Toyota, Mazda Alliance to Yield $1.6B North America Plant

The two car giants’ new agreement calls for the joint development of a manufacturing facility that would begin producing vehicles in the U.S. in 2021.

Akio Toyoda, Toyota
Akio Toyoda, Toyota

Toyota Motor Corp. and Mazda Motor Corp. have agreed to establish a business and capital alliance that is turning heads. It’s a partnership that will accomplish a few goals, including the $1.6 billion development of a joint assembly plant by the North American divisions of the Japanese car companies.

Admittedly, Toyota and Mazda are competitors, but they’re friendly competitors. “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,” Akio Toyoda, president of Toyota Motor Corp., said in a prepared statement.

The new alliance didn’t come to fruition overnight. Toyota and Mazda have been ruminating on the idea since May 2015, when the two car giants entered into an agreement to build a continuous partnership that would mutually benefit the companies. The result: a deal to form a joint venture that produces vehicles in the U.S. at a billion-dollar, joint manufacturing facility.

A specific location hasn’t been chosen for the project, which will be equally funded by the companies, but the activities that will take place there have been outlined. Toyota will produce the Corolla for the North American market at the factory, while Mazda will assemble cross-over models that will be new to the North American audience. For both companies, however, the plant will allow for the expedited response to customers.

Toyota and Mazda’s new partnership also entails the joint development of technologies for electric vehicles and connected cars; collaboration on advanced safety technologies; and expansion of complementary products. The capital portion of the alliance calls for the mutual acquisition of shares. Toyota will acquire 31,928,500 shares of common stock to be newly issued by Mazda via a third-party allotment. Mazda will acquire Toyota shares with an equivalent value of the Mazda shares through the disposition of treasury stock by means of a third-party allotment to be implemented by Toyota. The share acquisition is scheduled to occur October 2, 2017.

Plants galore

Both Toyota and Mazda have been active in planning, developing, expanding and/or leasing U.S. properties over the last year. In April 2017, Toyota revealed plans to invest $1.3 billion in a 7.5 million-square-foot plant in Georgetown, Ky., which would be the company’s largest factory in the world. The Kentucky announcement was followed a month later by the car manufacturer’s opening of the expanded Toyota Motor North America Research & Development Purchasing and Prototype Development centers in York Township, Mich. And Toyota recently completed the move to its new 2 million-square-foot North American headquarters and operation center in Plano, Tex.

For its part, Mazda made its presence known in Southern California’s office market recently with the relocation of its North American headquarters to a 102,000-square-foot space at Irvine Co.’s new office tower at 200 Spectrum Center Dr. The car company will stay put at its new location under a 10-year lease agreement.

As for the team effort, development of the Toyota-Mazda plant is not precisely written in stone just yet. The partners must secure the requisite government approvals before deciding which state will win the coveted opportunity to host the project. If all goes as planned, the new U.S. factory will likely be ready to commence operations in 2021.

Image courtesy of Toyota