Toy­ota and Mazda plan $1.6-bil­lion plant in U.S.

Ja­panese au­tomak­ers say their joint ven­ture could cre­ate as many as 4,000 jobs.

Los Angeles Times - - BUSINESS BEAT - Times staff writer Charles Flem­ing con­trib­uted to this re­port.

Ja­panese au­tomak­ers Toy­ota Mo­tor Corp. and Mazda Mo­tor Corp. said Fri­day that they plan to spend $1.6 bil­lion to set up a jointven­ture auto man­u­fac­tur­ing plant in the U.S. — a move that may cre­ate up to 4,000 jobs.

The plant is to have an an­nual pro­duc­tion ca­pac­ity of about 300,000 ve­hi­cles and pro­duce Toy­ota Corol­las for the North Amer­i­can mar­ket. Mazda will make cross­over mod­els there that it plans to in­tro­duce to that mar­ket, both sides said.

The com­pa­nies will split the cost for the plant equally. It was un­clear which state the com­pa­nies had cho­sen for the plant, which the two en­ti­ties said could be op­er­a­ble by 2021.

Toy­ota said it had changed its plan to make Corol­las at a plant in Gua­na­ju­ato, Mex­ico, now un­der con­struc­tion, and in­stead will pro­duce Tacoma pick­ups there.

Pres­i­dent Trump had crit­i­cized Toy­ota for tak­ing auto pro­duc­tion and jobs to Mex­ico. With the in­vest­ment, the au­tomak­ers can hope to prove they are good Amer­i­can cor­po­rate cit­i­zens and ap­pease the Trump ad­min­is­tra­tion’s con­cerns about jobs mov­ing over­seas.

The com­pa­nies will also work to­gether on ad­vanced auto tech­nol­ogy, such as elec­tric ve­hi­cles, safety fea­tures and con­nected cars, as well as prod­ucts they could sup­ply each other, they said.

In a state­ment to The Times, Toy­ota Mo­tor North Amer­ica Chief Ex­ec­u­tive Jim Lentz hinted that his com­pany would ben­e­fit from tech­nol­ogy be­ing de­vel­oped by the smaller Mazda, which sells an es­ti­mated eight times fewer ve­hi­cles in the U.S. than Toy­ota, cur­rently the world’s largest auto man­u­fac­turer.

“Mazda’s pas­sion for cars and their ex­per­tise in ef­fi­cient man­u­fac­tur­ing, tech­nol­ogy and de­sign ca­pa­bil­i­ties greatly com­ple­ment Toy­ota’s strengths,” Lentz said.

Toy­ota will also ac­quire 31,928,500 shares of com­mon stock newly is­sued by Mazda through a third-party al­lot­ment, which will amount to a 5.05 per­cent stake in Mazda, val­ued at $455 mil­lion.

Mazda, which makes the Mi­ata road­ster, will ac­quire $455 mil­lion worth of Toy­ota shares, the equiv­a­lent of a 0.25% stake. The in­vest­ment deal is ex­pected to be fi­nal by Oc­to­ber, the com­pa­nies said.

Toy­ota Pres­i­dent Akio Toy­oda 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.

The com­pa­nies said their col­lab­o­ra­tion will re­spect their mu­tual in­de­pen­dence and equal­ity. Toy­ota al­ready pro­vides hy­brid tech­nol­ogy to Mazda, which makes com­pact cars for Toy­ota at its Mex­ico plant.

The sheer cost of the plant also makes a part­ner­ship log­i­cal, as it boosts cost ef­fi­ciency and economies of scale. Work­ing to­gether on green and other auto tech­nol­ogy also makes sense as the seg­ment be­comes in­creas­ingly com­pet­i­tive due to con­cerns about global warm­ing, the en­vi­ron­ment and safety.

“Given the mas­sive level of com­pe­ti­tion in the in­dus­try, part­ner­ships are no longer a sur­prise,” said Ak­shay Anand, an ex­ec­u­tive an­a­lyst at Kel­ley Blue Book.

Pol­i­tics are an­other in­cen­tive.

“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 mind-set,” Anand said.

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

Ja­panese ri­val Nis­san Mo­tor Co. is al­lied with Re­nault SA of France and Mit­subishi Mo­tors Corp., and is the global leader in elec­tric ve­hi­cles. Nis­san-Re­nault be­came the top au­tomaker in world ve­hi­cle sales for the first time in the first half of this year — un­der­scor­ing how al­liances can pro­pel such groups into pow­er­ful lead­ing po­si­tions.

Toy­ota is vy­ing for the spot of No. 1 au­tomaker in global ve­hi­cle sales against Nis­san-Re­nault and Volk­swa­gen AG of Ger­many, as the in­dus­try grad­u­ally con­sol­i­dates. The tie-up with Mazda, although still lim­ited, 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, the maker of Subaru cars.

In the past, Toy­ota, which makes the Prius hy­brid, Camry sedan and Lexus lux­ury mod­els, was not overly bullish on elec­tric ve­hi­cles, not­ing the lim­ited cruise range of the tech­nol­ogy. But re­cent break­throughs in bat­ter­ies al­low for longer travel per charge.

Mazda, based in Hiroshima, Ja­pan, used to have a pow­er­ful part­ner in Dear­born-based Ford Mo­tor Co., which bought 25% of Mazda in 1979 and raised that to 33.4% in 1996. But Ford be­gan cut­ting ties in 2008 and has shed its stake in Mazda.

Also Fri­day, Toy­ota re­ported its April-June profit was $5.6 bil­lion, up 11% from a year ear­lier. Quar­terly sales rose 7% to $64 bil­lion, as ve­hi­cle sales im­proved around the world.

Toy­ota sold 2.2 mil­lion ve­hi­cles for the quar­ter, an im­prove­ment of 42,000 ve­hi­cles on-year, and stuck to its ear­lier pro­jec­tion for global ve­hi­cle sales for the fis­cal year at 10.25 mil­lion ve­hi­cles.

Toy­ota also raised its fis­cal full-year profit fore­cast through March 2018 to $16 bil­lion, higher than its ear­lier fore­cast of $14 bil­lion. But that’s still lower than amount earned in the pre­vi­ous fis­cal year.

Christo­pher Jue EPA

TOY­OTA Mo­tor Corp. Pres­i­dent Akio Toy­oda and Mazda Mo­tor Corp. Pres­i­dent Masamichi Ko­gai at­tend a news con­fer­ence in Tokyo.

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