Transportation and Automotive Sector Ideas

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>>> Toyota to Take 5 Percent Stake in Mazda and Build Joint U.S. Plant



By JONATHAN SOBLE and PATRICIA COHEN

AUG. 4, 2017



https://www.nytimes.com/2017/08/04/business/toyota-mazda-electric-vehicles-investment.html



A Toyota engine assembly line in Huntsville, Ala., in 2009. Toyota and Mazda said they hoped a joint United States factory announced on Friday would begin producing vehicles by 2021.


TOKYO — Toyota said on Friday that it was taking a 5 percent stake in Mazda, another Japanese automaker, and that the companies would jointly build an assembly plant in the United States and would pool resources on new technologies.

The factory’s location has not been decided, but Toyota and Mazda said they hoped the first vehicles would roll off its production lines in 2021. The plant is expected to cost $1.6 billion and to employ about 4,000 workers, they said.

Akio Toyoda, chief executive of Toyota, said in January that the carmaker would invest $10 billion in the United States over the next five years. Although plans for that spending predated the election of President Trump, the timing of the announcement was widely seen as a response to Mr. Trump’s vows to promote American manufacturing, pushing back against countries like Japan that have large trade surpluses with the United States.

Mixing appeals, rebukes and state-sponsored enticements, Mr. Trump has pushed both American and foreign-owned companies to locate factories in the United States rather than in lower-wage countries. Even before Mr. Trump was sworn in, the heating and cooling giant Carrier agreed to cut the number of jobs it planned to move to Mexico from an Indiana plant after the state added $7 million in incentives.

Last week, the Taiwanese electronics supplier Foxconn joined Mr. Trump at the White House to announce its plans to locate a new plant with 3,000 positions in Wisconsin, which lured the company with a staggering $3 billion in state tax credits.

The announcement by Toyota and Mazda earned a congratulatory tweet from the president early Friday. “Toyota & Mazda to build a new $1.6B plant here in the U.S.A. and create 4K new American jobs. A great investment in American manufacturing!” he wrote. Seven months earlier he had warned Toyota in a tweet that moving operations to Mexico could result in a “big border tax.”

The alliance between Toyota and Mazda represents a small but significant step in the consolidation of the Japanese car industry, where a half-dozen producers compete for customers and capital. Toyota and Mazda said they planned to pursue joint development of electric vehicles and safety technology.

In an era of soaring development costs and unsettling technological shifts — especially the emergence of battery-powered and self-driving cars — many smaller producers fear they lack the resources required to keep up. Even Toyota, one of the world’s largest producers of vehicles, with an output of 10 million units a year, has been accused by some critics of falling behind in research and development.

“In the future, mobility won’t belong only to carmakers,” Mr. Toyoda said at a news conference announcing the Mazda stake, noting that Silicon Valley was increasingly turning its gaze to the auto industry, looking to disrupt areas including design, manufacturing and retail distribution.

“Totally new players like Google and Amazon are right before our eyes,” Mr. Toyoda said. “We need to cooperate and compete with them.”

Japan’s smaller carmakers have sought partnerships with larger producers before. Ford Motor long had a minority stake in Mazda, as did General Motors in Suzuki, before the American partners withdrew.

Mitsubishi joined the Renault-Nissan alliance last 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.

Toyota has been extending its reach, as well.

Last year, it took over its longtime minicar affiliate, Daihatsu. It has also been strengthening its links with Fuji Heavy Industries, the maker of Subaru cars, in which Toyota owns a 16.5 percent stake. And it has been discussing a new partnership with Suzuki.

Toyota and Mazda have been cooperating since 2010, when Toyota agreed to license its gasoline-electric hybrid-drive system to Mazda. The companies said in 2015 that they were exploring ways to expand their partnership.

With the Prius and other hybrids, Toyota has dominated the market for lower-emissions vehicles for years. But as fully battery-powered cars gain favor with regulators and consumers, the company faces new challenges — both from traditional competitors and new players like Tesla.

Mazda is known for making powerful and fuel-efficient internal combustion engines, but it lacks its own electric alternatives. Its sporty image and widely praised designs could appeal to Toyota: Mr. Toyoda has repeatedly spoken of his desire to give his company’s products more flair.

Mazda said it planned to issue new shares to Toyota worth 50 billion yen, or about $450 million, which would give Toyota a 5.05 percent ownership stake in Mazda. In return, Toyota plans to transfer some of its shares to Mazda. The stock would be worth an equivalent amount in cash, but because Toyota is much larger than Mazda, Mazda’s stake in Toyota would work out to 0.25 percent.

According to a Toyota fact sheet, the company has directly invested $23.4 billion in the United States, has 10 plants, and employs 136,000 people.

Some of the states where Toyota is currently located would love to be the home of this newest expansion.

“As Toyota embarks on its joint venture with Mazda, we stand ready to grow our existing partnership and strengthen Mississippi’s standing as a global leader in automotive manufacturing,” said Phil Bryant, the governor of Mississippi, where the company employs more than 2,000 workers.

Michigan, where Mazda produced cars before exiting in 2012, also boasted of what it could offer. “Any manufacturer looking to locate a plant in the United States will likely be taking a good look at Michigan,” Gov. Rick Snyder said. “We are a national leader for mobility and automotive R&D, as well as providing an exceptionally skilled manufacturing workforce and an outstanding business environment.”

And a spokesman for Gov. Greg Abbott of Texas said: “Toyota Motor Corporation has made significant investments in Texas — just recently opening their new North American headquarters — and we are very proud of the work they are doing in the Lone Star State. We will continue to work with Toyota to ensure Texas provides the business environment they need to succeed in the marketplace.”

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