Carolina. Hyundai Motor and Kia Motors also are considering a new U.S. factory.

It’s unlikely a domestic automaker will build a new assembly plant in the U.S. Earlier this year, officials for the Detroit Three said they had no plans to build any new assembly plants in the U.S. Analysts say that’s likely because U.S. auto industry sales have peaked and have been on the decline this year, and most companies simply don’t need more production capacity. Analysts have said the exception would be Japanese, Korean and German automakers if they needed the capacity.

Toyota and Mazda also will work together on electric vehicle, infotainment system and connected car technologies. As a relatively small automaker, Mazda has lacked the resources to make the big investments in advanced technologies that the largest automakers have committed.

The two automakers said they could also supply vehicles to each other. The alliance comes two years after the carmakers entered into an agreement to build on a partnership. Mazda does not currently have any auto plants in the U.S.

As part of the alliance, Toyota will acquire 31,928,500 shares of newly issued Mazda stock, giving it around a 5 percent stake in Mazda. Mazda will acquire 50 billion yen worth of Toyota shares for a 0.25 percent stake. The investment deal is expected to be final by October.

Toyota is among the world’s top sales leaders and, through July, holds a 14 percent share in the United States, while Mazda is a much smaller player, holding a 1.7 percent market share in the U.S.

The partnership also comes at a time when changes to the North America Free Trade Agreement may make U.S. products more desirable. The move could help protect Mazda from certain taxes, analysts say.

Mazda built some cars in the U.S. for years at a plant in Flat Rock through a partnership with Ford Motor Co. Ford bought 25 percent of Mazda in 1979 and raised it to 33.4 percent in 1996, but it began selling off its ownership of the Japanese company in 2008. Mazda has no plants in the U.S. now.

Toyota has assembly plants in Indiana, Mississippi, Kentucky, Alabama, Texas and West Virginia.

Toyota President Akio Toyoda on Friday praised Mazda as a great partner. “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.

Toyota provides hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.

Mazda President Masamichi Kogai said he hoped that the partnership will help energize the industry, as rivals come together for the shared goals of innovation and fostering talent and leadership.

The 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. It is also the top shareholder in Fuji Heavy Industries, which produces Subarus.

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