Published: Sat, August 05, 2017
Economy | By Melissa Porter

Toyota tunes up with Mazda deal

Toyota tunes up with Mazda deal

The plant will be opened under a new 50/50 joint venture between the two rivals, and is expected to create 4,000 new jobs.

The companies have not announced exactly where the new plant will be built. But it will locate additional production of the Tacoma mid-size pickup truck at the Mexico factory instead of the Corolla, which had been set to move there from an operation in Ontario, Canada.

President Donald Trump had criticized Toyota and other automakers for taking auto production and jobs to Mexico, saying vehicles for the US market should be built by USA workers. Toyota said Trump's views had not influenced the decision.

The new plant comes after Trump escalated criticism of Toyota in January, threatening to implement a border tax if the company did not invest in USA production. "With the investment", the AP said, "both automakers can hope to prove their good American corporate citizenship and appease the Trump administration's concerns about jobs moving overseas". Corolla sales fell 10 percent through July.

On Wednesday, Foxconn said the Wisconsin plant "will be the first of a series of facilities we will be building in several states". If not, the plant will have the flexibility to shift to another model, according to spokesman Scott Vazin. This will result in Mazda acquiring 0.25 percent of Toyota, and Toyota acquiring 5.05 percent of Mazda.

Toyota now has a 5% stake in Mazda.

Toyota and Mazda are also set to announce plans to collaborate on the development of electric vehicles, safety equipment and self-driving auto technology, the person said.

Both parties would also be cooperating on electric vehicles. But recent breakthroughs in batteries allow for longer travel per charge.

Mitsubishi joined the Renault-Nissan alliance previous 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.

The Camry has been America's top-selling auto for 15 consecutive years, and has served as the company's flagship vehicle since 1982.

Toyota noted the growing competition from newcomers in the auto industry like Google, Apple and Amazon, stressing he was anxious about autos turning into commodities.

"They're going to start looking at sites to look at the best benefits for Toyota and Mazda".

In 2015, the two carmakers announced that they would expand their partnership to cooperate in developing environmentally friendly and safe-driving technology. For North America, Mazda produces vehicles at two plants co-owned by Ford. "This plant is a great example of Toyota's know-how and ingenuity, and of course its match with the work force and our partners in the community Together, we make such a great team, and through this teamwork, we've made some fantastic accomplishments".

A share of Mazda might also prevent incursions in the future by tech companies, said one industry analyst on Friday. The move has been well-received by investors as it reduces the risks involved for both companies - important amid falling automotive sales both in the USA and overseas.

Toyota raised its fiscal full year profit forecast through March 2018 to 1.75 trillion yen ($16 billion), higher than its earlier forecast of 1.5 trillion yen ($14 billion).

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