Auto Industry

Toyota, Mazda to build joint venture plant in US

Two companies will also share EV, connectivity and safety technologies

Toyota Motor Corp. President Akio Toyoda, left, and Mazda Motor Corp. President Masamichi Kogai pose for photographers prior to a press conference in Tokyo in May 2015.

Toyota and Mazda have entered into a business and capital partnership that will see the two establish joint venture vehicle production in the US and work on connectivity and electrification technologies, among others.

The agreement is a result of two years of discussions, and will also include the expansion of complementary products and collaboration on advanced safety technologies. The two will also acquire equal capital in the other company.

“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,” stated Toyota President Akio Toyoda. “This is a partnership in which those who are passionate about cars will work together to make ever-better cars. It is also the realization of our desire to never let cars become commodities.”

“Nothing would please me more than if, through this alliance, we can help to energize 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,” added Mazda President and CEO Masamichi Kogai.

The companies entered into an agreement of partnership in May 2017, and have spent the past three months discussing the areas to explore that would be beneficial to both companies.

Under the collaboration, the two will create a joint-venture plant in the US that would have an annual capacity of 300,000 vehicles and create 4,000 jobs to produce Toyota Corollas and Mazda crossovers. The two will enter into discussions with various government agencies with the aim of beginning production in 2021. It is expected the plant will require roughly $1.6 billion (shared equally by the two companies).

The two will also jointly develop technologies for the basic structures of electric vehicles (to allow both to respond more quickly to market-specific regulations and trends), technologies for onboard multimedia infotainment systems. Toyota will also share its vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) technologies as both companies prepare for a future of autonomous vehicles.

The two will also work on complementary products, with Toyota to supply a compact commercial van to Mazda in Japan. Mazda currently supplies the Mazda2 that’s sold as the Toyota Yaris sedan in Canada and Mexico.

For the capital part of the partnership, Toyota will acquire 31,928,500 shares of common stock newly issued by Mazda through a third-party allotment (valued at 50 billion yen). Mazda will acquire the equivalent in Toyota shares, through a disposition of treasury stock through a third-party allotment.

The acquisition of shares is expected to be finalized in October 2017.

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