Thursday, 19 July, 2018

Mazda first quarter profit drops on weak North American sales

Toyota to take 5 percent stake in Mazda Nikkei The Toyota logo is seen at the company's display during the North American International Auto Show in Detroit
Preston Stone | 05 August, 2017, 00:10

The move is likely to be seen as a win for President Trump, who attacked Toyota earlier this year over its plans to build a new factory in Guanajuato, Mexico.

The automakers have not yet decided where to build the new assembly plant, potentially triggering a bidding war among states eager for economic development.

The two automakers have also agreed to jointly develop technologies for electric vehicles, connected-car technology, and collaborate on advanced safety technologies.

Toyota and Mazda also plan to work together on developing in-car information technologies and automated driving functions, as competition intensifies over the development of self-driving vehicles. Once built, it would produce 300,000 vehicles a year with half being the Toyota Corolla and the rest an unspecified Mazda model, the person said. President Donald Trump tweeted Friday morning.

Chris Richter, managing director of investment company CLSA, said: "By buying a 5% stake (in Mazda), Toyota takes Mazda off the table rather than having it sit out there like a free agent which could someday be used against them".

Toyota North America chief Jim Lentz told Reuters in an interview the automaker has not started searching for sites for the plant, expected to employ 4,000 workers, but would locate the factory near Toyota's existing supply chain. "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".

Representing Mazda, President and CEO Masamichi Kogai said that the alliance could help "energize the auto industry and create more vehicle fans by bringing together two competitive spirits to spur each other on". He threatened to slap a "big border tax" on Toyota cars if the plant isn't built in the U.S.

Toyota began its manufacturing operations in the United States in 1972.

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (August 4, 2017).

The limited tie-up with Mazda marks the latest addition to Toyota's sprawling empire, which includes Japanese truck maker Hino Motors and minicar maker Daihatsu Motor Co.

The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale.

Toyota has already invested $23.4 billion in its US operations, and has planned another $11.6 billion in investment over the next five years, fueled by robust profits.

Neither Toyota nor Mazda would comment when asked about the joint venture. At CES this year, Toyota also demonstrated a concept vehicle that entered around an onboard artificial intelligence smart assistant that helps the driver inside and out of the vehicle.

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