Toyota-Mazda deal signals a new age
Rising costs force more partnerships between automakers
For Mazda and Toyota, it’s profitable to be friends as well as competitors when it comes to building a $1.6 billion auto plant in the USA.
The sweeping new alliance between the Japanese automakers signals an acceleration of global consolidation and collaboration as automotive companies grapple with the rising costs of vehicle development and global regulatory standards.
Facing steep costs to develop electric vehicles and self-driving cars, automakers increasingly seek partnerships to help spread out the burden.
The focus has been on the main Toyota-Mazda deal for the joint-venture assembly plant that will create up to 4,000 jobs in the USA, where Toyota will make the Corolla, instead of Mexico. Mazda said it will make crossovers but did not disclose models. The two companies have yet to announce exactly where the plant will be built.
The companies’ investments in each other and collaboration on the development of electric cars and self-driving vehicles demonstrate how small automakers — in this case, Mazda — find it increasingly difficult to meet regulatory and market demands on their own.
Though President Trump has signaled plans to reconsider fuel economy standards, global auto companies still face tighter requirements in foreign markets, effectively necessitating technological investments to improve gas mileage and lower emissions.
The auto industry “has entered a period of major change, where factors such as diversifying market needs, tightened environmental and safety regulations, increased sophistication of advanced technologies, market entrants from other industries and diversification of the mobility business are interacting in complex manners,” Mazda said Friday in a statement.
Mazda said it and Toyota not only will try to improve their manufacturing capacities and strengthen their businesses but “establish a cooperative relationship to develop a system that will enable their continued growth.”
Signs the auto industry is increasingly collaborating and consolidating:
Toyota, Mazda invest in each other: In addition to their technology and manufacturing partnership, Toyota is acquiring 5% of Mazda, and Mazda is acquiring 0.25% of Toyota.
The deal paves the way for the possibility of a complete Toyota acquisition of Mazda.
Nissan broadens its global alliance: Japanese automaker Nissan acquired a controlling stake in struggling Japanese automaker Mitsubishi in 2016. The deal broadened Nissan’s position in a global alliance with French automaker Renault, giving the global trio the combined power to handle complex manufacturing and vehicle development demands.
Carlos Ghosn, architect and leader of the alliance, said the deal would involve collaboration on purchasing, localized manufacturing, vehicle platforms and technology sharing.
General Motors selling European division: GM said that it had completed the sale of its languishing European division to French automaker PSA Groupe, which makes the Peugeot brand.
Fiat Chrysler’s quest for a deal. Fiat Chrysler CEO Sergio Marchionne has promoted indus- try consolidation for several years. He promoted a tie-up with General Motors in recent years, but GM rejected the possibility. He has batted down speculation of an accord with Volkswagen Group.
Marchionne has maintained that consolidation is necessary to help meet the costs of industry regulation and vehicle development.
Self- driving car partnerships. In a series of deals, auto companies, suppliers and tech giants have announced plans to coordinate self-driving car development.
Facing tremendous costs, technical hurdles and regulatory uncertainty over the technology, auto companies choose to collaborate instead of go it alone.
Partnerships include an alliance between German automaker BMW, tech giant Intel and supplier Delphi, and a collaboration between Mercedes-Benz parent Daimler and supplier Bosch.
Ride-hailing collaborations. Several companies have announced plans to work together on ride-hailing ventures.
GM and former Google car project Waymo are coordinating plans with Lyft to introduce selfdriving cars into the ride-hailing app’s network. Toyota has invested in ride-hailing app Uber.