Toy­ota, Mazda to build U.S. unit

$1.6B plant’s site is still un­de­cided

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - JONATHAN SOBLE

TOKYO — Toy­ota said on Fri­day that it was tak­ing a 5 per­cent stake in Mazda, an­other Ja­panese au­tomaker, and that the com­pa­nies would jointly build an as­sem­bly plant in the United States and would pool re­sources on new tech­nolo­gies.

The fac­tory’s lo­ca­tion has not been de­cided, but Toy­ota and Mazda said they hoped the first ve­hi­cles would roll off its pro­duc­tion lines in 2021. The plant is ex­pected to cost $1.6 bil­lion and to em­ploy about 4,000 work­ers, they said.

Akio Toy­oda, chief ex­ec­u­tive of Toy­ota, said in Jan­uary that the car­maker would in­vest $10 bil­lion in the United States over the next five years. Although plans for that spend­ing pre­dated the elec­tion of Pres­i­dent Don­ald Trump, the an­nounce­ment was widely seen as a re­sponse to Trump’s vows to pro­mote U.S. man­u­fac­tur­ing, push­ing back against coun­tries like Ja­pan that have large trade sur­pluses with the United States.

The al­liance be­tween Toy­ota and Mazda rep­re­sents a small but sig­nif­i­cant step in the con­sol­i­da­tion of the Ja­panese car in­dus­try, where a half-dozen pro­duc­ers com­pete for cus­tomers and cap­i­tal. Toy­ota and Mazda said they planned to pur­sue joint de­vel­op­ment

of elec­tric ve­hi­cles and safety tech­nol­ogy.

In an era of soar­ing de­vel­op­ment costs and un­set­tling tech­no­log­i­cal shifts — es­pe­cially the emer­gence of bat­tery-pow­ered and self­driv­ing cars — many smaller pro­duc­ers fear they lack the re­sources re­quired to keep up. Even Toy­ota, one of the world’s largest pro­duc­ers of ve­hi­cles, with an out­put of 10 mil­lion units a year, has been ac­cused by some crit­ics of fall­ing be­hind in re­search and de­vel­op­ment.

“In the fu­ture, mo­bil­ity won’t be­long only to car­mak­ers,” Toy­oda said at a news con­fer­ence an­nounc­ing the Mazda stake, not­ing that Sil­i­con Val­ley was in­creas­ingly turn­ing its gaze to the auto in­dus­try, look­ing to dis­rupt ar­eas in­clud­ing de­sign, man­u­fac­tur­ing and re­tail distri­bu­tion.

“To­tally new play­ers like Google and Ama­zon are right be­fore our eyes,” Toy­oda said. “We need to co­op­er­ate and com­pete with them.”

Ja­pan’s smaller car­mak­ers have sought part­ner­ships with larger pro­duc­ers be­fore. Mazda was owned by Ford Mo­tor and Suzuki by Gen­eral Mo­tors for decades, but their Amer­i­can part­ners with­drew un­der fi­nan­cial pres­sure af­ter the 2008 fi­nan­cial cri­sis.

Mit­subishi joined the Re­nault-Nis­san al­liance last year, af­ter the French-Ja­panese group ex­tended Mit­subishi a $2.2 bil­lion life­line to help it re­cover from a scan­dal over fal­si­fied fuel-econ­omy ratings.

Toy­ota has been ex­tend­ing its reach, as well.

Last year, it took over its long­time minicar af­fil­i­ate, Dai­hatsu. It has also been strength­en­ing its links with Fuji Heavy In­dus­tries, the maker of Subaru cars, in which Toy­ota owns a 16.5 per­cent stake. And it has been dis­cussing a new part­ner­ship with Suzuki.

Toy­ota and Mazda have been co­op­er­at­ing since 2010, when Toy­ota agreed to li­cense its gaso­line-elec­tric hy­brid-drive sys­tem to Mazda.

The com­pa­nies said in 2015 that they were ex­plor­ing ways to ex­pand their part­ner­ship.

With the Prius and other hy­brids, Toy­ota has dom­i­nated the mar­ket for lower-emis­sions ve­hi­cles for years. But as fully bat­tery-pow­ered cars gain fa­vor with reg­u­la­tors and con­sumers, the com­pany faces new chal­lenges — both from tra­di­tional com­peti­tors and new play­ers like Tesla.

Mazda is known for mak­ing pow­er­ful and fu­el­ef­fi­cient in­ter­nal com­bus­tion en­gines, but it lacks its own elec­tric al­ter­na­tives. Its sporty im­age and widely praised de­signs could ap­peal to Toy­ota: Toy­oda has re­peat­edly spo­ken of his de­sire to give his com­pany’s prod­ucts more flair.

Mazda said it planned to is­sue new shares to Toy­ota worth about $450 mil­lion, which would give Toy­ota a 5.05 per­cent own­er­ship stake in Mazda. In re­turn, Toy­ota plans to trans­fer some of its shares to Mazda. The stock would be worth an equiv­a­lent amount in cash, but be­cause Toy­ota is much larger than Mazda, Mazda’s stake in Toy­ota would work out to 0.25 per­cent.

AP/EU­GENE HOSHIKO

Toy­ota Mo­tor Corp. Pres­i­dent Akio Toy­oda (left) and Mazda Mo­tor Corp. Pres­i­dent Masamichi Ko­gai end a news con­fer­ence Fri­day in Tokyo where Toy­oda said au­tomak­ers now have to com­pete with “to­tally new play­ers like Google and Ama­zon.

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