Mazda and Toyota Take Their Relationship to the Next Level, Start Planning an Assembly Plant

Matt Posky
by Matt Posky

Toyota Motor Corp. is set to strike a deal to take a 5-percent stake in fellow Japanese automaker Mazda Motor Corp. The alliance includes the construction of a joint-venture $1.6 billion U.S. automotive plant and sharing EV technology — showing that Mazda hasn’t totally sworn off the idea of an electric car.

The two companies have been dating casually for a couple of years; Toyota sometimes uses Mazda’s Mexican factory to build compact cars, the two have fostered a love child (the Mazda 2-based Toyota Yaris iA), but this is the first time they’ve seriously considered moving in together. Toyota claimed the decision was about more than just a strategy to share technology, suggesting the automakers had genuine feelings for one another.

“The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars,” Toyota President Akio Toyoda said in a statement, “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 realization of our desire to never let cars become commodities.”

However Toyota doesn’t want to be tied down to one company. The brand also has a 16.5 percent stake in Subaru, and explained that its 2015 technology-sharing foray was “an engagement announcement, not a marriage announcement.”

The wedding is definitely still on.

“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,” said Mazda CEO Masamichi Kogai of the union.

While the partnership helps keep Toyota as the world’s largest carmaker, Mazda has the most to gain. With no production facilities within the United States, there’s definitely some apprehension about what might happen if Donald Trump delivers on his protectionist promises — especially since North America makes up the over a third of Mazda’s revenue (and 21 percent of it operating profits in 2016).

With an R&D budget of roughly 140 billion yen ($1.27 billion) for 2017, Mazda also lacks the funds to develop electric cars on its own — a problem shared by Subaru and Suzuki. However, Toyota swooped in with a sack of money to help them while also helping itself.

At the new U.S. factory, Mazda intends to produce jointly developed models specifically for the North American market, while Toyota plans to build the Corolla. Excess Tacoma production will be sent over to the company’s new Mexican facility, which was originally built to handle the Corolla.

Pending approval from relevant government agencies, the companies will begin to examine detailed plans with the goal to start operations at the new plant by 2021. Toyota claims it will have capacity of approximately 300,000 units and create 4,000 American jobs.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Jeff S Jeff S on Aug 05, 2017

    This is a good alliance for both Toyota and Mazda. Ford should have kept Mazda but as mentioned above that was Mulally and the One Ford policy. My concern is the blending of both cultures.

  • Akear Akear on Aug 08, 2017

    Why can't America have great cars companies, like Toyota, Mazda, and even Nissan. Barra what a disgrace!

  • Zipper69 Current radio ads blare "your local Chrysler, Dodge, Jeep, Ram dealer" and the facias read the same. Is the honeymoon with FIAT over now the 500 and big 500 have stopped selling?
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  • ToolGuy Personally I have no idea what anyone in this video is talking about, perhaps someone can explain it to me.
  • ToolGuy Friendly reminder of two indisputable facts: A) Winners buy new vehicles (only losers buy used), and B) New vehicle buyers are geniuses (their vehicle choices prove it):
  • Groza George Stellantis live off the back of cheap V8 cars with old technology and suffers from lack of new product development. Now that regulations killed this market, they have to ditch the outdated overhead.They are not ready to face the tsunami of cheap Chinese EVs or ready to even go hybrid and will be left in the dust. I expect most of their US offerings to be made in Mexico in the future for good tariff protection and lower costs of labor instead of overpriced and inflexible union labor.