Toyota and Mazda JV to Build Cars in U.S. Trumped?

Toyota Motor Corporation and Mazda Motor Corporation signed an agreement to enter a business and capital alliance, with the stated goal of strengthening a small partnership that begin in March of 2013 and build a joint venture plant in the U.S.

The plant would have an annual production capacity of approximately 300,000 units. Pending approvals and authorization by government agencies, the companies will begin to examine detailed plans with the goal of starting operations in 2021. The plant will require a total investment of approximately $1.6 billion, and will create up to 4,000 jobs.

The Japanese Goliath and tiny Mazda claimed this would mutually benefit the companies by using the resources of both companies and complementing each other’s products and technologies toward the goal of making more-appealing cars. (Mazda CX-5 Crossover Takes on Subaru Forester, Next Mazda B-Series Pickup to be Built by Isuzu, Mazda Drops Ford Motor in New Changan Mazda JV in China)

In AutoInformed’s view this appears to be Toyota’s attempt to prop up an ailing Mazda along with the politically convenient claim about creating jobs under nit-twit Trump who wants to bring jobs back to the U.S. If these are new jobs, how are they being brought back?

Mazda and Toyota Deal

  • establish a joint venture that produces vehicles in the United States,
  • jointly develop technologies for electric vehicles,
  • jointly develop connected-car technology,
  • collaborate on advanced safety technologies and
  • expand complementary products.

Toyota will acquire 31,928,500 shares of common stock newly issued by Mazda through a third-party allotment (shareholding ratio of 5.05% on an issued share basis after the capital increase; total value of 50 billion yen).

Mazda will, by selling treasury stock through a third-party allotment to be implemented by Toyota, acquire Toyota shares that are equivalent in value to the Mazda shares (shareholding ratio of 0.25% on an issued share basis). The value of the shares mutually acquired by both companies will be equivalent.

Toyota President Akio Toyoda said, “The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars. 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. It is also the realization of our desire to never let cars become commodities.”

The auto industry increasingly faces great challenges, including stricter and expensive environmental and safety regulations for new vehicles and the entrance of competitors from other industries, as well as the growth of mobility-related businesses that could drastically cut vehicle sales.

About Kenneth Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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