Toyota and Mazda to Build Factory in US


 

Toyota Motor Corp and Mazda Motor Corp have announced plans to build a $1.6 billion assembly plant within the United States. Toyota’s president Akio Toyoda argued to the Mazda board that industry consolidation is needed because of the threat automakers face from tech firms such as Apple and Google; who have put a signifiant amount of investment into the development of autonomous vehicles.

“New players from totally new business are challenging us. That’s why I feel it has become increasingly important for us automakers to gather new partners without seeing things in confrontational perspectives,” Toyoda said at a press conference.

The manufacturing plant has the potential to create as many as 4000 new jobs within the US, however it is still yet to be known where the plant would be built. It’s said that the plant will be capable of producing ~300,000 vehicles a year, with production being divided between the two Japanese automakers.

Mazda is said to be planning to build new crossover vehicles for the US market at the plant, while Toyota will produce its Corolla model there. The partnership will also look to pave the way for joint development of key electric vehicle technologies.

A new auto plant would be considered a win for President Trump, who campaigned to increase manufacturing jobs expanding employment for American autoworkers. President Trump attacked Toyota earlier this year when the automaker revealed plans to build a new factory in Mexico; threatening to impose a tax on Toyota cars.

Toyota is the world’s second largest automaker by vehicle sales in 2016, and has been forging alliances with smaller Japanese rivals for several years now. The US market has been a good source of revenue for Toyota and Mazda, and the deal would further the consolidation of the global auto industry around the two companies who have faced fierce competition from Volkswagen and General Motors.

Toyota has said they will buy for a 5% stake in Mazda, ~$450 million, as part of the deal, with Mazda expected to buy a stake of the same value in Toyota.

Each company would sell the cars they produce at the plant through their own channels. Building it jointly will reduce the potential investment burden and allow them to focus their expertise on specific production technologies; such as safety and technology for electric vehicles. Mazda has stated in the past that they lack the funds to develop electric cars on its own. As development for electric vehicles continue to improve, the auto industry has already started to face some pressure from countries who look to ban traditional fossil fuel cars by 2040.

Toyota has also said they plan to invest ~$10 billion in the United States over the next five years. The plant would be expected to be up and running by 2021.

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