It was recently announced that Toyota Motor Corporation and Mazda Motor Corporation plan to buy stakes in each other’s company with the eventual goal of a jointly-built $1.6 billion U.S. manufacturing plant. Toyota intends to acquire a stake of just over 5% of Mazda, while Mazda will acquire a stake of 0.25% in Toyota. While the move to partner up with a direct competitor may seem odd on the surface, the partnership is actually rooted in different angles of strategy.
- Mazda does not currently have a manufacturing facility in the United States. With the risk of heightened taxes on imported automobiles, it makes fiscal sense for Mazda to have a stateside presence to avoid hefty fines.
- Other auto manufacturers are partnering up already, such as Nissan and its connection to Renault SA and Mitsubishi.
- Investing in green car technology without 3rd party backing is incredibly expensive
- The companies intend to develop and share future technologies for environmentally-friendly vehicles, along with other tech
- Self-driving vehicles from Google and Amazon are forcing traditional manufacturers to think outside the box in order to keep up
For Mazda, a company that heavily relies on its North American presence, the larger footprint in America will only benefit their reach while cutting overhead costs. This sort of partnership is nothing new for Toyota.
- They already partner with Suzuki
- Previously sourced U.S. distribution of the Camry from a Subaru plant in Indiana
- Sourced some of their compact cars from Mazda’s Mexico plant
Details about the proposed plant are starting to emerge, including an annual automobile output of 300,000, 4,000 full-time jobs and a project 2021 opening. Toyota will limit its production in the plant to its popular Corolla model, while Mazda will focus on crossover vehicles, thus neither company will be in direct market competition. Where the plant will be located remains to be seen, but analysts predict it will be in the southern portion of the United States, where Toyota currently has operations.
As autonomous cars begin to pick up more momentum in the industry, it’s likely we’ll see larger, full-scale mergers of traditional auto manufacturers in order to keep up with technology and level the playing field. Mazda and Toyota have had smaller partnerships in the past, but do you think this latest move is a sign of an eventual merger? Share your thoughts with us in the comments section below.